exv10w1



 








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 10.1




Big Stone II Power Plant


Participation Agreement




By And Among



CENTRAL MINNESOTA MUNICIPAL POWER AGENCY,



GREAT RIVER ENERGY,



HEARTLAND CONSUMERS POWER DISTRICT,



MONTANA-DAKOTA UTILITIES CO., A DIVISION OF MDU

RESOURCES GROUP, INC.,



OTTER TAIL CORPORATION dba OTTER TAIL POWER COMPANY,



SOUTHERN MINNESOTA MUNICIPAL POWER AGENCY, AND



WESTERN MINNESOTA MUNICIPAL POWER AGENCY



As



Owners



JUNE 30, 2005





 









 







	 	 	 
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TABLE OF CONTENTS




	 	 	 	 	 
	 	 	Page	 
	ARTICLE I DEFINITIONS, RULES OF INTERPRETATION
	 	 	2	 
	 
	 	 	 	 
	1.01 Rules of Construction
	 	 	2	 
	1.02 Interpretation with 2005 Joint Facilities Agreement
	 	 	3	 
	1.03 Defined Terms
	 	 	3	 
	 
	 	 	 	 
	ARTICLE II THE PROJECT
	 	 	13	 
	 
	 	 	 	 
	2.01 Project
	 	 	13	 
	2.02 Owners’ Commitment
	 	 	14	 
	2.03 Ratification and Acceptance of Phase I Activities
	 	 	14	 
	 
	 	 	 	 
	ARTICLE III DEVELOPMENT, FINANCING AND WITHDRAWAL
	 	 	14	 
	 
	 	 	 	 
	3.01 Development Phases
	 	 	14	 
	3.02 Financing Plan
	 	 	15	 
	3.03 Financing Obligations
	 	 	15	 
	3.04 General Prohibition on Withdrawal
	 	 	17	 
	3.05
Withdrawal Rights as a Result
of (*)
	 	 	17	 
	3.06 Limited Withdrawal Rights of GRE, Otter Tail and Other Owners
	 	 	18	 
	3.07 Obligations of an Owner That Withdraws Pursuant to Section 3.06
	 	 	19	 
	3.08 General Obligations of a Withdrawing Owner
	 	 	19	 
	3.09 Reallocation of Ownership Shares
	 	 	20	 
	3.10 Termination for Failure to Obtain Financing Approvals
	 	 	21	 
	 
	 	 	 	 
	ARTICLE IV OWNERSHIP
	 	 	21	 
	 
	 	 	 	 
	4.01 Plant Property
	 	 	21	 
	4.02 Title
	 	 	22	 
	4.03 Waiver of Partition Rights
	 	 	22	 
	4.04 Right of Possession
	 	 	22	 
	4.05 Transfer of Title
	 	 	22	 
	 
	 	 	 	 
	ARTICLE V DISPOSITION OF OWNERSHIP INTERESTS
	 	 	23	 
	 
	 	 	 	 
	5.01 General Prohibition on Transfers of Ownership Interests
	 	 	23	 
	5.02 Acts or Circumstance Not Deemed Transfers
	 	 	23	 
	5.03 Right of First Refusal
	 	 	24	 
	5.04 Covenants Run With Land
	 	 	26	 
	 
	 	 	 	 
	ARTICLE VI PROJECT AND PLANT MANAGEMENT
	 	 	26	 
	 
	 	 	 	 
	6.01 Management by Committee
	 	 	26	 
	6.02 Composition of Committees
	 	 	26	 
	6.03 Authority of Representatives to Act on Behalf of Owner
	 	 	26	 
	6.04 Committee Operational Procedures
	 	 	27	 
	6.05 Coordination Committee
	 	 	28	 
	6.06 Actions Requiring Coordination Committee Approval
	 	 	29	 
	6.07 Engineering and Operating Committee
	 	 	30	 






 









 







	 	 	 
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	6.08 Actions Requiring Unanimous Coordination Committee Approval
	 	 	31	 
	 
	 	 	 	 
	ARTICLE VII CONTRIBUTIONS; EXPENDITURES
	 	 	31	 
	 
	 	 	 	 
	7.01 Obligation to Pay Project Costs; Trust Account
	 	 	31	 
	7.02 Payment Procedures
	 	 	32	 
	7.03 Reservation of Right to Dispute Payments
	 	 	33	 
	7.04 Services and Property Contributed by Owners
	 	 	33	 
	7.05 Emergency Services
	 	 	34	 
	7.06 Taxes
	 	 	34	 
	7.07 Fuel
	 	 	34	 
	7.08 Station Power
	 	 	35	 
	7.09 Insurance
	 	 	35	 
	7.10 Assurances of Creditworthiness
	 	 	36	 
	7.11 Right to Obtain Financing
	 	 	37	 
	 
	 	 	 	 
	ARTICLE VIII CASUALTY LOSS; CONDEMNATION
	 	 	37	 
	 
	 	 	 	 
	8.01 Repair or Replacement
	 	 	37	 
	8.02 Eminent Domain
	 	 	38	 
	 
	 	 	 	 
	ARTICLE IX LIABILITY
	 	 	39	 
	 
	 	 	 	 
	9.01 Limitation and Release of Liability to Other Owners
	 	 	39	 
	9.02 Waiver of Certain Damages
	 	 	40	 
	9.03 Assignment of Rights
	 	 	40	 
	9.04 Reduction of Damages
	 	 	40	 
	9.05 Shared Liability
	 	 	40	 
	9.06 Indemnification for Willful Actions
	 	 	40	 
	9.07 Availability of Insurance Proceeds
	 	 	40	 
	9.08 Operator Indemnity
	 	 	41	 
	 
	 	 	 	 
	ARTICLE X ENTITLEMENT TO ENERGY AND CAPACITY
	 	 	41	 
	 
	 	 	 	 
	10.01 Interconnection and Transmission Upgrade Allocation Agreement
	 	 	41	 
	10.02 Generation Entitlement
	 	 	41	 
	10.03 Ancillary Services
	 	 	42	 
	10.04 Midwest ISO Market Development
	 	 	44	 
	10.05 Data to be Provided to the Midwest ISO
	 	 	44	 
	 
	 	 	 	 
	ARTICLE XI DEFAULTS AND REMEDIES
	 	 	45	 
	 
	 	 	 	 
	11.01 Event of Default
	 	 	45	 
	11.02 Contribution by Non-Defaulting Owners
	 	 	45	 
	11.03 Disputed Event of Default
	 	 	46	 
	11.04 No Waiver
	 	 	46	 
	11.05 Cumulative Rights
	 	 	46	 
	 
	 	 	 	 
	ARTICLE XII RELATIONSHIP OF PARTIES
	 	 	47	 
	 
	 	 	 	 
	12.01 Nature of Obligations
	 	 	47	 
	12.02 Tax Status
	 	 	47	 
	 
	 	 	 	 
	ARTICLE XIII DISPUTE RESOLUTION
	 	 	47	 






 









 







	 	 	 
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	ARTICLE XIV TERM
	 	 	47	 
	 
	 	 	 	 
	14.01 Term
	 	 	47	 
	14.02 Windup Events
	 	 	48	 
	14.03 Termination by Agreement
	 	 	48	 
	14.04 Return of Real Property to Otter Tail
	 	 	48	 
	 
	 	 	 	 
	ARTICLE XV REPRESENTATIONS, WARRANTIES
	 	 	48	 
	 
	 	 	 	 
	15.01 Representations and Warranties
	 	 	48	 
	 
	 	 	 	 
	ARTICLE XVI MISCELLANEOUS
	 	 	49	 
	 
	 	 	 	 
	16.01 Publicity Policy
	 	 	49	 
	16.02 Successors and Assigns; Assignment
	 	 	50	 
	16.03 Notices
	 	 	50	 
	16.04 Force Majeure
	 	 	50	 
	16.05 Waiver
	 	 	51	 
	16.06 Survival
	 	 	51	 
	16.07 Severability
	 	 	51	 
	16.08 Governing Law
	 	 	51	 
	16.09 Consent to Jurisdiction
	 	 	51	 
	16.10 Waiver of Trial by Jury
	 	 	52	 
	16.11 No Third-Party Beneficiaries
	 	 	52	 
	16.12 Cooperation
	 	 	52	 
	16.13 Captions
	 	 	52	 
	16.14 Entire Agreement
	 	 	52	 
	16.15 Counterparts
	 	 	52	 
	16.16 Further Assurances
	 	 	53	 






	 	 	 	 	 
	EXHIBIT A
	 	 	55	 
	 
	 	 	 	 
	EXHIBIT B
	 	 	58	 
	 
	 	 	 	 
	EXHIBIT B-1
	 	 	59	 
	 
	 	 	 	 
	SCHEDULE 3.02(A) OWNER FINANCING PLANS
	 	 	60	 
	 
	 	 	 	 
	SCHEDULE 3.03(A) REAL AND/OR PERSONAL PROPERTY INTENDED TO BE PLANT PROPERTY
	 	 	61	 
	 
	 	 	 	 
	SCHEDULE 3.05(A) REFERENCE RATE METHODOLOGY
	 	 	63	 
	 
	 	 	 	 
	SCHEDULE 7.01 TRUST AGREEMENT
	 	 	64	 
	 
	 	 	 	 
	SCHEDULE 10.01 INTERCONNECTION AND TRANSMISSION UPGRADE ALLOCATION AGREEMENT
	 	 	79	 






 









 







	 	 	 
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Participation Agreement



     THIS PARTICIPATION AGREEMENT (the “Agreement”) is
made as of June 30, 2005 (the “Effective Date”), by and among Central Minnesota Municipal Power
Agency, an agency incorporated under the laws of Minnesota (“CMMPA”), Great River Energy, a
cooperative corporation incorporated under the laws of Minnesota (“GRE”), Heartland Consumers Power
District, a consumers power district formed and organized under the South Dakota Consumers Power
District Law (Chapter 49-35 of the South Dakota Codified Laws) (“Heartland”), Montana-Dakota
Utilities Co., a Division of MDU Resources Group, Inc., a corporation incorporated under the laws
of the State of Delaware (“Montana-Dakota”), Otter Tail Corporation, a corporation incorporated
under the laws of Minnesota, doing business as Otter Tail Power Company (“Otter Tail”), Southern
Minnesota Municipal Power Agency, a municipal corporation and political subdivision of the State of
Minnesota (“SMMPA”), and Western Minnesota Municipal Power Agency, a municipal corporation and
political subdivision of the State of Minnesota (“WMMPA”) (each individually a “Party” and,
collectively, the “Parties”).



RECITALS




     WHEREAS, Otter Tail, Montana-Dakota, and NorthWestern Corporation (formerly known as
NorthWestern Public Service Company) dba NorthWestern Energy, a corporation incorporated under the
laws of the State of Delaware (“NorthWestern”), own an undivided interest in one hundred percent
(100%) of the existing 450 MW coal-fired electric generating plant located in Grant County, South
Dakota known as the Big Stone Plant (“BSP I”) and have entered into that certain Big Stone I and
Big Stone II Joint Facilities Agreement on October 3, 2002, as amended and supplemented, which gave
Otter Tail the right to develop BSP II (as such term is defined below); and



     WHEREAS, on June 30, 2005, NorthWestern and the Parties are entering into the Joint Facilities
Agreements (as such term is defined below), pursuant to which the Parties have obtained certain
rights to acquire property and to investigate, design, and construct BSP II; and



     WHEREAS, each of the Parties has its own needs for additional electric generating capacity and
believes that, when compared with the costs to design, construct and operate separate plants to
satisfy their respective electric generating capacity requirements, significant economies of scale
can be achieved through the joint construction and operation of a single plant capable of producing
the additional generating capacity the Parties collectively require. Accordingly, the Parties have
determined to proceed with the joint development, construction and operation of BSP II, to be
operated for their mutual benefit, in accordance with the rights obtained pursuant to the Joint
Facilities Agreements; and



     WHEREAS, each Party desires that the new plant be capable of utilizing domestic coal and
achieving both lower fuel costs and environmental benefits of lower emissions through the use of a
high efficiency supercritical power plant design and advanced emissions-control technologies; and



 









 







	 	 	 
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     WHEREAS, the magnitude of the cost to develop, build and operate BSP II necessitates that the
Parties share the related financial burdens associated therewith, and each Party has determined
that the sharing and allocation of such costs and BSP II’s generating capacity can best be
accomplished by acquiring, owning and managing the related property rights necessary to build, own
and operate BSP II as tenants in common; and



     WHEREAS, each Party intends to rely on the capacity and electric energy generated by BSP II as
part of its system planning and reliability obligations and to serve the needs of its current and
future customers; and



     WHEREAS, this Agreement is made by the Parties to provide for their ownership as tenants in
common of BSP II, and sets forth certain responsibilities and mechanisms for the design,
construction, ownership, operation, maintenance and repair of BSP II.



     NOW, THEREFORE, in consideration of the agreements and covenants set forth herein, and other
good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, and
intending to be legally bound by this Agreement, the Parties covenant and agree as follows:



AGREEMENTS




ARTICLE I

DEFINITIONS, RULES OF INTERPRETATION




     1.01 Rules of Construction. The capitalized terms listed in this Article shall have the
meanings set forth herein whenever the terms appear in this Agreement, whether in the singular or
the plural or in the present or past tense. Other terms used in this Agreement but not listed in
this Article shall have meanings as commonly used in the English language and, where applicable, in
Prudent Utility Practice (as such term is defined below). Words not otherwise defined herein that
have well-known and generally accepted technical or trade meanings are used herein in accordance
with such recognized meanings. In addition, the following rules of interpretation shall apply:




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




 









 







	 	 	 
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     1.02 Interpretation with 2005 Joint Facilities Agreement. The Parties, recognizing that they
are also parties to the 2005 Joint Facilities Agreement with NorthWestern:




	 	(a)	 	acknowledge that the terms of this Agreement are not binding upon NorthWestern;
and
	 
	 	(b)	 	notwithstanding any other provision in this Agreement to the contrary, nothing
in the Joint Facilities Agreements or the O&M Agreement shall alter or modify a Party’s
rights, duties and obligations under this Agreement.





     1.03 Defined Terms. In addition to definitions appearing elsewhere in this Agreement, the
following terms have the following meanings:



     2005 Joint Facilities Agreement: Shall mean that certain Big Stone I and Big Stone II 2005
Joint Facilities Agreement dated as of June 30, 2005 by and among the Parties and NorthWestern.



     Affiliate(s): Shall mean with respect to any Person:




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




For the purposes of this definition, “control,” “controlled by,” and “under common control with,”
mean the possession, directly or indirectly, of the power to direct or cause the direction of the
management or policies of a Person, whether through the ownership of voting securities or by
contract or otherwise. Notwithstanding the foregoing provisions, Operator and Owners (except with
regard to Otter Tail) shall not be deemed to be Affiliates of each other and any Person that is
otherwise an Affiliate of Operator shall not be deemed to be an Affiliate of Operator for purposes
of this Agreement to the extent such Person is acting in its capacity as an Owner.




     Agreement: Shall mean this Agreement, as amended from time to time.



     Ancillary Services: Shall mean those services that can be supplied by the Plant that are
necessary to support the transmission of Capacity and Energy from resources to loads while
maintaining reliable operation of the Transmission System in accordance with Prudent Utility
Practice. As of the Effective Date, Ancillary Services include Spinning Reserve Service,
Supplemental Reserve Service, Reactive Supply and Voltage Control From Generating Sources Service,
and Regulation and Frequency Response Service as such terms are defined by NERC: Spinning Reserve
Service shall mean providing additional capacity from electricity generators that are on-line,
loaded to less than their maximum output, and available to serve customer demand immediately should
a contingency occur; Supplemental Reserve Service shall mean providing additional capacity from
electricity generators that can be used to respond to a
contingency within a short period, usually ten (10) minutes; Reactive Supply and Voltage
Control From Generating Sources Service shall mean providing reactive supply through changes



 









 







	 	 	 
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to
generator reactive output to maintain transmission line voltage and facilitate electricity
transfers; and Regulation and Frequency Response Service shall mean providing for following the
moment-to-moment variations in the demand or supply in a control area and maintaining scheduled
interconnection frequency.



     Applicable Law: Shall mean:




	 	(a)	 	any and all laws, legislation, statutes, codes, acts, rules, regulations,
ordinances, treaties or other similar legal requirements enacted, issued or promulgated
by a Governmental Authority;
	 
	 	(b)	 	any and all orders, judgments, writs, decrees, injunctions, Governmental
Approvals or other decisions of a Governmental Authority; and
	 
	 	(c)	 	any and all legally binding announcements, directives or published practices or
interpretations, regarding any of the foregoing in (a) or (b) of this definition,
enacted, issued or promulgated by a Governmental Authority;




to the extent, for each of the foregoing in (a), (b) and (c) of this definition, applicable to or
binding upon (i) BSP II; (ii) a Party, its Affiliates, its members, it partners or their respective
Representatives, to the extent any such Person is engaged in activities related to BSP II; or



(iii) the property of a Party, its Affiliates, its members, its partners or their respective
Representatives, to the extent such property is used in connection with BSP II or an activity
related to BSP II.



     Blanket Easement Agreement: Shall mean that certain Easement Agreement dated as of June 30,
2005 by and among the Parties and NorthWestern.



     BSP I: Shall have the meaning given to such term in the recitals to this Agreement.



     BSP II or Plant: Shall mean the new, approximately 600 MW coal-fired electric generating
plant to be located adjacent to BSP I, and owned jointly by the Parties.



     Capacity: Shall mean an electrical rating expressed in megawatts (MW).



     CMMPA: Shall have the meaning given to such term in the preamble to this Agreement.



     Commercial Operation: Shall mean that the Plant is operating and producing Capacity and
Energy on a continuous basis, and is delivering such Energy to the Owners at the Interconnection
Point in accordance with Prudent Utility Practice and Applicable Law.



     Commercial Operation Readiness: Shall mean such time as the Plant has been completed in
accordance with the Plans and Specifications, has successfully completed construction and
operational testing specified in the Construction Contracts, is able to operate and produce
Capacity and Energy on a continuous basis, and is able to deliver such Energy to the
Owners at the Interconnection Point in accordance with Prudent Utility Practices and
applicable Law.



 









 







	 	 	 
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     Committee: Shall mean any Committee established pursuant to this Agreement.



     Common Interconnection Facilities: Shall mean (i) the new interconnection facilities
identified in the Interconnection Study, which have been determined and specified pursuant to
Attachment X of the Midwest ISO Tariff to be required to physically and electrically interconnect
the Plant to the Transmission System, and (ii) Contributing Owner Facilities pursuant to Section
2.04 of the Interconnection and Transmission Upgrade Allocation Agreement.



     Construction Contracts: Shall mean the contracts and agreements for the construction of the
Plant, including any transmission or other Common Interconnection Facilities, that are duly
authorized and executed, as provided herein.



     Contributing Owner Facilities: Shall have the meaning given to such term in Section 2.03 of
the Interconnection and Transmission Upgrade Allocation Agreement.



     Coordination Committee: Shall mean the Committee established and maintained pursuant to
Section 6.05.



     Decision Period: Shall have the meaning given to such term in Section 3.09(b)(ii)(A).



     Determination Rate: Shall have the meaning given to such term in Section 3.05(a).



     Dispute: Shall have the meaning given to such term in Article XIII.



     Double Majority: Shall mean a majority of the Coordination Committee members and not less
than a majority of Ownership Shares (it being a requirement that, when an Owner votes its Ownership
Shares, it must vote all of such Ownership Shares).



     Effective Date: Shall have the meaning given to such term in the preamble of this Agreement.



     Election Period: Shall have the meaning given to such term in Section 5.03(a)(ii).



     EMT: Shall have the meaning given to such term in Section 10.05.



     Energy: Shall mean electric energy having characteristics commonly known as three phase
alternating current, with a nominal frequency of sixty (60) Hertz, a nominal voltage equivalent to
that of Otter Tail’s or its successor’s Transmission System, and measured in kilowatt-hours (kWh)
or megawatt-hours (MWh).



     Engineering and Operating Committee or E&O Committee: Shall mean the Committee established
and maintained pursuant to Section 6.07.



     Event of Default: Shall have the meaning given to such term in Section 11.01.



     FERC: Shall mean the Federal Energy Regulatory Commission or any Governmental Authority which
preceded or hereafter may succeed the Federal Energy Regulatory Commission.



 









 







	 	 	 
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     FERC Accounts: Shall mean the Uniform System of Accounts prescribed by FERC for Public
Utilities and Licensees (Class A and B Electric Utilities) as in effect from time to time.



     Financial Closing: Shall mean the date on which all of the Parties shall have consummated
their respective Financing necessary to fund their share of the cost of the Plant, which
consummation shall include, but not be limited to, the execution of all documentation required to
consummate said Financing.



     Financing: Shall have the meaning given to such term in Section 7.11.



     Financing and Approval Deadline: Shall mean the deadline by which each Party shall have
obtained all financing and regulatory approvals necessary for it to obtain its Financing and own
its Ownership Interest in the Plant, which deadline shall be ninety (90) days after the Record of
Decision for the Plant is issued by WAPA, subject to possible extension as described in Section
3.06(a).



     Financing Documents: Shall mean the loan agreements, credit agreements, notes, bonds,
indentures, security agreements, lease financing agreements, mortgages, deeds of trust, interest
rate exchanges, pledge agreements, swap agreements, letters of credit, resolutions and other
documents evidencing, securing or otherwise relating to the development, bridge, construction
and/or permanent debt financing or other extension(s) of credit for BSP II, including any credit
enhancement, credit support, swaps, caps, floors, collars, hedging agreements, working capital
financing, or refinancing documents, and any and all amendments, modifications, or supplements to
the foregoing that may be entered into from time to time in connection with development,
construction, ownership, leasing, operation or maintenance of BSP II.



     Fixed Fuel: Shall mean the equivalent hourly British Thermal units (BTU) input to the boilers
at the Plant required to provide the Minimum Net Generation requirements of the Plant.



     Force Majeure Event: Shall mean a cause or event beyond the reasonable control of, and
without the fault or negligence of the Party, including, without limitation, an emergency, act of
God; flood, earthquake, hurricane, or tornado and the like; sabotage; vandalism beyond that which
could reasonably be prevented by a Party; terrorism; war; riot; fire; explosion; blockade;
insurrection; strike, slow down or labor disruption (even if such could be resolved by conceding to
the demands of a labor group); and action or failure to take actions by any Governmental Authority
after the Effective Date (including, without limitation, the adoption or change in any Law, but
only if such actions or failures to take action prevent or delay performance; and the inability,
despite due diligence, to obtain any licenses, permits, or approvals required by any Governmental
Authority; provided, however, that the following shall not be Force Majeure Events:




	 	(a)	 	the refusal of RUS to approve GRE’s participation in the Project;
	 
	 	(b)	 	the refusal of the MNPUC to approve Otter Tail’s integrated resource plan with
respect to BSP II; or




 









 







	 	 	 
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	 	(c)	 	Owner’s failure to perform any obligation under this Agreement due to its
inability to obtain an authorization or approval from a Governmental Authority where
such Governmental Authority issuing the authorization or approval is also the Owner;




provided, however, that the occurrence of a Force Majeure Event shall not excuse or relieve a Party
from any payment obligations hereunder.




     Fuel: Shall mean all types of fuel used in the operation of the Plant’s boilers, including,
without limitation, coal and fuel oil.



     Governmental Approvals: Shall mean any material authorizations or permissions issued or
granted by any Governmental Authority to BSP II, its Owners and their Affiliates in connection with
any activity related to BSP II.



     Governmental Authority: Shall mean any federal, state, local or municipal governmental body;
any governmental, quasi-governmental, regulatory or administrative agency, commission, body or
other authority exercising or entitled to exercise any administrative, executive, judicial,
legislative, policy, regulatory or taxing authority or power; or any court or governmental
tribunal; any independent system operator, regional transmission organization, reliability
organization, or other regulatory body; in each case having jurisdiction over an Owner, the
Project, BSP II, the Plant Site, or the Transmission System to which either Plant is
interconnected.



     GRE: Shall have the meaning given to such term in the preamble to this Agreement.



     Heartland: Shall have the meaning given to such term in the preamble to this Agreement.



     Interconnection and Transmission Upgrade Allocation Agreement: Shall have the meaning given
to such term in Section 10.01.



     Interconnection Study: Shall mean the Big Stone II Generator Interconnection Study performed
by Otter Tail for the Midwest ISO dated November, 2004 prepared pursuant to Attachment X of the
Midwest ISO open access transmission Tariff in connection with large generator interconnection
request (MISO generator identification number G392) associated with the Project, and any
amendments, supplements, subsequent studies, and interconnection agreement which may be issued
pursuant to the aforementioned large generator interconnection request.



     Joint Facilities Agreements: Shall mean the 2005 Joint Facilities Agreement, the Option to
Purchase Contract, and the Blanket Easement Agreement.



     Laws: Shall mean any and all federal, state, and local statutes, laws, judicial decisions,
regulations, ordinances, rules, judgments, orders, decrees, codes, plans, injunctions, permits,
tariffs, governmental agreements and governmental restrictions, whether now or hereafter in
effect.



 









 







	 	 	 
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     MAPP: Shall mean the Mid-Continent Area Power Pool or its successor.



     Materials and Supplies: Shall mean materials and supplies obtained for use in the operation,
maintenance or repair of the Plant (exclusive of Fuel), the cost of which is charged to the
applicable FERC Accounts.



     Midwest ISO or MISO: Shall mean the Midwest Independent Transmission System Operator, Inc.,
its successor, or any other applicable regional transmission organization.



     Midwest ISO Tariff: Shall mean the then effective Open Access Transmission Tariff of the
MISO.



     Minimum Net Generation: Shall mean the lowest net load at which the Plant can reliably
generate Energy on a continuous basis as determined by the Operator in accordance with the
instructions from the Engineering and Operating Committee and in conformance with manufacturers’
warranties and Prudent Utility Practice; such Energy can be taken by any Owner in the form of Net
Energy Generation, Ancillary Services, or a combination thereof, pursuant to this Agreement.



     Minimum Rating: Shall have the meaning given to such term in Section 7.10.



     MNPUC: Shall mean the Minnesota Public Utilities Commission or its successor.



     Montana-Dakota: Shall have the meaning given to such term in the preamble of this Agreement.



     NERC: Shall mean the North American Electric Reliability Council or its successor.



     Net Effective Generating Capacity: Shall mean the maximum continuous ability of the Plant to
produce power (net of amounts needed for station use) as determined by the Operator, in accordance
with instructions of the Engineering and Operating Committee, which level of power shall be the
level above which the Plant should not be operated, except at the time of system peaks or during
emergencies, in order to reduce maintenance and improve reliability.



     Net Energy Generation: Shall mean the Energy generated by the Plant that is available to the
Owners at the Point of Interconnection.



     Network Resource: Shall mean a designated generating resource owned and operated to supply
electricity to serve network load on a non-interruptible basis.



     Non-Transferring Owner: Shall have the meaning given to such term in Section 5.03(a).



     Non-Withdrawing Owner: Shall have the meaning given to such term in Section 3.09(b)(i).



     NorthWestern: Shall have the meaning given to such term in the recitals to this Agreement.



 









 







	 	 	 
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     O&M Agreement: Shall mean the then effective Operation and Maintenance Services Agreement
related to the operation and maintenance of the Plant.



     Operating Capacity: Shall mean the maximum ability of the Plant to produce power (net of
amounts needed for station use) at any particular time as determined by the Operator in accordance
with instructions from the Engineering and Operating Committee.



     Operating Capacity Entitlement: Shall mean the Capacity entitlement of each Owner that at any
time shall equal the Operating Capacity multiplied by an Owner’s Ownership Share.



     Operating Plan and Budget: Shall mean the annual operating plan and operating budget for
Phase IV developed and approved by the Engineering and Operating Committee.



     Operator: Shall mean the operator of the Plant pursuant to the O&M Agreement.



     Option to Purchase Contract: Shall mean that certain Option to Purchase Contract dated as of
June 30, 2005 by and among the BSP I Owners and Otter Tail, as administrative agent for itself and
the other BSP II Owners.



     Otter Tail: Shall have the meaning given to such term in the preamble to this Agreement.



     Owner Financing Plan: Shall have the meaning given to such term in Section 3.02.



     Owners: Shall mean the Parties to this Agreement and, thereafter, any permitted successors and
assigns to the Parties’ rights, title and interests in the Plant Property.



     Ownership Share: Shall mean the undivided percentage ownership interest of a particular Owner
in Plant Property as set forth on Exhibit B, as the same may be changed pursuant to this Agreement;
provided, however, that solely for purposes of Section 3.09(b) and Section 5.03 it shall mean the
percentage ownership of a particular Owner as set forth on Exhibit B-1, as the same may be changed
pursuant to this Agreement.



     Party(ies): Shall have the meaning given to such term in the preamble to this Agreement.



     Performance Testing: Shall mean the acceptance tests, demonstration tests and/or performance
tests set forth in the Construction Contracts or otherwise required by the Engineering and
Operating Committee, to demonstrate that the Plant has been constructed in accordance with the
Plans and Specifications and consistent with Prudent Utility Practice.



     Person: Shall mean an individual, a partnership, a corporation, a limited liability company,
an association, a joint-stock company, a business trust, consumer power district, cooperative,
unincorporated association, government or any subdivision thereof, or an organized group of
individuals (whether incorporated or not), or a receiver, trustee or other liquidating agent of any
of the foregoing in his capacity as such.



     Phase I: Shall mean the first phase of development of BSP II as defined in Section 3.01(a).



 









 







	 	 	 
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     Phase II: Shall mean the second phase of development of BSP II as defined in Section 3.01(b).



     Phase III: Shall mean the third phase of development of BSP II as defined in Section 3.01(c).



     Phase IV: Shall mean the fourth phase of development of BSP II as defined in Section 3.01(d).



     Plans and Specifications: Shall mean the plans and specifications for the construction and
design of the Plant, including the scope of work performed by any contractor under one or more of
the Construction Contracts; all work drawings, engineering and construction schedules, project
schedules, project monitoring systems, specifications status lists, material and procurement
ledgers, drawings and drawing lists, manpower allocation documents, management and project
procedures documents, project design criteria, and any other document referred to in the
Construction Contracts, in each case as approved by the Operator.



     Plant Property: Shall have the meaning given to such term in Section 4.01.



     Plant Site: Shall mean the real property adjacent to BSP I on which the Plant is to be
located, including the real property to be acquired pursuant to the Option to Purchase Contract and
any and all easements, leases, licenses, option rights, rights-of-way and other rights used in
connection with the Plant.



     Point of Interconnection: Shall mean the high-voltage terminals of the Plant generator step
up transformer located at the Plant.



     Point of Physical Connection: Shall mean the physical and electrical interconnection between
(i) the Common Interconnection Facilities or the Common Interconnection Facilities Upgrades and
(ii) the Transmission System.



     Progress Payment: Shall mean an advance of Project Costs in an amount of Ten Million Dollars
($10,000,000) (and such additional amounts as determined by the Engineering and Operating
Committee), which amounts are budgeted to complete Phase II and any additional amounts the Owners
shall be obligated to pay on a proportional basis on the Effective Date, or as otherwise directed
by the E&O Committee, and which amounts shall be deposited in the Trust Account to pay Project
Costs as they arise.



     Project: Shall mean the undertaking of the Owners with respect to the development and
construction of BSP II as set forth in Section 2.01.



     Project Agreements: Shall mean this Agreement, the Construction Contracts, the Joint
Facilities Agreements, the O&M Agreement and every other contract or agreement relating to the
development, construction, operation, maintenance or repair of the Plant or the Project.



     Project Budget: Shall mean the budget setting forth the Project Costs to be incurred for the
Project during Phases II, III and IV, as developed and approved by the Engineering and Operating
Committee.



 









 







	 	 	 
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     Project Costs: Shall mean the aggregate of all costs and expenses of the Owners heretofore or
hereafter incurred in respect of the Project, including, without limitation, the Progress Payment
and the costs and expenses for the acquisition of Plant Property, costs of transmission delivery
and interconnection studies performed by the Midwest ISO, transmission facility costs assigned to
or otherwise borne by the Project, the construction of the Plant, and the operation, maintenance
and repair of the Plant and other Plant Property, including, without limitation, renewals,
replacements, additions and retirements in respect thereof (and including expenditures for Fuel to
the extent provided in Section 7.07). Except as provided in this Agreement, expenses incurred by
an Owner on account of its Ownership Share in Plant Property, including, without limitation,
interest on its borrowed funds, its income, property, business and occupation and similar taxes,
its internal overhead and administrative expenses, and fees and expenses of its independent
certified public accountants, counsel and others providing it with professional or other services
on account of such individual interest, shall be for the account of such Owner and shall not be
Project Costs.



     Project Financing Plan: Shall have the meaning given to such term in Section 3.02.



     Proposed Purchaser: Shall have the meaning given to such term in Section 5.03(a).



     Prudent Utility Practice: Shall mean any of the practices, methods or acts required by
Applicable Law, the National Electric Safety Code, MISO, the North American Electric Reliability
Council, or the successors of any of them, whether or not a Party is a member thereof, or otherwise
engaged in or approved by a significant portion of the utility electric generation industry during
the relevant time period or any of the practices, methods and acts that in the exercise of
reasonable judgment in light of the facts known at the time the decision was made, could have been
expected to accomplish the desired result at a reasonable cost consistent with good business
practices, reliability, safety and expedition. Prudent Utility Practice is not intended to be
limited to the optimum practice, method or act to the exclusion of all others, but rather to be
acceptable practices, methods or acts generally accepted in the upper Midwest region.



     Record of Decision: Shall mean WAPA’s final record of its decision, published in the Federal
Register, addressing how the findings of its Environmental Impact Statement, including
consideration of alternatives, were incorporated into WAPA’s decision-making process and issued no
earlier than the later of ninety (90) days after the issuance of a draft Environmental Impact
Statement or thirty (30) days after the issuance of a final Environmental Impact Statement.



     Reference Rate: Shall mean (*) per megawatt hour.



     RUS: Shall mean the Rural Utilities Service of the United States Department of Agriculture or
any successor thereof.



     SEC: Shall have the meaning given to such term in Section 7.10.



     SMMPA: Shall have the meaning given to such term in the preamble to this Agreement.



 









 







	 	 	 
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     Term: Shall have the meaning given to such term in Section 14.01.



     Termination Date: Shall have the meaning given to such term in Section 14.01.



     Total Load Regulation: Shall have the meaning given to such term in Section 10.03(d).



     Total Operating Reserves: Shall have the meaning given to such term in Section 10.03(b).



     Transfer, Transferred or Transferring: Shall mean any actual, attempted, proposed or
purported sale, assignment, conveyance, transfer, gift, exchange, mortgage, pledge, encumbrance
(including, but not limited to, liens of any kind), hypothecation or grant of a security interest
in or other disposition of an Owner’s Ownership Interest, whether voluntary or involuntary.



     Transferring Owner: Shall have the meaning given to such term in Section 5.03(a).



     Transferred Share: Shall have the meaning given to such term in Section 5.03(a).



     Transmission System: Shall mean the facilities that are used to provide transmission service
necessary for any of the Owners to deliver the Energy from the Point of Physical Connection to
their respective points of delivery. The Transmission System includes, but is not limited to,
facilities, the operational control of which has been transferred to the Midwest ISO subject to
FERC approval under Section 203 of the Federal Power Act.



     Trust Account: Shall mean the segregated interest-bearing trust account already established
by the Operator on behalf of the Owners to provide for obligations with respect to the Project and
the Plant.



     Trust Account Deposit(s): Shall have the meaning given to such term in the O&M Agreement.



     URGE Testing: Shall mean the MAPP reliability testing procedure established by the MAPP
regional reliability committee (designated Uniform Rating of Generating Equipment) used to
determine the Capacity, less self-supplied station power use, that the Plant could supply as
accredited Capacity to the interconnected systems of the MAPP members.



     WAPA: Shall mean the Western Area Power Administration or any successor thereof.



     Willful Action: Shall mean any act or omission of an Owner (including an Owner acting as
Operator) by or on its behalf, at the direction of its directors, a corporate officer, or in the
case of the Operator, a Plant Manager (as defined in the O&M Agreement), in respect of the matter
involved, which:




	 	(a)	 	is knowingly or intentionally done or not done with conscious indifference to
the consequences, or with the expectation that injury or damage to other Owners or any
other Person would, or would be reasonably likely to, result therefrom; or




 









 







	 	 	 
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	 	(b)	 	is determined by final judgment or decree of a court having jurisdiction, to be
a material default under any Project Agreement, and occurs or continues beyond the time
specified in such judgment or decree for curing such default, or if no time to cure is
specified therein, occurs or continues beyond a reasonable time to cure such default.





     Withdrawing Owner: Shall have the meaning given to such term in Section 3.09(b)(i).



     Withdrawn Share: Shall have the meaning given to such term in Section 3.09(b)(ii).



     WMMPA: Shall have the meaning given to such term in the preamble to this Agreement.



ARTICLE II

THE PROJECT




     2.01 Project. The Project shall consist of the following activities to be conducted during
Phases I, II and III of the development of the Plant, as more fully described in Article III:




	 	(a)	 	the acquisition of the Plant Site (including feasibility studies and testing),
including, without limitation, the acquisition of all properties, easements, rights and
public and private permits, licenses, orders and other authorizations necessary or
desirable to provide access to the Plant Site by railroad and from public roads, to
provide communications and other necessary utility services to the Plant Site, and to
provide water of the quality and quantity required for the construction and operation
of the Plant and allow discharge and/or storage of water and wastes from the Plant, and
to enable in all other respects the construction, operation, maintenance and repair of
the Plant and other Plant Property;
	 
	 	(b)	 	the design, construction, equipping and testing of the Plant on the Plant Site
in preparation for Commercial Operation Readiness at a planned Capacity of
approximately 600 MW, including the interconnection of the Plant to the Transmission
System, including all related interconnection and transmission upgrades;
	 
	 	(c)	 	the arrangements for the supply of Fuel, or such substantial portion thereof as
the Owners deem advisable, and for the delivery thereof to the Plant, as is necessary
to test the Plant and to ensure operating of the Plant at Net Available Capacity
thereafter during the Term;
	 
	 	(d)	 	the selection and training of the initial staff needed to test and operate the
Plant;
	 
	 	(e)	 	the procurement of all Materials and Supplies (including an appropriate supply
of spare parts) necessary to conduct Performance Testing and thereafter commence the
Commercial Operation of the Plant;
	 
	 	(f)	 	coordination with BSP I and the owners thereof as contemplated in the Joint
Facilities Agreements; and




 









 







	 	 	 
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	 	(g)	 	all matters incidental to the foregoing, which, consistent with Prudent Utility
Practice, should be done to prepare the Plant for Commercial Operation.





     2.02 Owners’ Commitment. Each of the Parties, as the initial Owners, for itself and its
successors and permitted assigns which may hereafter become Owners, shall carry out the Project in
accordance with this Agreement. The Owners shall cause the Plant to be operated for the benefit of
the Owners.



     2.03 Ratification and Acceptance of Phase I Activities. Each Party hereby ratifies and
accepts each of the Phase I activities carried out by the Parties, whether individually or
collectively, relating to the Project prior to the Effective Date.



ARTICLE III

DEVELOPMENT, FINANCING AND WITHDRAWAL




     3.01 Development Phases. The Owners, pursuant to the Project Agreements, shall develop the
Plant in four (4) phases, as follows:




	 	(a)	 	“Phase I” shall consist of all development activities undertaken by the Owners,
individually or collectively, relating to the Project prior to the Effective Date.
	 
	 	(b)	 	“Phase II” shall consist of due diligence, preparation for Financial Closing,
design and engineering work, negotiation of the Construction Contracts and the other
Project Agreements and other necessary activities on the Effective Date and continuing
until one (1) day prior to the later of the date of Financial Closing or the date of
execution of the Construction Contracts.
	 
	 	 	 	During Phase II, to the extent not completed as of the Effective Date, the Owners,
acting through the Engineering and Operating Committee, shall conclude all plans and
preparations necessary for development and financing of the Project, including, but
not limited to (i) the preparation of a development plan, Owner Financing Plan,
Project Financing Plan, construction schedule and Project Budget, (ii) the
preparation and negotiation of the Project Agreements, (iii) the application for,
and acquisition of, such permits and other Governmental Approvals as are necessary
for the development and construction of the Plant, and (iv) completion of all
documentation and other preparations required for Financial Closing and execution
and delivery of Construction Contracts.
	 
	 	(c)	 	“Phase III” shall consist of the construction, Performance Testing and start-up
of the Plant. Phase III shall commence on the later of the date of Financial Closing
or the date of execution of the Construction Contracts, and shall end one (1) day prior
to the date the Plant commences Commercial Operation.
	 
	 	 	 	During Phase III, the Owners, acting through the Engineering and Operating
Committee, shall complete Financial Closing (if not previously completed), execute
Construction Contracts (if not previously executed), cause construction, Performance
Testing and start-up of the Plant to occur, prepare for




 









 







	 	 	 
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	 	 	 	commencement of Commercial
Operation (including the training and hiring of necessary operating staff) and
obtaining any permits or Governmental Approvals not previously obtained that are
required for the operation of the Plant.
	 
	 	(d)	 	“Phase IV” shall consist of the Commercial Operation of the Plant, which phase
shall commence on the date the Plant commences Commercial Operation and end on the
Termination Date.
	 
	 	 	 	During Phase IV, the Owners, acting through the Engineering and Operating Committee,
shall operate and maintain the Plant in accordance with Prudent Utility Practices
and the Project Agreements. Subject to oversight by the Engineering and Operating
Committee, the obligations of the Owners during Phase IV shall be carried out by the
Operator in accordance with, and to the extent set forth in, the O&M Agreement.





     3.02 Financing Plan.




	 	(a)	 	On or before the Effective Date, each Owner shall confirm that it has delivered
to each of the other Owners a plan detailing how it will obtain all financing and
regulatory approvals necessary for it to obtain its Financing and own its undivided
interest in the Plant (each such plan, an “Owner Financing Plan”). A copy of each
Owner Financing Plan is attached hereto as Schedule 3.02(a).
	 
	 	(b)	 	On or before the date that is six (6) months after the Effective Date, the
Owners will collectively develop a final plan for the financing of the Project (the
“Project Financing Plan”), taking into account the Owner Financing Plans provided by
each of the Owners and any special financing benefits or restrictions. The Project
Financing Plan will provide for the coordination among the Owners’ lenders and set
forth in detail the Financing Documents that will be required for Financial Closing.





     3.03 Financing Obligations.




	 	(a)	 	Attached hereto as Schedule 3.03(a) each Owner has described (i) all real
and/or personal property held by such Owner as of the Effective Date that is intended
to be Plant Property, including, but not limited to, interests in the Joint Facilities
Agreements and the work product resulting from development activities undertaken during
Phase I relating to the Project, but excluding Contributing
Owner Facilities, and (ii) all Project Costs incurred by such Owner prior to the
Effective Date, including, but not limited to, the costs to acquire the real and/or
personal property and interests listed on Schedule 3.03(a).
	 
	 	(b)	 	On the Effective Date:






	 	(i)	 	each Owner that has incurred Project Costs prior to the
Effective Date as listed in Schedule 3.03(a) shall be reimbursed by the other
Owners in




 









 







	 	 	 
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	 	 	 	proportion to their respective Ownership Shares, to the extent not
previously reimbursed;
	 
	 	(ii)	 	to the extent reimbursement has been provided to the Owner as
described in Section 3.03(b)(i), each Owner’s interest in its work product
resulting from development activities undertaken prior to the Effective Date
(other than its interests in personal property, real property and the Joint
Facilities Agreements) as identified in Schedule 3.03(a), shall be transferred
to and vest in the Owners as tenants in common in proportion to their
respective Ownership Shares and each Owner transferring such property shall
cause it to be transferred; and
	 
	 	(iii)	 	each Owner shall pay into the Trust Account its proportionate
share, based on Ownership Share, of the Progress Payment to finance the
development of the Project until the Financial Closing.






	 	(c)	 	At least thirty (30) days before the date of the Financial Closing, each Owner
shall amend its disclosures in Schedule 3.03(a) to reflect (i) any additional real
and/or personal property held by such Owner that is intended to be Plant Property and
that has not been previously transferred to the Owners as tenants in common, including,
but not limited to, interests in the Joint Facilities Agreements and the work product
resulting from development activities undertaken during Phase II relating to the
Project, and (ii) all reasonable and documented Project Costs incurred by such Owner
during Phase II, including, but not limited to, the costs to acquire the additional
real and/or personal property listed on Schedule 3.03(a).
	 
	 	(d)	 	On the date of Financial Closing,






	 	(i)	 	each Owner that has incurred Project Costs prior to the
Financial Closing as listed in amended Schedule 3.03(a) shall be reimbursed by
the other Owners in proportion to their respective Ownership Shares in
accordance with Section 4.02, to the extent not previously reimbursed;
	 
	 	(ii)	 	to the extent not previously transferred, each Owner’s title
to, or other property interest in all property and rights resulting from
development activities undertaken prior to the Financial Closing (including,
but not limited to, its interests in personal property, real property
(including any rights necessary to exercise any options for real property) and
the Joint Facilities Agreements) as identified in Schedule 3.03(a), but
excluding
Contributing Owner Facilities, shall vest in the Owners as tenants in common
in proportion to their respective Ownership Shares in accordance with
Section 4.02; and
	 
	 	(iii)	 	each Owner shall deliver its cash or binding financial
obligation of a well-known financial institution to finance its Ownership Share
and to fund its share of the balance of the Project Costs through the
completion of construction and the commencement of Commercial
Operation. Each




 









 







	 	 	 
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	 	 	 	Owner shall provide to the Engineering and Operating Committee and the other
Owners such customary documents, including reasonable and customary legal
opinions, consents to assignment and certificates as may be requested with
respect to the financing of the Project and shall use its best efforts to cause
its Lenders to enter into any intercreditor or similar documents as are
customary in transactions of this nature.






	 	(e)	 	To the extent not otherwise specifically provided in any Project Agreement or
other written agreement among the Owners, (i) any additional real and/or personal
property or interests therein acquired after the Financial Closing intended to be Plant
Property shall be acquired by the Owners, acting through the Engineering and Operating
Committee, as tenants in common with undivided interests equal to their respective
Ownership Shares and (ii) all Project Costs and other liabilities or obligations
incurred with respect to the Project during Phase III shall be the responsibility and
obligation of the Owners in proportion to their respective Ownership Shares.





     3.04 General Prohibition on Withdrawal. Except as specifically provided herein, an Owner may
not terminate its participation in and withdraw from the Project.



     3.05
Withdrawal Rights as a Result of (*).





	 	(a)	 	On June 20, 2006, the E&O Committee shall determine
(*) (the “Determination Rate”), using the
same methodology used in determining the Reference Rate, as detailed on Schedule
3.05(a) hereof, and which determination shall include only those anticipated costs
properly authorized under this Agreement.
	 
	 	(b)	 	(*), then the Owners, acting
through the Coordination Committee, shall meet on June 30, 2006 and shall take the
following vote:






	 	(i)	 	If a Double Majority approves the continuation of the Project,
then any Owner who did not vote to continue the Project may withdraw from the
Project, so long as it: (A) provides written notice to the other Owners of its
withdrawal within seven (7) days of the vote, and (B) deposits into the
Trust Account on or before July 31, 2006, a payment equal to (*) per
kilowatt multiplied by that Owner’s Ownership Share. An Owner who properly
withdraws under this Section 3.05(b)(i) shall have no other obligations
under this Agreement, except as required under Section 3.08. (*) If both Montana-Dakota and Otter Tail withdraw from the Project
under this Section 3.05(b)(i), any of the Progress Payments paid by
Montana-Dakota and Otter Tail prior to withdrawal under this Section
3.05(b)(i) that are not needed to pay Project Costs incurred prior to
withdrawal under Section 3.05(b)(i) shall remain Plant Property and




 









 







	 	 	 
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	 	 	 	Montana-Dakota and Otter Tail shall have no claim to such Progress Payments.
In the event that the Progress Payments paid by Montana-Dakota and Otter
Tail prior to withdrawal under this Section 3.05(b)(i) are not sufficient to
pay Montana-Dakota’s and Otter Tail’s respective shares of Project Costs
incurred prior to withdrawal under this Section 3.05(b)(i), Montana-Dakota
and Otter Tail shall pay into the Trust Account their respective amounts of
the shortfall. Any such payments required of Montana-Dakota and Otter Tail
shall be made within five (5) business days after the amount of the
shortfall is determined.
	 
	 	(ii)	 	If a Double Majority does not approve the continuation of the
Project, then those Owners who wish to withdraw from the Project may do so by
providing written notice to the other Owners of their withdrawal within seven
(7) days of the vote, and shall have no other obligations under this Agreement,
except as required under Section 3.08; provided, however, that notwithstanding
the lack of Double Majority approval to continue the Project, those Owners who
do not withdraw from the Project may continue the Project under the Project
Agreements as long as either Montana-Dakota or Otter Tail has not withdrawn
from the Project. If Montana-Dakota and Otter Tail both withdraw from the
Project pursuant to this Section 3.05(b)(ii), then the Project shall be wound
up as provided for in Section 14.02 of this Agreement.





     3.06 Limited Withdrawal Rights of GRE, Otter Tail and Other Owners. GRE shall use its best
efforts to obtain on or prior to the Financing and Approval Deadline the approval by RUS of GRE’s
participation in the Project, as required pursuant to GRE’s mortgage with RUS. Otter Tail shall
use its best efforts to obtain on or prior to the Financing and Approval Deadline the approval by
MNPUC of Otter Tail’s integrated resource plan with respect to BSP II, which approval shall include
authorization for Otter Tail to participate in the Project (*).
GRE and Otter Tail shall provide written reports to the Owners regarding their progress in
obtaining their required approvals and copies of all submissions to and responses from RUS and
MNPUC, respectively. Notwithstanding the general prohibition on withdrawal set forth in Section
3.04:




	 	(a)	 	GRE and Otter Tail may withdraw from the Project if they do not obtain their
required approvals described above by giving written notice of withdrawal to the other
Owners at least five (5) business days prior to the Financing and Approval Deadline.
The withdrawal shall be effective as of the date of such notice. If such notice is
given, then the Financing and Approval Deadline for the non-withdrawing Owners shall
automatically be extended by sixty (60) days.
	 
	 	(b)	 	In the event GRE withdraws pursuant to Section 3.06(a), any other Owner may,
for a period of thirty (30) days after GRE gives its notice of withdrawal, also
withdraw from the Project by giving written notice to the other Owners. The withdrawal
shall be effective as of the date of the withdrawing Owner’s written notice.




 









 







	 	 	 
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     3.07 Obligations of an Owner That Withdraws Pursuant to Section 3.06. In the event an Owner
withdraws pursuant to Section 3.06, all Progress Payments paid by the withdrawing Owner prior to
withdrawal shall be used to pay the withdrawing Owner’s share of Project Costs incurred prior to
withdrawal. Any of the Progress Payments paid by the withdrawing Owner prior to withdrawal that
are not needed to pay Project Costs incurred prior to withdrawal shall remain Plant Property and
the withdrawing Owner shall have no claim to such Progress Payments. In the event that the
Progress Payments paid by the withdrawing Owner prior to withdrawal are not sufficient to pay the
withdrawing Owner’s share of Project Costs incurred prior to withdrawal, the withdrawing Owner
shall pay into the Trust Account the amount of the shortfall. The withdrawing Owner’s payment
shall be made within five (5) business days after the amount of the shortfall is determined.
Notwithstanding the foregoing, in the event that the non-withdrawing Owners elect to discontinue
the Project, either (i) as a result of one or more withdrawals pursuant to Section 3.06, or (ii) at
any time within six (6) months after any such withdrawal, a withdrawing Owner shall not have any
liability or obligation pursuant to this Section 3.07, and the Owners shall wind up the Project and
contribute to Project Costs as provided in other provisions of this Agreement.



     3.08 General Obligations of a Withdrawing Owner. In the event any Owner withdraws and
terminates its participation in the Project as permitted under this Agreement or otherwise, the
withdrawing Owner shall immediately:




	 	(a)	 	transfer to the remaining Owners all rights it has under the Project
Agreements;
	 
	 	(b)	 	transfer to the remaining Owners all rights it has to Plant Property,
including, but not limited to, any amounts on deposit in the Trust Account and any
previous paid Progress Payments;
	 
	 	(c)	 	with the exception of Contributing Owner Facilities, transfer to the remaining
Owners any and all other rights, interests or property, whether real, personal,
tangible or intangible or otherwise, relating in any way to the Project, the Plant, the
Plant Site or otherwise;
	 
	 	(d)	 	to the extent not previously paid, pay its proportion (based upon its Ownership
Share prior to termination) of Project Costs incurred through the withdrawal date; and
	 
	 	(e)	 	to the extent not previously paid, pay its proportion (based upon its Ownership
Share prior to termination) of Project Costs incurred after the date of its withdrawal,
provided such Project Costs relate to obligations created prior to the date of its
withdrawal, and provided the remaining Owners are unable to mitigate those Project
Costs with reasonable effort and minimal impact upon their ability to continue with the
Project; provided, however that this Section 3.08(e) shall not apply to a withdrawal
pursuant to Section 3.06.





     In the event that an Owner withdraws and/or otherwise terminates its participation in the
Project for any reason, then said Owner, by its signature below, hereby appoints each of the
remaining Owners its true and lawful agents and attorneys-in-fact to effect any of the foregoing



 









 







	 	 	 
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obligations of this Section 3.08(a)-(e), Section 3.09 and otherwise with respect to the withdrawing
Owner’s obligations under any of the Project Agreements or any other obligation thereof with
respect to the Plant, the Project, the Plan Site or otherwise.



     3.09 Reallocation of Ownership Shares.




	 	(a)	 	If Otter Tail and/or GRE withdraws from the Project pursuant to Section 3.06,
then their rights that are forfeited, property transferred and money paid by either or
both, as applicable, shall be transferred or allocated to all remaining Owners in
proportion to their respective Ownership Shares (and such Ownership Shares shall be
re-calculated without the withdrawing Owner’s Ownership Share). Notwithstanding
anything in this Agreement to the contrary, if Otter Tail withdraws pursuant to Section
3.06 then, unless another owner of BSP I shall be a participant in the Project as an
Owner, Otter Tail shall retain ownership of any real property rights it has in the
Plant Site and any such rights previously transferred by Otter Tail to the Owners shall
be returned to Otter Tail.
	 
	 	(b)	 	If an Owner withdraws from the Project pursuant to Section 3.05(b), and either
Montana-Dakota or Otter Tail (or both) have not withdrawn, then:






	 	(i)	 	After such withdrawal, the E&O Committee shall promptly meet
and determine whether the non-withdrawing Owners (collectively, for purposes of
this Section 3.09(b), the “Non-Withdrawing Owners”) are able to unanimously
agree as to the reallocation of the withdrawing Owner’s (each, a “Withdrawing
Owner” and collectively, the “Withdrawing Owners”) Ownership Shares without
completing the reallocation process in Section 3.09(b)(ii). Withdrawing Owners
may not participate in such determination by the E&O Committee, or any other
decision of the E&O Committee under this Section 3.09(b).
	 
	 	(ii)	 	If the E&O Committee is unable to unanimously agree as to the
reallocation of a Withdrawing Owner’s Ownership Shares (the “Withdrawn Share”)
pursuant to Section 3.09(b)(i), then the Withdrawn Share shall be offered to
each of the Non-Withdrawing Owners according to the following reallocation
process:






	 	(A)	 	The reallocation process shall occur within a
sixty (60) day period, which period shall begin on the date after the
E&O Committee has met as required under Section 3.09(b)(i) (the
“Decision Period”). The reallocation process shall be administered by
or at the direction of the E&O Committee, which shall have the
authority and discretion to set the deadlines therefor, subject at all
times to the requirement that the reallocation process be completed
within the Decision Period.
	 
	 	(B)	 	Each Non-Withdrawing Owner shall promptly
inform all other Non-Withdrawing Owners in writing whether it intends
to accept




 









 







	 	 	 
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	 	 	 	reallocation of its ratable share of the Withdrawn Share. If
any Non-Withdrawing Owner does not intend to accept its ratable share
of the Withdrawn Share, then those Non-Withdrawing Owners that have
elected to accept
reallocation of their ratable share of the Withdrawn
Share shall again have the opportunity to elect to accept reallocation
of their ratable share of the unaccepted Withdrawn Share. This process
shall continue until either (1) the Non-Withdrawing Owners have elected
to accept reallocation of the entire Withdrawn Share, or (2) all
Non-Withdrawing Owners have elected to not accept some amount of the
Withdrawn Share.
	 
	 	(C)	 	If some amount of the Withdrawn Share remains
unallocated by the earlier of the end of the process described in
Section 3.09(b)(ii)(B) and the end of the Decision Period, then the E&O
Committee shall meet to (1) determine if one or more of the
Non-Withdrawing Owners will accept the unallocated Withdrawn Share, (2)
reduce the size of the Project, or (3) wind up the Project as provided
in Section 14.02(b) of this Agreement.





     3.10
Termination for Failure to Obtain Financing Approvals. If any Owner has not obtained all
approvals necessary for it to finance and own its Ownership Share by the Financing and Approval
Deadline, then all of the Owners who have obtained all such necessary approvals shall unanimously
decide whether to either (i) extend the Financing and Approval Deadline, (ii) remove the Owner(s)
who have not obtained such approvals and proceed with the Project, or (iii) terminate and wind up
the Project. If all remaining Owners (which must include either Montana-Dakota or Otter Tail) have
not obtained all approvals necessary to finance and own their Ownership Shares by the date that is
twelve (12) months after the Financing and Approval Deadline, then this Agreement shall terminate
and the Project shall be wound up in accordance with Article XIV unless the remaining Owners (which
must include either Montana-
Dakota or Otter Tail) shall have unanimously voted to extend this Agreement and continue with
the Project.



ARTICLE IV



OWNERSHIP




     4.01 Plant Property. Plant Property shall consist of the Plant and of all other property
(real, personal or fixtures; tangible and intangible) identified on Schedule 3.03(a), as such may
be amended from time to time or acquired thereafter (either directly in the names of the Owners as
tenants in common in accordance with this Agreement or indirectly for their account by any Owner,
agent (including, but not limited to, the Operator), nominee, contractor or subcontractor) for
exclusive use or consumption in connection with the construction, operation, maintenance or repair
of the Plant, including, but not limited to, the following:




	 	(a)	 	the Project Site, including all land and interests in land not a part of such
site but intended for exclusive use in connection with the construction, operation,
maintenance or repair of the Plant, as from time to time located or contemplated;




 









 







	 	 	 
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	 	(b)	 	all public and private permits, licenses, orders and other authorizations
issued or obtained in connection with the construction, operation, maintenance or
repair of the Plant or other Plant Property;
	 
	 	(c)	 	all materials, parts and component equipment acquired for incorporation or
installation in the Plant or other Plant Property, either in the initial construction
thereof or as subsequent additions or betterments thereto or replacements thereof, and
all tools and construction equipment acquired for use or consumption exclusively in
connection with the construction, operation, maintenance or repair of the Plant or
other Plant Property;
	 
	 	(d)	 	all products and byproducts produced from Plant Property;
	 
	 	(e)	 	all railroad equipment, vehicles, tools, office and other equipment and
furnishings, Fuel and any other fuel supplies, spare parts, other Materials and
Supplies and all other materials and supplies, whether to be located in the Plant or on
the Plant Site or off-site, which are intended for exclusive use in connection with the
construction, operation, maintenance or repair of the Plant or other Plant Property;
and
	 
	 	(f)	 	all contracts regarding the Plant and all options and contract rights to
acquire any of the foregoing Plant Property.





     4.02 Title. It is the intent of the Parties that the Owners own all Plant Property as tenants
in common, in proportion to the respective Ownership Share of each Owner. No instruments by which
title or other property interest in any Plant Property is acquired by the Owners, or by which the
title or other property interest of the Owners
in any Plant Property is evidenced, shall contain any provisions inconsistent with the intent
of the preceding sentence.



     4.03 Waiver of Partition Rights. No Owner shall resort to any action at law or in equity to
partition the Plant, the Plant Site, the Plant Property or the Project Agreements (either by
partition in kind or by the sale of the subject property and division of the proceeds), and each
Owner hereby expressly waives the benefit of all Laws that may now or hereafter authorize such
partition for a term that is coterminous with the term of this Agreement or for such lesser period
as may be required by Applicable Law.



     4.04 Right of Possession. No Owner shall lease or otherwise grant to another Person the right
of possession as to any of the Plant Property, separate and apart from ownership of title to such
property, without the prior written consent of all the other Owners.



     4.05 Transfer of Title. As soon as practicable, but no later than the Financial Closing, each
Owner shall execute, deliver, record and file, as necessary, bills of sale, deeds, endorsements,
assignments and other good and sufficient instruments of conveyance and transfer, to vest in the
other Owners as tenants in common all the right, title and interest of that Owner in, to or under
any or all of the property intended to be Plant Property and take all steps to put all Owners in
actual possession and control of all the property intended to be Plant Property. From time to time
following the Financial Closing, each Owner shall execute, deliver, record and



 









 







	 	 	 
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file such other
instruments of conveyance and transfer as the other Owners may reasonably request or as may be
otherwise necessary to more effectively convey and transfer to, and vest in, all Owners and put all
Owners in possession of, any part of the Plant Property, and, in the case of licenses,
certificates, approvals, authorizations, agreements, contracts, leases, easements and other
commitments included in the Plant Property (a) which cannot be transferred or assigned effectively
without the consent of third parties which consent has not been obtained prior to the Financial
Closing, to cooperate with all Owners at all Owners’ request in endeavoring to obtain such consent
promptly, and if any such consent is unobtainable, to use its best efforts to secure to all Owners
the benefits thereof in some other manner, or (b) which are otherwise not transferable or
assignable, to use its best efforts jointly with all Owners to secure to all Owners the benefits
thereof in some other manner. All real property to be transferred hereunder shall be transferred
such that only the covenants of marketable title and quiet enjoyment are required to be contained
therein. This provision shall survive the termination or expiration of this Agreement.



ARTICLE V



DISPOSITION OF OWNERSHIP INTERESTS




     5.01
General Prohibition on Transfers of Ownership Interests. A Party’s Ownership Interest in
this Agreement and Plant Property may only be Transferred to another Person as permitted under this
Agreement; provided, however, that in no event, may an Owner own an Ownership Interest consisting
of less than a (*) megawatt share of the Plant’s Capacity.
Any Party acquiring an ownership interest in this Agreement or Plant Property pursuant to a
permitted transfer, shall take such ownership interest subject in all respects to the terms and
conditions of this Agreement, including, but not limited to, the assurances of creditworthiness set
forth in Section 7.10. Any attempted Transfer by an Owner other than in accordance with the terms
and conditions of this Agreement shall be, and is hereby declared, null and void ab initio.



     5.02
Acts or Circumstance Not Deemed Transfers. The following shall not, under any
circumstances, be deemed Transfers, as such term is defined herein, and are not subject to the
general prohibition on Transfers of Section 5.01 and, accordingly, are permitted, provided that any
terms and conditions contained in the following are complied with:




	 	(a)	 	subject to the right of first refusal provisions of this Agreement, the sale by
any Owner of all or part of its Ownership Share of the Plant Property or any part
thereof if made by a trustee, mortgagee or other secured party as a remedy for a
default under such encumbrance; provided that the transferee must agree to be bound by
the terms of this Agreement and to perform the obligations of an Owner hereunder;
	 
	 	(b)	 	the transfer of the title of any Owner to all of its Ownership Share of the
Plant Property as an incident to a sale, merger or other transfer of all or
substantially all of such Owner’s assets as an entirety or of all or substantially all
of such Owner’s assets used in its electric utility business, as an entirety;
	 
	 	(c)	 	liens for taxes not yet due, or non-material liens for taxes or material liens
for taxes which are being reasonably contested;




 









 







	 	 	 
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	 	(d)	 	liens incurred in the ordinary course of business and not in connection with
the borrowing of money, including, without limitation, liens incidental to the
operation and maintenance of the Plant, liens in connection with construction
improvements in compliance with any Project Documents or otherwise, liens in connection
with an Owner’s maintenance of bank accounts, workers’ compensation, unemployment
insurance and other types of social security, surety and appeal bonds, bids, and
performance bonds (provided any of the foregoing liens that are material are being
contested and adequate reserves are maintained with respect thereto);
	 
	 	(e)	 	the pledge or granting a security interest in, or assigning as collateral, all
or any portion of an Ownership Share or the Plant Property or an Owner’s interest in
this Agreement in order to obtain Financing. Any Person receiving such an interest in
connection with a default by an Owner on its Financing shall be required to assume and
become obligated to perform all of the obligations of Owner at such time as that Person
including, without limitation, (i) perform any of that Owner’s obligations then
outstanding with respect to the foregoing, (ii) cure any monetary defaults of such
Owner and any non-monetary defaults that are reasonably capable of being performed by
such Person, and (iii) be deemed to have assumed and become obligated to perform the
obligations of such Owner thereafter arising
under this Agreement in respect of such property; provided that the transferee must
agree to be bound by the terms of this Agreement and to perform the obligations of
an Owner hereunder;
	 
	 	(f)	 	the transfer of the title of any Owner to all or any part of its Ownership
Share of the Plant Property to an Affiliate; provided, however, that any such Affiliate
must satisfy the creditworthiness assurances set forth in Section 7.10; and
	 
	 	(g)	 	any necessary reallocation of Ownership Shares as a result of a decision by
certain Owners to continue the Project under Section 3.05(b).





     5.03 Right of First Refusal. Notwithstanding anything in this Agreement to the contrary, an
Owner may Transfer all or a portion of its Ownership Share (subject in all respects to the
requirement that no Owner may own an Ownership Share consisting of less than a (*) megawatt share
of the Plant’s Capacity) provided that such Owner complies in all respects with the right of first
refusal process contained in this Section 5.03.




	 	(a)	 	If any Owner (the “Transferring Owner”) desires to transfer all or any part of
its Ownership Share pursuant to a bona fide written offer from a third party including,
without limitation, another Owner (the “Proposed Purchaser”), the Transferring Owner
shall first offer the proportion of its Ownership Share that it desires to Transfer
(the “Transferred Share”) to each of the other Owners (collectively, for purposes of
this Section 5.03, the “Non-Transferring Owners”) according to the following procedure:






	 	(i)	 	The Transferring Owner shall notify the Non-Transferring Owners
of its intention to Transfer the Transferred Share and furnish the
Non-




 









 







	 	 	 
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	 	 	 	Transferring Owners with a copy of the bona fide written offer signed by
the Proposed Purchaser setting forth, in reasonable detail, the price, terms
and conditions (including, without limitation, the source and terms of any
financing) of the proposed Transfer. To be a bona fide offer, such offer must
be for all cash and the Proposed Purchaser must satisfy the creditworthiness
assurances set forth in Section 7.10.
	 
	 	(ii)	 	The right of first refusal process (including the closing of
any transactions thereunder) shall occur within a one hundred eighty (180) day
period, which period shall begin on the date the Transferring Owner provides
the Non-Transferring Owners with a copy of the bona fide written offer pursuant
to Section 5.03(a)(ii) (the “Election Period”). The right of first refusal
process shall be administered by or at the direction of the E&O Committee,
which shall have the authority and discretion to set the deadlines therefor,
subject at all times to the requirement that the process be completed within
the Election Period. Non-Transferring Owners who elect to purchase any portion
of the Transferred Share must do so on all of the same terms and conditions as
are set forth in the Proposed Purchaser’s bona fide offer to the Transferring
Owner. Notwithstanding anything to
the contrary in this Section 5.03, the Non-Transferring Owners, or one of
them, must collectively purchase the entire Transferred Share in order to
validly exercise the right of first refusal.
	 
	 	(iii)	 	Each Owner shall promptly inform the Transferring Owner in
writing whether it intends to purchase its ratable share of the Transferred
Share. If any Non-Transferring Owner does not elect to purchase its ratable
share of the Transferred Share, then those Owners who have elected to purchase
their ratable share of the Transferred Share shall again have the opportunity
to elect to purchase their ratable share (vis-à-vis those Owners who elected to
participate in the initial round). This process shall continue until either
(A) the Non-Transferring Owners have elected to purchase the entire Transferred
Share, or (B) the Non-Transferring Owners have not elected to purchase the
entire Transferred Share.
	 
	 	(iv)	 	If the Non-Transferring Owners have not elected to purchase the
entire Transferred Share, the Transferring Owner shall be entitled, for a
period ninety (90) days after the end of the Election Period, to complete the
transfer of the Transferred Share to the Proposed Purchaser, in all respects
pursuant to the terms of its bona fide written offer; provided, however, that
no such sale may occur unless the Proposed Purchaser shall have agreed, in
writing, to be bound by all of the terms of this Agreement and any other
Project Agreements to which all other Owners are parties.
	 
	 	(v)	 	If the sale of the Transferred Share is not completed within
said ninety (90) day period, the Transferred Share may not be Transferred
without again complying with the requirements of this Section 5.03.




 









 







	 	 	 
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     5.04 Covenants Run With Land. The provisions of this Agreement, including, without
limitation, the right of first refusal provisions contained in Section 5.03, shall constitute
covenants running with the land as to the interests in real property which are made subject hereto
and shall bind each Owner and their successors and assigns.



ARTICLE VI

PROJECT AND PLANT MANAGEMENT




     6.01 Management by Committee. The Owners’ rights and obligations with respect to the Plant,
the Project and Plant Property shall be managed by the Owners acting through a Coordination
Committee and an Engineering and Operating Committee established and maintained during the Term in
accordance with this Article VI. The Coordination Committee and the Engineering and Operating
Committee, from time to time, may establish and maintain such additional Committees as they deem
advisable, but in no event may any such additional Committees have powers greater than those of the
Committee that created such additional Committee.



     6.02 Composition of Committees. Each Owner shall have a natural Person designated to act as
its primary representative on each Committee and a natural Person designated as an alternate who
will act as its representative when the primary representative is unavailable. Each Owner shall
notify the other Owners of its initial designations and of each subsequent change in the identity
of the natural Persons who will serve as its primary representative and alternate representative,
respectively, on each Committee, and with reasonable promptness shall fill vacancies in such
positions as they occur. Each Owner shall designate, as soon as practicable, its primary
representatives and alternative representatives on the Coordination Committee and the Engineering
and Operating Committee, and such other Committees as the Owners may from time to time establish.
Each Owner may change its primary representative and alternative representative by providing
written notice of such change to every other Owner. An Owner may, but need not, appoint the same
representative to serve as its representative on multiple Committees.



     6.03 Authority of Representatives to Act on Behalf of Owner.




	 	(a)	 	The primary representative and alternative representative of any Owner on any
Committee shall be deemed for all purposes to be duly authorized to represent and act
on behalf of the Owner in respect of all business conducted by the Committee and each
Owner agrees to be bound by action taken by each Committee on matters within the
authority of such Committee, to the extent allowed by Applicable Law.
	 
	 	(b)	 	If both the primary representative and alternative representative of an Owner
are unable to attend a Committee meeting, then an Owner shall send another natural
Person to represent it at such Committee meeting and such natural Person shall
presumptively be deemed to be duly authorized to represent and act on behalf of the
Owner in respect of all business conducted by the Committee. Similarly, if a Committee
proposes to act via a written action, an Owner shall ensure that a natural Person, duly
authorized, duly considers such proposed written action.




 









 







	 	 	 
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	 	(c)	 	Failure of an Owner to send another natural Person or to respond to a request
to take action by written action shall not preclude any Committee from taking such
action on behalf of all Owners (provided that notice of such meeting or action was
properly given and that the requisite approval to take such action is received),
despite any such failure to be present or to respond to a request to act by written
action. For the avoidance of doubt, it is the explicit agreement of the Owners that no
Owner or Owners may prevent Committee action by failing to be present at a duly called
Committee after receiving proper notice or to respond to a request for written action.
	 
	 	(d)	 	Notwithstanding anything in this Agreement to the contrary, an Owner’s
representative on a Committee shall be prohibited from taking action, voting or
otherwise approving or disapproving of any action under this Agreement if (i) such
Owner has been removed from the Project pursuant to Section 3.10 because it has not
obtained all approvals necessary for it to finance and own its Ownership
    Share by the Financing and Approval Deadline, (ii) such Owner’s right to vote its
Ownership Share is under suspension pursuant to Section 11.02, or (iii) one or more
other Owners have acquired such Owner’s rights in the manner described in Section
11.02(a) and the defaulting Owner has not repurchased those rights as described in
Section 11.02(b). In the event an Owner’s representative is prohibited from taking
action as described in the foregoing sentence, such Owner’s Ownership Share shall
not be counted for the purpose of calculating the vote required to achieve a Double
Majority except to the extent that one or more other Owners have acquired that
Ownership Share pursuant to Section 11.02(a), and such Owner’s Committee
representatives shall not be counted for the purpose of determining the number of
Committee members required to take the action being considered.





     6.04 Committee Operational Procedures.




	 	(a)	 	Each Committee shall meet with such frequency and in accordance with such rules
and procedures as it deems advisable for the conduct of its business, including, by way
of illustration only, Roberts’ Rules of Order; provided that, in any instance
in which such rules or procedures conflict with this Agreement, the provisions of this
Agreement shall control.
	 
	 	(b)	 	Each Committee shall designate one of its members as a chairperson, who shall
prepare and maintain minutes of all meetings and records of written actions for all
acts of a Committee taken without a meeting, copies of which shall be provided to each
Owner as promptly as reasonably possible after each such meeting or action without a
meeting.
	 
	 	(c)	 	Each Committee member shall be given advance written notice of any meeting of
the Committee stating the place, date and hour of the meeting and the purpose(s) for
which the meeting is called. Such advance written notice shall be given not less than
three (3) days and no more than thirty (30) days in advance of a meeting. A Committee
member who is present at a meeting shall be deemed to have




 









 







	 	 	 
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	 	 	 	waived notice thereof.
Physical presence shall not be required for attendance of a meeting of any Committee
if, by telephone or other means, the Committee members not physically present are able
simultaneously to hear and be heard by all other Committee members present. Each
Committee member shall be given reasonable advance written notice of any proposed
action to be taken.
	 
	 	(d)	 	The E&O Committee may conduct its business without meetings and may act by oral
or written consent of the representatives; provided, however, that except when
impracticable because of emergency conditions or except as to representatives who waive
(in advance) this requirement, the representative of each Owner shall be consulted as
to his approval or disapproval of any action proposed to be authorized by oral or
written consent.
	 
	 	(e)	 	The Coordination Committee may conduct its business without meetings and may
act by the unanimous written (but not oral) consent of the number of members of the
Coordination Committee that is required at a minimum to take action at a meeting at
which all Coordination Committee members are present.
	 
	 	(f)	 	Any two (2) Committee members of a particular Committee may call a Committee
meeting by giving notice as required by this Agreement.
	 
	 	(g)	 	Any Committee member may put an item on the agenda for a Committee meeting,
provided he serves on such Committee, and any Committee member may initiate any
proposal for written action by a Committee of which he is a Committee member.
	 
	 	(h)	 	Whenever any Committee, except the Coordination Committee, is unable to act
because of the inability or failure of Committee members to unanimously agree to take
or not to take any particular action, then such matter shall be referred to the
Coordination Committee for action.





     6.05 Coordination Committee.




	 	(a)	 	Coordination Committee members shall be the most senior officer of each Owner
or of an Owner’s operating utility, as applicable, or be a natural Person who has been
granted the same level of authority of such more senior officer for purposes of acting
on its behalf.
	 
	 	(b)	 	In addition to any purposes, responsibilities and authority specified elsewhere
herein, the Coordination Committee shall have as its purposes, responsibilities and
authority, the following:






	 	(i)	 	to act as the liaison between the Owners as to matters relating
to the Project, the Plant or other Plant Property and to supervise and
coordinate the functions of the other Committees;
	 
	 	(ii)	 	to be the definitive policy-making body of the Owners in all
matters relating to the Project, the Plant or other Plant Property which are
not by




 









 







	 	 	 
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	 	 	 	this Agreement or by action of the Coordination Committee delegated to
another Committee;
	 
	 	(iii)	 	to take responsibility, or delegate such responsibility to
another Committee including the responsibility for taking, all action necessary
or deemed advisable in connection with the Project or the ownership, operation,
maintenance or repair of the Plant or other Plant Property which has not been
provided for in this Agreement or other contract heretofore or hereafter made
by the Owners;
	 
	 	(iv)	 	to take action on all matters which are referred to it by the
E&O Committee or another Committee; and
	 
	 	(v)	 	to remove and replace the Operator and appoint another as
Operator if it finds that the then serving Operator has materially failed to
perform the services required of it.






	 	(c)	 	To the extent necessary, Coordination Committee members shall execute all
documents required to effectuate a particular duly authorized and approved act of the
Coordination Committee, regardless of whether a particular Coordination Committee
member acted to approve such act.
	 
	 	(d)	 	In the event of conflict between the actions or decisions of the Coordination
Committee and any other Committee, then the act or decision, as the case may be, of the
Coordination Committee shall govern in all respects.
	 
	 	(e)	 	The approval of at least a Double Majority shall constitute an act of the
Coordination Committee.





     6.06 Actions Requiring Coordination Committee Approval. Notwithstanding anything contained
herein to the contrary, only the Coordination Committee may take action on the following:




	 	(a)	 	awarding any Construction Contract;
	 
	 	(b)	 	any matter referred to the Coordination Committee by the Engineering and
Operating Committee;
	 
	 	(c)	 	any contracts or arrangements with any Owner or Affiliate of any Owner;
	 
	 	(d)	 	to consider and take appropriate action against any defaulting Owner in the
event of an Event of Default; and
	 
	 	(e)	 	removal of the Operator for any reason; provided, however, that an Owner who is
also the Operator subject to removal may not vote on the termination of itself as
Operator.





 









 







	 	 	 
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     6.07 Engineering and Operating Committee.




	 	(a)	 	In addition to any purposes, responsibilities and authority specified elsewhere
herein, the Engineering and Operating Committee shall have as its purposes,
responsibilities and authority, the following:






	 	(i)	 	to determine policy for the Owners on a day-to-day basis as to
matters relating to the proper design, construction, operation, maintenance and
repair of the Plant and Plant Property and to provide general supervision of
the Operator as to such matters and of the planning and execution of the
various undertakings involved in the Project and the operation, maintenance and
repair of the Plant and Plant Property;
	 
	 	(ii)	 	to develop and approve a plan for development of the Project,
construction schedule, Project Budget, Operating Plan and Budget and any
material changes or amendments thereto;
	 
	 	(iii)	 	to advise and direct the Operator as to the identity and
general form and content of the reports and formal statements of policies and
procedures to be prepared by the Operator for review and approval of the
Engineering and Operating Committee in respect to the construction, operation,
maintenance and repair of the Plant and Plant Property;
	 
	 	(iv)	 	except as set forth herein or in the O&M Agreement, to approve
the form and substance, and to authorize the execution, of the Joint Facilities
Agreements, the O&M Agreement and other Project Agreements not executed as of
the Effective Date;
	 
	 	(v)	 	to review and approve the procedures developed by the Operator
for determining the Net Effective Generating Capacity, Minimum Net Generation
and Net Energy Generation;
	 
	 	(vi)	 	to take all actions necessary in connection with the Project
within the scope of its powers and responsibilities hereunder;
	 
	 	(vii)	 	to authorize and direct the Operator to approve mechanical
completion, substantial completion and final completion of the Plant pursuant
to the Construction Contracts and to accept the results of the Performance
Testing, and to contest, settle, off-set or waive liquidated damages that may
become due and payable pursuant to the terms of the Construction Contracts;
	 
	 	(viii)	 	to make the determination as to when the Plant has commenced Commercial
Operation;
	 
	 	(ix)	 	subject to the terms of the O&M Agreement and taking into
account the particular financing arrangements of the Owners, to determine when
Plant Property should be retired and to authorize disposition by the Operator
of




 









 







	 	 	 
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	 	 	 	such Plant Property no longer needed for the operation, maintenance or
repair of the Plant or other Plant Property;
	 
	 	(x)	 	to act upon all matters referred to it by the Coordination
Committee and upon all matters relating to the Project or the operation,
maintenance and repair of the Plant or other Plant Property referred to it by
any other Committee;
	 
	 	(xi)	 	to take all action necessary or deemed advisable in connection
with the Project or the operation, maintenance and repair of the Plant or other
Plant Property for which provision has not otherwise been made by or on behalf
of the Owners;
	 
	 	(xii)	 	to develop the Fuel procurement policies, Fuel cost allocation
adjustment factor and other procedures necessary for the O&M Agreement; and
	 
	 	(xiii)	 	any contract in excess of Five Hundred Thousand Dollars ($500,000) if such
contract is not provided for in the most recent BSP II annual budget.






	 	(b)	 	The Engineering and Operating Committee may act only by unanimous approval of
its members and shall refer to the Coordination Committee for resolution any matters
which it does not approve.





     6.08 Actions Requiring Unanimous Coordination Committee Approval. Notwithstanding anything
contained herein to the contrary, any of the following actions require the unanimous act of all
members of the Coordination Committee:




	 	(a)	 	withdrawal of any Owner, except as provided in Section 3.05 and Section 3.06;
	 
	 	(b)	 	termination of this Agreement or sale of the Project or the Plant before the
fiftieth (50th) anniversary of the date of Commercial Operation; and
	 
	 	(c)	 	reduction of size of Plant below 540 MW prior to Financial Closing.





ARTICLE VII



CONTRIBUTIONS; EXPENDITURES




     7.01 Obligation to Pay Project Costs; Trust Account.




	 	(a)	 	Except as otherwise provided in this Agreement, each Owner shall be liable for
Project Costs in proportion to their Ownership Shares and each Owner shall deposit
monies in the Trust Account as required to pay for its proportion of the Project Costs.
Funds deposited into the Trust Account are Plant Property and are for the payment of
Project Costs and otherwise for the account of the Project and the operation,
maintenance or repair of the Plant or other Plant Property, and no Owner shall have any
right, title or ownership interest in the Trust Account other than a beneficial
interest, in proportion to its Ownership Share, nor right to




 









 







	 	 	 
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	 	 	 	withdraw or direct
application of such funds, nor otherwise exercise control over such Trust Account,
except as provided for in this Agreement.
	 
	 	(b)	 	The Operator, on behalf of the Owners, has caused the Trust Account to be
established pursuant to a trust agreement substantially in the form attached hereto as
Schedule 7.01. Each Owner hereby acknowledges that any such funds contributed by it for
deposit in the Trust Account constitute a prepayment of its obligation to pay Project
Costs. Each Owner further acknowledges that its interest in funds in the Trust Account
are subject to applicable rights of set off, recoupment, and such other legal or
equitable defenses as may be available to the Operator, and other Owners under
Applicable Law.





     7.02 Payment Procedures.




	 	(a)	 	Funds to pay for Project Costs shall be requisitioned from the Owners as
follows:






	 	(i)	 	Before the Effective Date, the Operator, on behalf of the
Engineering and Operating Committee, shall issue a written notice to the
Owners, which written notice shall state the amount required to be deposited
into the Trust Account for each Owner (i) to reimburse the Owners for the
Project Costs that have been expended prior to the Effective Date in connection
with Phase I activities but not yet reimbursed by the other Owners, and (ii) to
provide a Progress Payment in the amount of Ten Million Dollars ($10,000,000).
The Owners shall pay such amounts on the Effective Date.
	 
	 	(ii)	 	In the event that the Progress Payment made pursuant to Section
7.02(a)(i) or any subsequent Progress Payment is not sufficient to fund the
completion of all Phase II activities, then prior to the depletion of all
previously made Progress Payments, the Operator, on behalf of the Engineering
and Operating Committee, shall issue a written requisition notice to the
Owners, which written notice shall state the amount required to be deposited
into the Trust Account for each Owner to provide for the Phase II Project Costs
reasonably expected to be expended in excess of previously made Progress
Payments. The Owners shall pay such amounts within thirty (30) days of such
requisition.
	 
	 	(iii)	 	During Phases II, III and IV, unless the Engineering and
Operating Committee directs otherwise, funds shall be requisitioned from the
Owners from time to time as reasonably determined by the Operator. Unless
otherwise directed by the Engineering and Operating Committee, the Operator
shall issue a requisition notice to the Owners no later than the 15th of each
month, which notice shall state amounts required to be deposited into the Trust
Account by each Owner on each Monday (or the next Business Day in the event a
Monday is a bank holiday) of the upcoming month, and include an accounting of
the Project Costs then due and payable (or that will become due and payable
before the end of the upcoming month) and copies of any invoices or other
supporting




 









 







	 	 	 
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	 	 	 	materials. The Owners shall promptly pay such amounts by electronic
funds transfer into the Trust Account on the Monday (or next Business Day) so
indicated on the notice. In no event shall the Engineering and Operating
Committee direct requisitions for the Trust Account Deposits described in this
Section 7.02(a)(iii) in any manner that would require deposits from all Owners
to pay all Project obligations before they become due.
	 
	 	(iv)	 	To the extent funds are available in the Trust Account, the
Operator shall pay all invoices for Project Costs, subject in all respects to
the oversight of the E&O Committee. For purposes of this Agreement, Project
Costs shall only be paid to the extent they are Project Costs identified and
included in
the Project Budget, additional expenses approved by the Engineering and
Operating Committee as Project Costs or required to be expended in response
to an emergency. The Engineering and Operating Committee may alter the
payment procedures set forth in this Section 7.02 by issuance of directives
to the Operator and shall have the right to request information regarding
the Project Costs to be paid.
	 
	 	(v)	 	The Owners shall require Operator to prepare and deliver to the
Owners, not later than forty-five (45) days following the end of each calendar
year during the Term and not later than sixty (60) days following the date on
which this Agreement is terminated, a cash-based reconciliation of Trust
Account Deposits paid during the previous calendar year or, in the case of the
reconciliation done following the termination of this Agreement, the period
from January 1 of the calendar year in which termination of this Agreement
occurs until the end of the Term. Such reconciliation shall also include an
analysis of any differences between Project Costs on a cost basis and the
applicable budget for such Project Costs. Owners may withdraw from the Trust
Account the amount by which such reconciliation indicates the sum of all Trust
Account Deposits exceeded the sum of all Project Costs paid or due and payable
in accordance with this Agreement during the period to which the reconciliation
applies. Not later than twenty (20) days following receipt of such
reconciliation, Owners shall deposit in the Trust Account the amount in
immediately available funds by which such reconciliation indicates the sum of
all Project Costs paid or due and payable in accordance with this Agreement
exceeds the sum of all Trust Account Deposits during the period to which the
reconciliation applies.





     7.03 Reservation of Right to Dispute Payments. If an Owner shall dispute any portion of the
amount of funds requisitioned by the Operator, the Owner shall make the disputed payment but such
payment, if accompanied by notice of the Owner’s protest of the requisition, which must be made
within a commercially reasonable period, shall not jeopardize the Owner’s right to have the Dispute
resolved in accordance with the procedures set forth in Article XIII.



     7.04 Services and Property Contributed by Owners. Except for services of the Operator, for
which any payment shall be made in accordance with the O&M Agreement, and



 









 







	 	 	 
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except in the case of
emergency situations, services or property for the Project or for the operation, maintenance or
repair of the Plant or other Plant Property shall be supplied by an Owner on a cost-reimbursement
basis and only pursuant to authorization, and upon terms approved, by the Engineering and Operating
Committee. Notwithstanding any provision herein to the contrary, no Owner shall be entitled to,
nor shall any Owner receive, any increased Ownership Share as a result of services or property for
the Project or for the operation, maintenance or repair of the Plant or other Plant Property
supplied by the Owner.



     7.05 Emergency Services. In the event of an emergency situation, any Owner may supply
services or property without prior
authorization by the Engineering and Operating Committee when obtaining such authorization is
impracticable in the reasonable judgment of the Owner taking action to obtain such advance
authorization, in which event the terms for such supply shall be as approved by the Engineering and
Operating Committee after the event on a basis consistent with the cost-reimbursement principles
expressed in Section 7.04.



     7.06 Taxes. The Owners shall use their best efforts to have each taxing authority which
imposes taxes or assessments upon Plant Property assess, levy and bill the same to each Owner
separately according to the respective Ownership Shares so that each Owner’s share of the total of
such taxes and assessments shall be solely the responsibility of, and a lien upon, the particular
Owner and its title to its Ownership Share of the Plant Property; and each Owner, in such event,
agrees to so pay the taxes and assessments for which it is solely responsible, or to contest the
same, in such a manner as to prevent involuntary sale or transfer of its title to its Ownership
Share of the Plant Property on account of non-payment of such taxes and assessments. Failure to do
so shall be a material breach of this Agreement. If any such taxes or assessments are assessed,
levied and billed in a manner other than as specified in the preceding sentence, then the Operator
shall be responsible for paying such taxes, and the protest or other contest thereof when
appropriate in the judgment of the Operator or when directed by the Engineering and Operating
Committee, and payments of such taxes shall be considered Project Costs.



     7.07 Fuel. All Fuel, whether obtained for prompt consumption or for reserves, shall be Plant
Property (purchased for the account of each Owner). The cost of Fuel purchased shall be a Project
Cost and shrinkage of Fuel shall be shared by the Owners according to their Ownership Shares.




	 	(a)	 	The Engineering and Operating Committee shall establish practices and
procedures for determining the Fixed Fuel requirements of the Plant.
	 
	 	(b)	 	Fuel, when delivered to the burners at the Plant, shall be charged from
inventory to operation. The cost of Fuel delivered to the burners at the Plant shall
consist of all charges to that account which under the FERC Accounts in effect on the
Effective Date is designated account 501, including the cost of coal and ash handling,
and shall be apportioned among the Owners as follows:






	 	(i)	 	the cost of the Plant’s Fixed Fuel requirements shall be
apportioned among the Owners in accordance with their Ownership Shares; and




 









 







	 	 	 
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	 	(ii)	 	the cost of all other Fuel requirements of the Plant shall be
apportioned among the Owners in the same proportion that their respective
generation scheduled in excess of their Ownership Share of the Minimum Net
Generation bears to the total Net Energy Generation scheduled in excess of
Minimum Net Generation;




provided, however, that for purposes of settling accounts among the Owners for the cost of Fuel
delivered to the burners at the Plant, each unit of Fuel so consumed shall be treated as jointly
owned by the Owners in proportion to their Ownership Shares.




     7.08 Station Power. All station power shall be provided by each Owner according to their
Ownership Shares through on-site self-supply by netting station power usage against Net Energy
Generation on a monthly basis to the fullest extent allowed by Law. If on-site self-supply by
netting of station power usage against Net Energy Generation is allowed only through hourly
netting, all station power shall be provided by each Owner according to their Ownership Shares
through on-site self-supply by netting station power usage against Net Energy Generation on an
hourly basis. If on-site self-supply is not allowed by Law or if the Plant’s station power usage
exceeds its Energy output in a month (or an hour), each Owner shall arrange for its share of the
Plant’s station power, through remote self-supply or third party supplied energy. The E&O
Committee shall establish procedures for Owners to arrange for remote self-supply or third party
supplied station power in the event on-site self supply is not allowed by Law or the Plant’s
station power usage exceeds Plant Energy output in a month (or an hour).



     7.09 Insurance. The Owners shall jointly obtain a single policy or policies insuring Plant
Property and the operations of the Plant against loss or damage from such hazards and risks in such
amounts, for such limits and in such insurance carrier or carriers as may be determined by the
Engineering and Operating Committee in accordance with the following policies:




	 	(a)	 	During Phases I, II, and III of the Project, in accordance with the direction
and specifications of the Engineering and Operating Committee, the Owners shall jointly
procure or cause to be procured and maintain in force policies of comprehensive bodily
injury and property damage liability insurance, pollution liability, professional
liability, extra expense and delay in start up, all-risk builders risk insurance,
employees’ dishonesty bond, automobile liability insurance, workers’ compensation
insurance, and such other policies of insurance as are normally carried by utilities
constructing facilities similar to the Project.
	 
	 	(b)	 	During Phase IV of the Project, in accordance with the direction and
specifications of the Engineering and Operating Committee, the Owners shall jointly
procure or cause to be procured and maintain in force policies of broad form property
insurance, broad form boiler and pressure vessel insurance, workers’ compensation
insurance covering employees of the Operator engaged in the performance of its
responsibilities under the Project Agreements at the job site, comprehensive bodily
injury and property damage liability insurance, pollution liability, professional
liability, employees’ dishonesty bond, automobile liability insurance, and such other
policies of insurance as are normally carried by utilities operating facilities similar
to the Project.




 









 







	 	 	 
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	 	(c)	 	Each Owner shall be named an insured with the other Owners as their interests
appear on all insurance, and when appropriate, the insurance shall carry
cross-liability endorsements.
	 
	 	(d)	 	The insurable values, limits, deductibles, retentions and other special terms
of the Owners Insurance shall be determined by the Engineering and Operating Committee
prior to the placement of such Owners Insurance. After such
determination, a policy of Owners Insurance shall not be changed without the prior
approval of the Engineering and Operating Committee except for minor changes as to
which notification shall be given to the Engineering and Operating Committee.
	 
	 	(e)	 	Each Owner shall be given a copy of the insurance policies forms together with
a line sheet therefore naming the insurers and underwriters and the extent of their
participation.
	 
	 	(f)	 	Each Owner shall have the right, by written notice to the party procuring the
policy, to name any mortgage, trustee or secured party on all or any of the Owners
Insurance policies as loss payees or additional insured as their interests may appear.
	 
	 	(g)	 	Insurance policies procured pursuant to this Section 7.09 shall be primary
insurance for all purposes and shall be so endorsed.
	 
	 	(h)	 	It is expressly understood and agreed that each Owner has an insurable interest
in the Project and may procure for its own account additional insurance with respect to
its interest as it may determine. The cost of such insurance shall be paid by such
Owner from its own funds and the proceeds of such insurance shall be payable to such
Owner. Other Owners shall not have any rights or interest in such insurance or the
proceeds thereof.





     7.10 Assurances of Creditworthiness. Throughout the Term, each Owner and any successors or
permitted assigns thereof shall maintain a level of creditworthiness of at least a Standard &
Poor’s “BBB” issuer credit rating (or, in the case of Owners who do not maintain an issuer credit
rating, the rating of such Owner’s senior unsecured debt not subject to credit enhancement) or an
equivalent rating of a nationally recognized statistical rating organization recognized by the
United States Securities and Exchange Commission (the “SEC”) (the “Minimum Rating”). As of the
Effective Date, the four nationally recognized statistical rating organizations recognized by the
SEC are Moody’s Investors Service, Inc., Fitch, Inc., Standard & Poor’s, and Dominion Bond Rating
Service Limited. Any Owner who, on the Effective Date, does not have a creditworthiness rating
shall provide the other Owners with a copy of their most recent audited financial statements and
any other financial information as may be reasonably requested by the E&O Committee. All Owners
must achieve at least a Minimum Rating at least three (3) months prior to Financial Closing.



 









 







	 	 	 
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	 	(a)	 	After Financial Closing, in order to demonstrate its ability to fulfill its
ongoing obligations under this Agreement, each Owner shall submit to the Engineering
and Operating Committee:






	 	(i)	 	its audited or unaudited balance sheet and income statement on
not less than a quarterly basis and audited annual financial statements, in
each case in the form regularly prepared by such Owner or its accountants for
such period and corresponding periods in previous years;
	 
	 	(ii)	 	evidence that it has a credit rating of at least the Minimum
Rating; and
	 
	 	(iii)	 	such other financial information as may reasonably be
requested by the Engineering and Operating Committee.






	 	(b)	 	If, after review of such financial information, the Engineering and Operating
Committee determines that an Owner does not have a credit rating of at least the
Minimum Rating, such Owner shall be required to deposit, in addition to any other
amounts required to be deposited pursuant to this Agreement, a sum equal to the largest
two (2) weeks of Project Costs anticipated to be requisitioned in the next twelve (12)
months (as determined by the E&O Committee in its sole discretion) into the Trust
Account until such Owner again achieves a credit rating of at least the Minimum Rating.





     7.11 Right to Obtain Financing. Each Owner shall have the right to obtain financing to
purchase its Ownership Share in the Project (and its share of Project Costs) on the basis of loans,
bonds, or otherwise; provided that such financing is non-recourse and off-balance sheet to all
other Owners, or on other terms acceptable to the other Owners, as the case may be (“Financing”).
Accordingly, the Owners agree that: (i) this Agreement and the other Project Agreements are
intended to comply with standards and requirements for a multi-owner financed transaction so as to
be acceptable to the Owners’ Lenders; (ii) each Owner shall cooperate in good faith with each other
so as to satisfy the requirements of each Owner’s Financing arrangements, including where
appropriate, the making of such amendments to the terms of this or any other Project Documents so
long as such amendments are reasonable in scope and do not materially alter the economic benefits
of this Agreement; and (iii) each Owner shall execute customary consents and estoppels and provide
customary opinions, resolutions and related documents as may be reasonably required, as well as
information regarding such Owner as may be reasonably requested by the other Owners’ lenders.
Notwithstanding the foregoing, an Owner’s ability or inability to obtain third party project
financing for its participation in the Project shall not be a condition precedent to such Owner’s
obligations under this Agreement or any other Project Agreement.



ARTICLE VIII



CASUALTY LOSS; CONDEMNATION




     8.01 Repair or Replacement. If, due to any cause, the Plant or any other Plant Property shall
be damaged or destroyed, the Coordination Committee shall within thirty (30) days thereafter
estimate whether the cost of repair or replacement is less than, or equal to or more



 









 







	 	 	 
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than, Thirty
Million Dollars ($30,000,000), excluding any insurance proceeds. If such cost of repair or
replacement shall be estimated by the Coordination Committee to be less than Thirty Million Dollars
($30,000,000), excluding any insurance proceeds, the Operator shall be directed to cause, as
expeditiously as is possible, the damage or destruction to be repaired or replaced so as to restore
the Plant (or other Plant Property) to substantially the same general character and use as existed
immediately prior to such damage or destruction. The cost of such repair or replacement shall
constitute Project Costs. If such cost of repair or replacement is estimated by the Coordination
Committee to be Thirty
Million Dollars ($30,000,000) or more, excluding any insurance proceeds, the same shall be
repaired or replaced in the manner to be then agreed upon by the Owners, but if the Owners shall be
unable to agree, within forty-five (45) days after such damage or destruction has occurred, upon
the manner of such repair or replacement, or upon any alternative disposition of the matter, then
the Operator shall be directed to cause the damage or destruction to be repaired or replaced so as
to restore the Plant (or other Plant Property) to substantially the same general character and use
as existed immediately prior to such damage or destruction and the cost thereof shall constitute
Project Costs.



     8.02 Eminent Domain. If a part of the Plant Property is taken from the Owners by the exercise
of the power of eminent domain (or by voluntary conveyance in lieu thereof), the Engineering and
Operating Committee, within thirty (30) days after such taking, shall determine whether the part
taken can be replaced and/or whether the remainder of the Plant Property can be restored in such a
way that the Plant and other Plant Property, considered as a whole, will have substantially the
same Net Effective Generating Capacity and operating and economic characteristics as existed
immediately prior to such taking, and if so, whether the estimated cost of such replacement and/or
restoration is less than, or equal to or more than Thirty Million Dollars ($30,000,000).




	 	(a)	 	If all of the Plant is taken from the Owners by the exercise of the power of
eminent domain (or by voluntary conveyance in lieu thereof), or if a part of the Plant
Property is thus taken and the Engineering and Operating Committee determines, pursuant
to this Section 8.02, that the part taken cannot be replaced and/or the remainder of
the Plant Property cannot be restored in such a way that the Plant and other Plant
Property, considered as a whole, will have substantially the same Net Effective
Generating Capacity and operating and economic characteristics as existed immediately
prior to such taking, then this Agreement shall be terminated by the Owners upon
request by any Owner.
	 
	 	(b)	 	If a part of the Plant Property is taken from the Owners by the exercise of the
power of eminent domain (or by voluntary conveyance in lieu thereof), and if the
Engineering and Operating Committee determines, pursuant to this Section 8.02, that the
part so taken can be replaced and/or the part not taken can be restored so that the
Plant and other Plant Property, considered as a whole, will have substantially the same
Net Effective Generating Capacity and operating and economic characteristics as existed
immediately prior to such taking, then:






	 	(i)	 	if the cost of such replacement and/or restoration is estimated
by the Engineering and Operating Committee to be less than Thirty Million
Dollars ($30,000,000), the Operator shall be directed to cause, as




 









 







	 	 	 
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	 	 	 	expeditiously as possible, such replacement and/or restoration to be
accomplished so as to restore the Plant and other Plant Property, considered as
a whole, to substantially the same Net Effective Generating Capacity and
operating and economic characteristics as existed immediately prior to such
taking; and the cost thereof shall constitute Project Costs; or
	 
	 	(ii)	 	if the cost of such replacement and/or restoration is estimated
by the Engineering and Operating Committee to be Thirty Million Dollars
($30,000,000) or more, the Operator shall be directed to cause such replacement
and/or restoration to be accomplished in the manner agreed upon by the Owners,
but if the Owners shall be unable to agree, within forty-five (45) days after
the taking has occurred, upon the manner of such replacement and/or restoration
or upon any alternative disposition of the matter, then the Operator shall be
directed to cause such replacement and/or restoration to be accomplished so as
to restore the Plant and other Plant Property, considered as a whole, to
substantially the same Net Effective Generating Capacity and operating and
economic characteristics as existed immediately prior to such taking; and the
cost thereof shall constitute Project Costs.





ARTICLE IX



LIABILITY




     9.01 Limitation and Release of Liability to Other Owners. Except to the extent (1) resulting
from Willful Action, (2) covered by valid and collectible Owners’ Insurance, or (3) otherwise
provided in this Agreement, no Owner or any of its directors, officers or employees and no
Committee member (acting in such capacity in good faith) shall be obligated to discharge, and is
hereby released by the other Owners from, any liability to any other Owner for any direct, indirect
or consequential loss, damage, claim, cost, charge or expense of any kind or nature to or involving
the property of any such other Owner that has resulted or may result in the future (whether or not
resulting from the negligence of any Owner, its directors, officers, members, affiliates, employees
or any other Person or entity whose negligence would be imputed to such Owner) from:




	 	(a)	 	the performance or non-performance of services or the supplying of, or failure
to supply, any property, in connection with the Project, or the ownership, operation,
maintenance or repair of the Plant or other Plant Property, or
	 
	 	(b)	 	the past or future performance or non-performance of the obligations of any
Owner under this Agreement or any Project Agreement.




Any Owner that obtains a judgment against another Owner and its directors, officers and employees
(or any of them) for a liability covered either by the release provided in the preceding sentence
or by valid and collectible Owners’ insurance shall not execute, levy or otherwise enforce the same
(including recording or otherwise effecting a judgment lien) against any such other Owner, its
directors, officers or employees, or the property of any of them.




 









 







	 	 	 
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     9.02 Waiver of Certain Damages. Notwithstanding any other provision of this Agreement (except
to the extent indemnification payments are made as a result of an indemnified Party’s obligation to
pay special, indirect, incidental, punitive or consequential damages to a third party (excluding
any Owner’s or Party’s affiliates, officers, directors, shareholders or members) as a result of
actions
included in the protection afforded by the indemnification contained herein), no Owner or
Party (nor any of their affiliates, contractors, consultants, officers, directors, shareholders,
members or employees) shall be liable for special, indirect, incidental, punitive or consequential
damages under, arising out of, due to, or in connection with its performance or non-performance of
this Agreement or any of its obligations herein, whether based on contract, tort (including,
without limitation, negligence), strict liability, warranty, indemnity or otherwise.



     9.03 Assignment of Rights. In the event any insurer providing Owners’ Insurance refuses to
pay any judgment obtained by an Owner against another Owner on account of liability covered by such
insurance, the Owner against which the judgment is obtained, at the request of the Owner which
obtained such judgment and in consideration for the release granted in Section 9.01, shall execute
such documents as may be necessary to effect an assignment of its contractual rights against the
non-paying insurer and thereby give the prevailing Owner which obtained the judgment the
opportunity to enforce its judgment directly against such insurer.



     9.04 Reduction of Damages. For the purpose of relieving each Owner, its directors, officers
and employees, of any liability to make contribution to other non-Owner tortfeasors, the release
stated in Section 9.01 hereby effects a reduction of all injured Owners’ damages recoverable
against all other non-Owner tortfeasors to the extent of the pro rata share of the other Owners,
their directors, officers and employees. The provisions of this Section 9.04 are intended to be
cumulative to any other release heretofore set out.



     9.05 Shared Liability. Liability of one or more Owners for any loss, damage, claim, cost,
charge or expense of any kind or nature (including direct, indirect or consequential loss, damage,
claim, cost, charge or expense) suffered or incurred by any party other than an Owner, whether or
not due to the negligence of any Owner, its directors, officers, employees or any other person or
entity whose negligence would be imputed to such Owner, that results from the performance or
non-performance of services or the supplying of, or failure to supply, any property, in connection
with the Project or the ownership, operation, maintenance or repair of the Plant or other Plant
Property, shall, as between the Owners, be shared by them in proportion to their Ownership Shares
unless such liability shall have resulted from the Willful Action of any Owner, in which case the
Owner(s) whose Willful Action resulted in the loss, damage, claim, charge or expense shall be
liable pursuant to Section 9.06. Payments made in settlement of any claim of liability shall for
these purposes be construed as a payment discharging liability in which the Owners shall share as
provided in this Section 9.05.



     9.06 Indemnification for Willful Actions. Each Owner shall be responsible for the
consequences of its Willful Actions and shall indemnify and hold harmless the other Owners from the
consequences thereof.



     9.07 Availability of Insurance Proceeds. The provisions of this Article IX shall not be
construed to relieve any insurer of its obligation to pay any insurance proceeds in accordance



 









 







	 	 	 
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with
the terms and conditions of policies of insurance maintained in force by the Owners, or any or some
of them.



     9.08 Operator Indemnity. The reference to Owner or Owners in this Agreement shall include any
Owner while acting as Operator.



ARTICLE X



ENTITLEMENT TO ENERGY AND CAPACITY; INTERCONNECTION




     10.01 Interconnection and Transmission Upgrade Allocation Agreement. Contemporaneously with
the execution of this Agreement, the Owners shall enter into the Interconnection and Transmission
Upgrade Allocation Agreement, substantially in the form attached hereto as Schedule 10.01 (the
“Interconnection and Transmission Upgrade Allocation Agreement”).



     10.02 Generation Entitlement. Each Owner shall have entitlement to the Plant’s electrical
generation as follows, subject to this Article X:




	 	(a)	 	Initial Production. During Phase III, each Owner shall be entitled to its
Operating Capacity Entitlement and its Ownership Share of Net Energy Generation
including all that produced by Performance Testing, URGE Testing or through Plant
start-up procedures. Each Owner shall take delivery of such Capacity and Energy at the
Point of Interconnection. The Owners shall cause the Operator to provide the Owners
with a schedule of when the Plant will be producing Energy related to testing. If an
Owner cannot use Capacity and Energy produced during testing, then the Owners shall
authorize the Operator to dispose of such Capacity and Energy in a commercially
reasonable manner, including, but not limited to, transacting Energy in the Midwest ISO
energy market or as unscheduled Energy into the Otter Tail control area. For any such
transactions, the Owners shall cause the Operator to collect funds for any and all
settlements and disburse the net proceeds (after deducting its reasonable transaction
costs) to the Owner(s) based on its unscheduled amounts.
	 
	 	(b)	 	Regular Production Allocation. During Phase IV, each Owner shall own its
Operating Capacity Entitlement and its Ownership Share of Net Energy Generation (or
Ancillary Services if so elected pursuant to Section 10.03) produced by the Plant.
	 
	 	(c)	 	Minimum Obligations. When any Owner schedules its Ownership Share of Minimum
Net Generation (or a greater amount, not to exceed its Ownership Share), every other
Owner shall be required to schedule their Ownership Share of Minimum Net Generation (or
a greater amount, not to exceed its Ownership Share). In the event one or more Owners
with Ownership Shares equal to or greater than (*) desire that the Plant not be
operated when it is otherwise available
to be operated, and one or more Owners desire to schedule Energy and/or




 









 







	 	 	 
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	 	 	 	Ancillary
Services from the Plant, the Owner or Owners desiring that the Plant not be operated
may, in lieu of operating the Plant, provide an equal amount of Energy and/or
Ancillary Services from other sources to the Owner(s) that desires to schedule
Energy and/or Ancillary Services from the Plant; any such Energy and/or Ancillary
Services provided from other sources shall be delivered to the Point of
Interconnection (or such other point of delivery as may be agreed) in an amount
equal to that desired to be scheduled. In the event any Owner with less than or
equal to a (*) Ownership Share wishes to schedule Energy from the Plant, and any
other Owner or Owners with greater than (*) Ownership Share do not wish to schedule
Energy from the Plant when the Plant is available, the Owner or Owners not desiring
to schedule shall have the option of providing lower cost energy from other sources
as may be available to the Owner wishing to schedule from the Plant at such point of
delivery as may be mutually agreed; provided however, that if one or more Owners
with an aggregate Ownership Share of greater than or equal to (*) wish to schedule
Energy from the Plant, then this option shall not apply and all Owners shall
schedule at least their respective Ownership Share of the Minimum Net Generation as
provided above.
	 
	 	(d)	 	Disposition of Plant Output. The Owners shall cause or otherwise direct the
Operator to keep the system operator for each Owner advised of the Net Effective
Generating Capacity (or Operating Capacity if lower). It is the intent of the Owners
that the Plant will be operated as a high availability, base load Network Resource
within the parameters of Prudent Utility Practice in order to maximize the life of the
Plant and to avoid high maintenance costs that may be incurred due to operation of the
Plant above its Net Effective Generating Capacity. It is recognized that at times of
testing, when essential to fulfill applicable reliability organization or regional
transmission organization obligations and in emergencies, it may become necessary to
operate the Plant for short periods of time above its Net Effective Generating Capacity
(up to the Rated Capacity). The Operator shall be directed by the Owners to keep such
operations to a minimum.






	10.03	 	Ancillary Services.






	 	(a)	 	Payment for Ancillary Services Generally. The Owners acknowledge that the
markets for Ancillary Services are likely to evolve and that some or all Ancillary
Services from the Plant may be sold either pursuant to a regional or other tariff rate,
or a competitive market (e.g., allowing bidding) may develop for some or all Ancillary
Services. Regardless of the specific market structures that exist at any point in
time, the sale of Ancillary Services by the Owners from the Plant shall follow the
following principles:






	 	(i)	 	if the particular Ancillary Service is subject to a Midwest ISO
or other applicable tariff, then the Owners shall be paid for Ancillary Service
on a pro rata based on each Owner’s Ownership Share; and
	 
	 	(ii)	 	if a competitive market exists for the particular Ancillary
Service then an Owner or Owners may sell the Ancillary Service into the
competitive




 









 







	 	 	 
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	 	 	 	market and the selling Owner shall be entitled to the proceeds from
such sale;






	 	 	 	provided, however, the remaining provisions of this Section 10.03 shall apply to any
sales made under the immediately preceding clauses (i) or (ii).
	 
	 	(b)	 	Operating Reserves. The Owners hereby direct the E&O Committee, as soon as
practicable, to determine the number of megawatts of spinning reserve and supplemental
reserve Ancillary Services that the Plant, based on the Plant’s design, will be able to
reasonably provide (the “Total Operating Reserves”). The E&O Committee may update the
Total Operating Reserves from time to time. Each Owner shall be entitled to provide or
sell Operating Reserves from the Plant in an amount no greater that its pro rata share
of Total Operating Reserves based on its Ownership Share.
	 
	 	(c)	 	Reactive Power. Each Owner owns its Ownership Share of all reactive power
produced or available from the Plant and shall have the right to sell such reactive
power into the Midwest ISO market in accordance with this Section 10.03 or self-supply
its own needs with its share of reactive power from the Plant; except that if the
Midwest ISO (or other transmission operator authorized to make such a request) requires
any Owner or the Plant Operator to provide Reactive Power from the Plant and to the
extent the Plant is operated as a single plant as determined under Section 10.03(d)
below, then the revenues and costs recovered by that Owner under the applicable tariff
shall be allocated pro rata to the Owners based on each Owner’s Ownership Share; or to
the respective Owner(s) providing such reactive power to the extent the Plant is
operated on a pseudo-tie basis as determined under Section 10.03(d) below.
	 
	 	(d)	 	Load Regulation and Frequency Response Service. The Owners hereby direct the
E&O Committee, as soon as practicable, to determine the extent to which Load Regulation
and Frequency Response Service can be supplied by the Plant (“Total Load Regulation”).
Each Owner shall be entitled to provide or sell Load Regulation and Frequency Response
Service from the Plant in an amount no greater than its pro rata share of Total Load
Regulation based on its Ownership Share.
	 
	 	(e)	 	Plant Operations; Pseudo-Tie. Because the Plant is interconnected with
transmission systems whose owners are members of the Midwest ISO, the E&O Committee
shall review the Midwest ISO Tariff Business Practices that are in effect at the time
of Commercial Operation and determine whether the Plant will be operated as separate
physical generators for the Owners on a pseudo-tie basis or as a single operating
entity, taking into consideration the Owners’ ability to self-supply their needs for
Reactive Power and other Ancillary Services from the Plant, and other appropriate
factors (with appropriate accounting between the Owners) and the costs of the various
operating options available to the Owners at
that time. The E&O Committee shall also determine the amount of Reactive Power in
VARS that can be supplied by the Plant from time to time and the effect




 









 







	 	 	 
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	 	 	 	On Net
Available Capacity of the Plant, and so inform the Operator for purposes of possible
supply of Reactive Power to the market and for scheduling of the Net Available
Capacity, associated Energy and bidding or self-supplying Reactive Power by the
Owners. The determination of the E&O Committee may be revised from time to time as
determined by the Owners through the E&O Committee. Should the E&O Committee
determine to operate the Plant on a pseudo-tie or similar basis as if individual
units were supplying such Reactive Power, the Operator may supply any unscheduled
Reactive Power into the market to the extent individual Owners are not harmed and
deposit the proceeds of such market transactions pro rata to Owners not scheduling
or self-supplying Reactive Power during that hour of operation.
	 
	 	(f)	 	In the event an Owner takes Plant output in the form of Ancillary Services
pursuant to this Agreement, the Owners shall cause the Operator to calculate a
reduction in that Owner’s entitlement to Net Energy Generation and/or Operating
Capacity, as appropriate.
	 
	 	(g)	 	Midwest ISO Directives. Notwithstanding anything to the contrary in Sections
10.03(a) through 10.03(f) above, each Owner that is a transmission-owning member or
market participant in the Midwest ISO shall comply with all directives from the Midwest
ISO regarding supply of Ancillary Services from the Plant.





     10.04 Midwest ISO Market Development. The Owners acknowledge that the final development of
the Midwest ISO market and operations will be progressing during the development of the Project and
that the final scheduling requirements and business practices of Midwest ISO could have a
significant impact on the scheduling of the Net Energy Generation. In addition, the Owners could
incur increased operating costs due to redispatching orders associated with Midwest ISO market or
reliability organizational requirements during the life of the Plant. The E&O Committee shall
consider, develop and provide policies to equitably share the cost burden between Owners depending
upon their membership or market participation or non-membership or non-market participation from
time to time when the Plant schedule is reduced or affected by the Midwest ISO market or
reliability organization directives without specific Owner causation.



     10.05 Data to be Provided to the Midwest ISO. All Owners, whether or not Midwest ISO members,
shall provide to the Midwest ISO in a timely manner, either directly or through the Operator or an
authorized agent, the operational data the Midwest ISO reasonably requires for scheduling the
output of the Plant, as set forth in Section 38.8.4 of the Midwest ISO energy markets tariff
(“EMT”) and related business practices manuals and explanatory documents. Unless otherwise mutually
agreed, no Owner shall be required to provide on behalf of any other Owner to the Midwest ISO: (i)
any information that is required of a Market Participant; and
(ii) any information required for pseudo-tie operation by individual Owners if the Plant is
operated on a pseudo-tie basis.



     Any Owner not fully participating in the Midwest ISO Energy Markets with respect to its
Ownership Share shall follow any applicable practices and procedures set forth in Section



 









 







	 	 	 
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38.8.4.5
of the EMT. Any Owner that is fully participating in the Midwest ISO Energy Markets shall be
permitted to use the Midwest ISO market redispatch.



ARTICLE XI



DEFAULTS AND REMEDIES




     11.01 Event of Default. Any of the following shall constitute an event of default by an Owner
under this Agreement (each, an “Event of Default”):




	 	(a)	 	the failure of any Owner (i) to pay funds to the Trust Account, upon
requisition by the Operator on or before the date due, (ii) to provide the further
assurances specified by the Coordination Committee at the times and in the amounts
specified by the Coordination Committee in its notice to the Owners, or (iii) to pay
funds to the Trust Account necessary to cure an Event of Default by that Owner in the
ratio that its Ownership Share bears to the total Ownership Shares of the
non-defaulting Owner or as otherwise required by this Agreement; and
	 
	 	(b)	 	the failure of any Owner to perform or observe any of the other covenants and
conditions of this Agreement to be performed or observed by it, or the failure of any
Owner to perform or observe any of the covenants and conditions to be performed or
observed by it under any other contract made by the Owners for the Project or for the
ownership, operation, maintenance or repair of the Plant or other Plant Property, which
continues for a period of five (5) days after notice of such failure is given to it by
any other Owner (unless a different notice period is expressly otherwise expressly
provided for in this Agreement, in which case the other notice period shall control).





     11.02 Contribution by Non-Defaulting Owners. Upon the occurrence of an Event of Default by
any Owner, the defaulting Owner’s rights, including, without limitation, the right to vote its
Ownership Share under this Agreement, except for the cure right in Section 11.02(b), shall be
suspended while all of its obligations shall continue. In addition, the non-defaulting Owners
shall have the right, but not the obligation, to remedy the same (if capable of remedy by them) by
commencing and continuously pursuing such remedy until completed, either by paying the necessary
funds and/or rendering the necessary performance, with each non-defaulting contributing Owner
contributing to the cost of such remedy in the ratio that its Ownership Share bears to the total
Ownership Shares of all non-defaulting contributing Owners. No such payment or performance by the
non-defaulting contributing Owners shall be construed as an undertaking of the non-defaulting
contributing Owners to assume, guarantee, endorse, contingently agree to purchase or to provide
funds for the payment of, or otherwise become liable in respect of, any present or future
obligations of the defaulting Owner to any Party or third party.




	 	(a)	 	Upon any such payment or performance by non-defaulting contributing Owners, the
defaulting Owner’s entitlement to Capacity and Energy generated by the
Plant, including the defaulting Owner’s Operating Capacity Entitlement, any
receivables and all related rights set forth in Article X and the Interconnection
and Transmission Upgrade Allocation Agreement, or otherwise in this Agreement,
including, without limitation, the right to vote its Ownership Share, shall be




 









 







	 	 	 
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	 	 	 	deemed transferred to such non-defaulting contributing Owners in proportion to their
Ownership Shares (based on the ratio that each non-defaulting Owner’s Ownership
Share bears to the total Ownership Shares of all non-defaulting Owners) and the
defaulting Owner shall have no ownership or other rights with respect to such Energy
or Operating Capacity Entitlement.
	 
	 	(b)	 	For a period of sixty (60) days from the date of the Event of Default, the
defaulting Owner or a Lender may effect a repurchase of its Operating Capacity
Entitlement by paying to the respective non-defaulting contributing Owners the total
amount of money (and/or the reasonable equivalent in money for services or property
provided) paid by each non-defaulting contributing Owner, together with interest
thereon at a rate of interest one percent (1%) greater than the “prime rate” of
interest published in The Wall Street Journal, Eastern Edition, from the date of
expenditure by the non-defaulting contributing Owners to the date of payment by the
defaulting Owner; provided, however, that such repurchase shall not entitle the
defaulting Owner to any Capacity or Energy sold, used or scheduled from the date of
non-payment or non-performance through such payment date, including any proceeds or
receivables relating thereto, which shall remain for the account of the non-defaulting
contributing Owners. If the defaulting Owner has not cured its default during the
sixty (60) day cure period in this Section, such Event of Default shall be incurable
and the non-defaulting contributing Owners shall have the right to continue to exercise
their rights under this Section 11.02 for the remainder of the Term.





     11.03 Disputed Event of Default. If any Owner shall dispute that an Event of Default under
this Agreement has occurred, such Owner shall pay the disputed payment or perform the disputed
obligation, but may do so under protest which shall be in the form of a written notice to the other
Owners. In the event it is determined by a court of competent jurisdiction that such Owner is
entitled to a refund of all or a portion of the disputed payment or is entitled to the reasonable
equivalent in money for services or property provided for the performance of the disputed
obligation, the other Owners shall pay such amount to said Owner with interest at the interest rate
referred to in Section 11.02(b) from time to time in effect from the date of payment or performance
of the disputed obligation to the date of reimbursement. Such reimbursement shall be shared by the
other Owners in the ratio that their respective Ownership Shares bear to the total of all their
Ownership Shares unless otherwise prescribed by the decision of the arbitrators (or court order) in
the aforementioned arbitration (or court) proceedings.



     11.04 No Waiver. No waiver by an Owner of its rights with respect to an Event of Default
under this Agreement shall be effective unless all non-defaulting Owners waive their similar rights
and any such waiver shall not be deemed a waiver with respect to any subsequent default. No delay,
short of the statutory period of limitations, in asserting or enforcing any right hereunder shall
be deemed a waiver of such right.



     11.05 Cumulative Rights. The rights and remedies provided in this Article XI shall be in
addition to the rights and remedies of the Owners found elsewhere in this Agreement or under any
other Project Agreement or other legal or equitable relief that may be otherwise available.



 









 







	 	 	 
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ARTICLE XII



RELATIONSHIP OF PARTIES




     12.01 Nature of Obligations. The covenants, obligations and liabilities of the Owners are
intended to be several and not joint, and nothing herein contained shall be construed to create an
association, joint venture, trust or partnership, or to impose a trust or partnership covenant,
obligation or liability on or with regard to any one or more of the Owners. Each Owner shall be
individually, responsible for its own covenants, obligations and liabilities as herein provided.
No Owner or group of Owners shall be under the control of or shall be deemed to control any other
Owner or the Owners as a group. No Owner shall be the agent of or have a right or power to bind
any other Owner without its express written consent, except as provided in this Agreement or in any
other Project Agreements.



     12.02 Tax Status. The Owners hereby elect to be excluded from the application of Subchapter K
of Chapter 1 of Subtitle A of the Internal Revenue Code of 1986, or such portion or portions
thereof as may be permitted or authorized by the Secretary of the Treasury or his delegate insofar
as such subchapter, or any portion or portions thereof, may be applicable to the Owners under this
Agreement.



ARTICLE XIII



DISPUTE RESOLUTION




     All disputes arising under this Agreement (a “Dispute”) shall be addressed by the Coordination
Committee. Any Owner can request that a Dispute be brought before the Coordination Committee by
delivering a written request to the Coordination Committee. The Coordination Committee shall meet,
negotiate and attempt in good faith to resolve the Dispute quickly, informally and inexpensively.
In the event the Coordination Committee cannot resolve the Dispute within thirty (30) days after
commencement of negotiations, any Party may seek available legal remedies to resolve the Dispute,
whether at law or equity.



ARTICLE XIV



TERM




     14.01 Term. This Agreement shall become effective on the Effective Date and, unless earlier
terminated pursuant to this Agreement, shall
continue in effect for a period extending through the fiftieth (50th) anniversary
of the date of Commercial Operation, but shall continue indefinitely past such fiftieth
(50th) anniversary unless any Owner gives written notice not less then two (2) years
prior to the fiftieth (50th) anniversary (the “Termination Notice”) that it desires to
terminate this Agreement on such fiftieth (50th) anniversary or at any time thereafter.
The Termination Notice shall specify a date that this Agreement shall terminate that is no sooner
than two (2) years after the date of the Termination Notice (the “Termination Notice Period”). The
Coordination Committee shall, within sixty (60) days after the date of the Termination Notice,
determine whether to sell the Plant as a going concern on a date as near as possible to the end of
the Termination Notice Period or to decommission the Plant so that it ceases Commercial Operation
at the end of the Termination Notice Period. If the Coordination Committee, with the approval of a
Double Majority, approves the sale of the Plant or its decommissioning, the Plant shall be sold or
decommissioned. The date that all actions necessary to complete the windup of



 









 







	 	 	 
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the Plant have been
completed is referred to herein as the “Termination Date,” and the period beginning on the
Effective Date and ending on the Termination Date is referred to herein as the “Term.”



     14.02 Windup Events. In connection with any termination of this Agreement, the Owners shall
complete the Windup Events. The Windup Events shall include the following actions by the
Engineering and Operating Committee or its designee:




	 	(a)	 	the termination of all Project Agreements upon the completion of the Windup
Events in accordance with the terms thereof, the cancellation costs for which shall
become Project Costs;
	 
	 	(b)	 	the timely disposition of all Plant Property by sale, auction, partition or
otherwise;
	 
	 	(c)	 	 the deposit of any proceeds from the disposition in the Trust Account
(provided, however, than an Owner that withdraws from the Project pursuant to Section
3.05(b)(i) of this Agreement shall not be entitled to receive any payment paid by such
Owner in connection with such withdrawal pursuant to Section 3.05(b)(i) of this
Agreement or otherwise); and
	 
	 	(d)	 	any other steps necessary steps for the winding-up of the Project, including
the disbursement to the Owners proportionately based on Ownership Shares of any balance
remaining in the Trust Account after the payment of all obligations related in any way
to the Project, the Plant or other Plant Property.





     14.03 Termination by Agreement. This Agreement may be terminated at any time by the unanimous
written agreement of all the Owners and shall automatically terminate if at any time all the
Ownership Shares become vested in a single Owner.



     14.04 Return of Real Property to Otter Tail. In the event this Agreement terminates for any
reason prior to Financial Closing, then all real property rights previously owned by Otter Tail and
transferred for the benefit of the Project shall be transferred and the Owners shall transfer title
thereto to Otter Tail,
free and clear of all liens or encumbrances and Otter Tail shall return any funds previously
paid to Otter Tail by Owners therefore.



ARTICLE XV



REPRESENTATIONS, WARRANTIES




     15.01 Representations and Warranties. Each Owner represents and warrants as follows:




	 	(a)	 	it is, as applicable, an agency, cooperative corporation, consumers power
district, municipal corporation and political subdivision, corporation duly organized,
validly existing and in good standing under the laws of the state of its formation and
authorized to conduct business in South Dakota;
	 
	 	(b)	 	it has the power and authority to enter into and perform this Agreement and is
not prohibited from entering into this Agreement or discharging and performing all




 









 







	 	 	 
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	 	 	 	covenants and obligations on its part to be performed under and pursuant to this
Agreement;
	 
	 	(c) 	 	it has taken all action required by Applicable Law in order to approve, execute
and deliver this Agreement;
	 
	 	(d)	 	the execution and delivery of this Agreement, the consummation of the
transactions contemplated herein and the fulfillment of and compliance by such Owner
with the provisions of this Agreement will not conflict with or constitute a breach of
or a default under or require any consent, license or approval that has not been
obtained pursuant to any of the terms, conditions or provisions of any law, rule or
regulation, any order, judgment, writ, injunction, decree, determination, award or
other instrument or legal requirement of any court or other agency of government, the
documents of its formation or any contractual limitation, restriction or outstanding
trust indenture, deed of trust, mortgage, loan agreement, lease, other evidence of
indebtedness or any other agreement or instrument to which it is a party or by which it
or any of its property is bound and will not result in a breach of or a default under
any of the foregoing;
	 
	 	(e)	 	it has taken all such action as may be necessary or advisable and proper to
authorize this Agreement, the execution and delivery hereof, and the consummation of
transactions contemplated hereby;
	 
	 	(f)	 	there are no bankruptcy, insolvency, reorganization or receiverships pending or
being contemplated by it, or to its knowledge threatened against it;
	 
	 	(g)	 	to its knowledge, there are no actions, proceedings, judgments, rulings or
orders issued by, or pending before any court or other governmental body that would
materially adversely affect its ability to perform its obligations under this
Agreement; and
	 
	 	(h)	 	this Agreement is a legal, valid and binding obligation of such Owner
enforceable in accordance with its terms, except as limited by laws of general
applicability limiting the enforcement of creditor’s rights or by the exercise of
judicial discretion in accordance with general principles of equity.





ARTICLE XVI



MISCELLANEOUS




     16.01 Publicity Policy. In recognition of the requirements and desire of the Parties to
disclose information regarding their ownership and involvement with BSP II and its activities, a
Party may:




	 	(a)	 	disclose information regarding BSP II as may be required by any Applicable Law;
	 
	 	(b)	 	provide information regarding BSP II to its Affiliates, employees, agents,
lenders, investors, consultants, advisors, contractors, accountants and counsel; and




 









 







	 	 	 
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	 	(c)	 	 publicize to any third-party (including, but not limited to, through press
releases and other media) information about the general activities of BSP II and any
otherwise publicly available information; provided, however, Parties shall seek to
avoid publicizing to third parties:






	 	(i)	 	financial information about BSP II, including the economics of
the Project, except as required to obtain financing or to update rating
agencies or an Owner’s lender;
	 
	 	(ii)	 	information regarding other Parties;
	 
	 	(iii)	 	information a Party specifically identifies as commercially sensitive
(such as information about ongoing Project negotiations); and
	 
	 	(iv)	 	information respecting the positions of BSP II on federal or
state policy matters (unless consistent with the policy goals or a policy
initiative of BSP II as generally understood by the Parties).




If a Party
desires to release information described in Sections 16.01(c)(i)-(iv), then that Party
shall describe the intended release of information to the E&O Committee and the E&O Committee shall
respond promptly to the Party with any concerns about such release.




     16.02 Successors and Assigns; Assignment. This Agreement shall inure to the benefit of and be
binding upon the successors and assigns of the Owners and Parties hereto, except as otherwise
explicitly not permitted herein.



     16.03 Notices. Notices required by this Agreement from a Party hereto shall be addressed to
the other Parties, at the addresses noted in Exhibit A, and may be updated from time to time by
written notice to all Parties. Any notice, request, consent, or other communication required or
authorized under this Agreement to be given by one
Party to another Party shall be in writing. It shall either be hand delivered or mailed,
postage prepaid, to the representative of said Party. If mailed, the notice, request, consent or
other communication shall be simultaneously sent by facsimile or other electronic means. Any such
notice, request, consent, or other communication shall be deemed to have been received by the close
of the Business Day on which it was hand delivered or transmitted electronically (unless hand
delivered or transmitted after the close of business, in which case it shall be deemed received at
the close of the next Business Day). Real-time or routine communications concerning the operation
of the Joint Facilities shall be exempt from this Section 16.03.



     16.04 Force Majeure. The performance of any obligation required hereunder shall be excused
during the continuation of any Force Majeure Event suffered by the Owner whose performance is
hindered in respect thereof, and the time for performance of any obligation that has been delayed
due to the occurrence of a Force Majeure Event shall be similarly extended. The Owner experiencing
the delay or hindrance shall use reasonable efforts to notify the other Owners in writing of the
occurrence of such Force Majeure Event and the anticipated period of delay within ten (10) days
after the commencement of the Force Majeure Event, provided that the failure of the Owner
experiencing the delay or hindrance to notify the other Owners within



 









 







	 	 	 
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such ten (10) day period
shall not preclude such Owner from claiming a Force Majeure Event hereunder. Each Owner suffering
a Force Majeure Event shall take, or cause to be taken, such action as may be necessary to overcome
or otherwise to mitigate, in all material respects, the effects of any Force Majeure Event suffered
by any of them and to resume performance hereunder as soon as practicable under the circumstances.



     16.05 Waiver. Failure to enforce any right or obligation by any Owner with respect to any
matter arising in connection with this Agreement shall not constitute a waiver as to that matter
nor to any other matter. Any waiver by any Owner or Party hereto of its rights with respect to a
default under this Agreement or with respect to any other matters arising in connection with this
Agreement must be in writing. Such waiver shall not be deemed a waiver with respect to any
subsequent default or other matter.



     16.06 Survival. Notwithstanding any provisions herein to the contrary, the confidentiality
obligations set forth in Section 16.01, the indemnity obligations set forth herein and the
limitations on liabilities set forth herein shall survive (in full force) the expiration or
termination of this Agreement, and shall continue to apply to all Owners and Parties hereto that
either terminate or transfer their interest in this Agreement even after such termination or
transfer.



     16.07 Severability. If any of the terms of this Agreement are finally held or determined to
be invalid, illegal or void, all other terms of the Agreement shall remain in effect; provided that
the Owners and Parties hereto shall enter into good faith negotiations concerning the terms
affected by such decision for the purpose of achieving conformity with requirements of any
Applicable Law and the intent of the Owners and Parties hereto.



     16.08 Governing Law. This Agreement shall be interpreted and enforced in accordance with the
Laws of the State of South Dakota without regard to its conflict of laws provisions.



     16.09 Consent to Jurisdiction. Each of the Owners and Parties hereto hereby irrevocably
consents and agrees that any legal action or proceedings with respect to this Agreement may be
brought in any of the courts of the United States of America for the District of South Dakota
having subject matter jurisdiction and, by execution and delivery of this Agreement and such other
documents executed in connection herewith, each Owner and Party hereby:




	 	(a)	 	accepts the non-exclusive jurisdiction of the aforesaid courts;
	 
	 	(b)	 	irrevocably agrees to be bound by any final judgment (after any and all
appeals) of any such court with respect to such documents;
	 
	 	(c) 	 	irrevocably waives, to the fullest extent permitted by law, any objection which
it may now or hereafter have to the laying of venue of any suit, action or proceedings
with respect to such documents brought in any such court, and further irrevocably
waives, to the fullest extent permitted by law, any claim that




 









 







	 	 	 
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	 	 	 	any such suit, action or
proceedings brought in any such court has been brought in any inconvenient forum;
	 
	 	(d)	 	agrees that service of process in any such action may be effected by mailing a
copy thereof by registered or certified mail (or any substantially similar form of
mail), postage prepaid, to such Owner or Party at its address set forth below, or at
such other address of which the other Owners or Parties hereto shall have been
notified; and
	 
	 	(e)	 	agrees that nothing herein shall affect the right to effect service of process
in any other manner permitted by law or limit the right to bring any suit, action or
proceeding in any other jurisdiction.





     16.10 Waiver of Trial by Jury. EACH OF THE OWNERS HEREBY KNOWINGLY, VOLUNTARILY AND
INTENTIONALLY WAIVES THE RIGHT ANY OF THEM MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION
BASED HEREON, OR ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT AND ANY AGREEMENT
CONTEMPLATED TO BE EXECUTED IN CONJUNCTION HEREWITH, OR ANY COURSE OF CONDUCT, COURSE OF DEALING,
STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF ANY OWNER OR PARTY HERETO. THIS PROVISION IS
A MATERIAL INDUCEMENT FOR THE OWNERS AND PARTIES ENTERING INTO THIS AGREEMENT.



     16.11 No Third-Party Beneficiaries. This Agreement is intended solely for the benefit of the
Owners and Parties hereto and nothing contained herein shall be construed to create any duty to, or
standard of care with reference to, or any liability to, or any benefit for, any Person not an
Owner or a Party to this Agreement.



     16.12 Cooperation. The Owners and Parties hereto acknowledge that they are entering into a
long-term arrangement in which the cooperation of all of them will be required. If, during the
Term, changes in the operations, facilities or methods of any Owner or Party will materially
benefit an Owner or Party without detriment to the other Owners or Parties, the Owners and Parties
commit to each other to make reasonable efforts to cooperate and assist each other in making such
change.



     16.13 Captions. All indexes, titles, subject headings, section titles, and similar items are
provided for the purpose of reference and convenience and are not intended to affect the meaning of
the content or scope of this Agreement.



     16.14 Entire Agreement. This Agreement shall supersede all other prior and contemporaneous
understandings or agreements, both written and oral, among the Owners and Parties relating to the
subject matter of this Agreement.



     16.15 Counterparts. This Agreement may be executed in several counterparts, each of which
shall be an original and all of which together shall constitute but one and the same instrument,
and may be executed by facsimile signature, which shall be considered as an original.



 









 







	 	 	 
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     16.16 Further Assurances. Upon the receipt of a written request from any Owner or Party, each
Owner and Party shall execute such additional documents, instruments and assurances and take such
additional actions as are reasonably necessary and desirable to carry out the terms and intent
hereof. This provision shall apply to Owners and Parties that either transfer or terminate their
interest in this Agreement even after the termination or transfer. No Owner or Party shall
unreasonably withhold, condition or delay its compliance with any reasonable request made pursuant
to this Section 16.16; and if the Ownership Share of any Owner shall be changed or transferred in
accordance with this Agreement, the Owners or their successors and permitted assigns shall execute
appropriate amendments of this Agreement recognizing the changes in ownership and the addition or
substitution of any new parties as Owners under this Agreement.



[The next page is the signature page.]





 









 







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



OWNERS:




	 	 	 	 	 	 	 	 	 
	CENTRAL MINNESOTA MUNICIPAL	 	 	 	GREAT RIVER ENERGY
	POWER AGENCY	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	By /s/ Paul I. Leland	 	 	 	By /s/ David Saggau
	 

	 	 
	 	 	 	 	 	 
	Paul Leland	 	 	 	David Saggau
	Its President	 	 	 	Its President and Chief Executive Officer
	 
	 	 	 	 	 	 	 	 
	HEARTLAND CONSUMERS POWER	 	 	 	MONTANA-DAKOTA UTILITIES CO., a
	DISTRICT	 	 	 	Division of MDU Resources Group, Inc.
	 
	 	 	 	 	 	 	 	 
	By /s/ Michael McDowell	 	 	 	By /s/ Bruce T. Imsdahl
	 

	 	 
	 	 	 	 	 	 
	Michael McDowell	 	 	 	Bruce T. Imsdahl
	Its General Manager	 	 	 	Its President and Chief Executive Officer
	 
	 	 	 	 	 	 	 	 
	SOUTHERN MINNESOTA MUNICIPAL	 	 	 	OTTER TAIL CORPORATION dba Otter Tail
	POWER AGENCY	 	 	 	Power Company
	 
	 	 	 	 	 	 	 	 
	By /s/ Raymond A. Hayward	 	 	 	By /s/ Charles S. MacFarlane
	 

	 	 
	 	 	 	 	 	 
	Raymond A. Hayward	 	 	 	Charles S. MacFarlane
	Its Executive Director and CEO	 	 	 	Its President
	 
	 	 	 	 	 	 	 	 
	WESTERN MINNESOTA MUNICIPAL	 	 	 	 	 	 
	POWER AGENCY	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	By /s/ Donald E. Habicht	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	Donald E. Habicht	 	 	 	 	 	 
	Its President	 	 	 	 	 	 






 









 







			
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EXHIBIT A




PARTY




CENTRAL MINNESOTA MUNICIPAL POWER AGENCY

459 South Grove Street

Blue Earth, MN 56013

Attn: Donald E. Kom, Executive Director

Telephone: (507) 526-2193

Facsimile: (507) 526-2527

E-mail: donk@utplus.com



GREAT RIVER ENERGY

17845 East Highway 10

Elk River, MN 55330

Attn: David Saggau, President and Chief Executive Officer

Telephone: (763) 241-2286

Facsimile: (763) 241-2366

E-mail: dsaggau@grenergy.com



HEARTLAND CONSUMERS POWER DISTRICT

203 West Center Street

Madison, SD 57042

Attn: Michael McDowell, General Manager

Telephone: (605) 256-6536

Facsimile: (605) 256-2990

E-mail: mmcdow@hcpd.com



MONTANA-DAKOTA UTILITIES CO., a Division of MDU Resources, Inc.

400 North Fourth Street

Bismarck, ND 58501

Attn: Andrea L. Stomberg, Vice President – Electric Supply

Telephone: (701) 222-7752

Facsimile: (701) 222-7606

E-mail: andrea.stomberg@mdu.com



 









 







			
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OTTER TAIL CORPORATION dba Otter Tail Power Company

215 South Cascade St.

P.O. Box 496

Fergus Falls, MN 56538-0496

Attn: Charles MacFarlane

Telephone: (218) 739-8353

Facsimile: (218) 739-8218

E-mail: cmacfarlane@otpoc.com



SOUTHERN MINNESOTA MUNICIPAL POWER AGENCY

500 First Avenue SW

Rochester, MN 55902-3303

Attention: Mr. Peter J. Reinarts, P.E.

Manager – Generation, Operations and Marketing

Telephone: (507) 292-6452

Facsimile: (507) 292-6414

E-mail: pj.reinarts@smmpa.org



and



SOUTHERN MINNESOTA MUNICIPAL POWER AGENCY

500 First Avenue SW

Rochester, MN 55902-3303

Attention: Mr. David P. Geschwind, P.E.

Chief Operating Officer

Telephone: (507) 292-6460

Facsimile: (507) 292-6414

E-mail: dp.geschwind@smmpa.org



 









 







			
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WESTERN MINNESOTA MUNICIPAL POWER AGENCY

25 N.W. 2nd Street, Suite 102

Ortonville, MN 56278-1411

Attention: Mr. Don Habicht

Telephone: (320) 839-2549

Facsimile: (320) 839-2540

E-mail: david.fhmab@midconetwork.com



and



MISSOURI RIVER ENERGY SERVICES

3724 West Avera Drive

P.O. Box 88920

Sioux Falls, SD 57109-8920

Attn: Mr. Ray Wahle

Telephone: (605) 338-4042

Facsimile: (605) 978-9360

E-mail: rwahle@mrenergy.com



 









 







			
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EXHIBIT B




	 	 	 
	OWNER	 	OWNERSHIP SHARE
	CMMPA

	 	30 Megawatts (5%)
	GRE

	 	116 Megawatts (19.333333%)
	Heartland

	 	25 Megawatts (4.166667 %)
	Montana-Dakota

	 	116 Megawatts (19.333333%)
	Otter Tail

	 	116 Megawatts (19.333333%)
	SMMPA

	 	47 Megawatts (7.833333%)
	WMMPA

	 	150 Megawatts (25%)
	 
	 	 
	Total:

	 	600 Megawatts (100%)






 









 







			
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EXHIBIT
B-1




	 	 	 
	CMMPA
	 	30 (5.357143%)
	GRE
	 	116 (20.714286%)
	Heartland
	 	25 (4.464286%)
	Montana-Dakota
	 	116 (20.714286%)
	Otter Tail
	 	116 (20.714286%)
	SMMPA
	 	47 (8.392857%)
	WMMPA
	 	110 (19.642857%)
	 
	 	 
	 
	 
	Total:
	 	560 (100%)
	 
	 





 









 







			
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SCHEDULE 3.02(a)




OWNER FINANCING PLANS




(*) (19
pages omitted)




 









 







			
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SCHEDULE 3.03(a)




REAL AND/OR PERSONAL PROPERTY INTENDED TO BE PLANT PROPERTY




HELD BY OTTER TAIL




Located in Grant County, Big Stone Township, Sections 14 and 15, Township 121, Range 47, South
Dakota.



Real Property Owned in Fee Title:



Rabe Family Trust. 295.78 acres, more or less, located in Section 14, Township 121, Range 46,
purchased October 17, 2001.



        The North 1/2 of the Southeast 1/4 and the East 1/2 of the Southwest 1/4, except Lot 1 and a portion
of Lot 2, Rabe Farm Subdivision located in the Southeast 1/4 of Section 14, township 121, Range 47.




AND




The East 1/2 of the Northwest 1/4 and the West 1/2 of the Northeast 1/4, except Lots 1 and
2, Lagoon Addition located in the North 1/2 of Section 14, Township 121 North, Range
47 West of the 5th P.M.




AND




The South 1/2 of the Southeast 1/4, except Lot 2 (52.13 acres, more or less), Rabe Farm
Subdivision located in the Southeast 1/4 of Section 14, Township 121, Range 47.




EXCEPTION




Lot 1 (10.98 acres, more or less), Rabe Farm Subdivision, located in the Southeast 1/4
of Section 14, Township 121 North, Range 47 West of the 5th P.M.



Options to Purchase Real Property:





	1.	 	Bray property, 34.31 acres, more or less. Lot 1, Bray Subdivision, located in the East 1/2 of
the Northeast 1/4, and the East 1/2 of the Southeast 1/4, Section 15, Township 121 North, Range 47
West of the 5th P.M., Grant County, South Dakota. $699,940.50 to be paid upon
exercise.
	 
	2.	 	E & M Farms, Inc., 305.75 acres, more or less. The East 1/2 of the Northwest 1/4, the West 1/2 of
the Southeast 1/4, except Lot 1, E & M Farms, Inc. Addition in the Southwest 1/4 of the Southeast
1/4, the East 1/2 of the Southwest 1/4, and the West 1/2 of the Northeast 1/4, all in Section 15,
Township 121 North, Range 47 West of the 5th P.M., Grant County, South Dakota.
$749,087.50 to be paid upon exercise.




 









 







			
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	3.	 	Donald & Nicole Bray, Record Title Holder, and Timothy & Nikki Rabe, Contract for Deed
Purchaser, 285.69 acres, more or less. The West 1/2 of the West 1/2 of Section 14, and the East 1/2
of the East 1/2 of Section 15, in Township 121 North, Range 47, except the building site and
approximately 20 acres adjoining the buildings on the Southwest part of the East 1/2 of the
Southeast 1/4 of Section 15, Township 121 North of Range 47 West of the 5th P.M.,
Grant County, South Dakota, containing 256 tillable acres, EXCEPTION: Lot 1, Bray
Subdivision, located in the East 1/2 of the Northeast 1/4 and the East 1/2 of the Southeast 1/4,
Section 15, Township 121 North, Range 47 West of the 5th P.M., Lot 1 contains 5.73
acres in the East 1/2 of the Northeast 1/4 and 28.58 acres in the East 1/2 of the Southeast 1/4,
Section 15, Township 121 North, Range 47. Subject to easements and reservations of record.
$84,059.50 to be paid upon exercise.






 









 







			
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SCHEDULE 3.05(a)




REFERENCE RATE METHODOLOGY




In order to arrive at the Reference Rate, the following were calculated as described below to
obtain these figures in MWH.



(*)



If the scope of the Project is changed, the Reference Rate shall be revised accordingly.




 









 







			
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SCHEDULE 7.01




TRUST AGREEMENT




     This Trust Agreement (the “Trust Agreement”), dated as of the 25th day of June, 2005, is by
and among Central Minnesota Municipal Power Agency, an agency incorporated under the laws of
Minnesota; Great River Energy, a cooperative corporation incorporated under the laws of Minnesota;
Heartland Consumers Power District, a consumers power district formed and organized under the South
Dakota Consumers Power District Law (Chapter 49-35 of the South Dakota Codified Laws);
Montana-Dakota Utilities Co., a Division of MDU Resources Group, Inc., a corporation incorporated
under the laws of the State of Delaware; Otter Tail Corporation, a corporation under the laws of
Minnesota doing business as Otter Tail Power Company (“Otter Tail”); Southern Minnesota Municipal
Power Agency, a municipal corporation and political subdivision of the State of Minnesota; and
Western Minnesota Municipal Power Agency, a municipal corporation and political subdivision of the
State of Minnesota (each individually a “BSP II Owner” and, collectively, the “BSP II Owners”), and
U.S. Bank National Association, a national banking association (the “Trustee”).



WITNESSETH:




     WHEREAS, the BSP II Owners intend to enter into that certain Big Stone II Power Plant
Participation Agreement effective as of June 30, 2005 (the “Participation Agreement”) and that
certain Operation & Maintenance Services Agreement effective as of June 30, 2005 (the “O&M
Agreement”) (the Participation Agreement and the O&M Agreement are collectively referred to herein
as the “BSP II Agreements”), pursuant to which the BSP II Owners, among other things, provide for
the establishment of a trust account by Otter Tail on behalf of the BSP II Owners; and



     WHEREAS, the BSP II Owners desire to retain the Trustee to serve as the trustee, and the
Trustee desires to provide such services, as contemplated under the BSP II Agreements, on behalf of
the BSP II Owners.



     NOW, THEREFORE, for and in consideration of these premises and for other good and valuable
consideration, the receipt of which is hereby acknowledged, Otter Tail and Trustee hereby agree as
follows:




 









 







			
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     1. Deposit of Funds with Trustee. The BSP II Owners will make payments to the
Trustee, to be deposited into Trustee’s trust account number (*) (the “Trust Account”), as
provided in the BSP II Agreements, copies of which have been previously provided to Trustee by
Otter Tail (the “Trust Funds”). The Trust Funds shall be held in the Trust Account and distributed
by the Trustee strictly in accordance with the terms and conditions of this Trust Agreement;
provided, however, that the Trustee and Otter Tail acknowledge that, with respect to the
administration of the Trust Account and Trust Fund, in the event of conflict between this Trust
Agreement and the BSP II Agreements, that the BSP II Agreements shall govern. The Trustee and
Otter Tail further acknowledge that the BSP II Agreements are subject to amendment by the BSP II
Owners at any time on or after June 30, 2005.



     2. Investment of Trust Funds. The Trustee shall invest the Trust Funds as indicated on
Exhibit A hereto. The BSP II Owners shall be entitled to any interest accrued on the Trust
Funds, as contemplated by the O&M Agreement; provided, however, that notwithstanding the foregoing,
any BSP II Owner may irrevocably determine that any interest accruing with respect to such BSP II
Owner’s deposits into the Trust Account shall be designated as Trust Funds for purposes of this
Trust Agreement and, upon such determination, such interest shall be retained in the Trust Account.
Such determination shall be made by written notice such BSP II Owner to the Trustee, with copies
delivered to all other BSP II Owners (an “Irrevocable Determination”). Any amounts retained in the
Trust Account for which an Irrevocable Determination has been made shall be credited against the
next succeeding progress payment requisitioned from such BSP II Owner and such progress payment
shall be reduced accordingly. Trustee shall distribute such interest accrued on the Trust Funds on
a quarterly basis to the BSP II Owners, beginning on or about September 30, 2005. Otter Tail shall
provide the Trustee payment instructions. The BSP II Owners acknowledge that the Trustee shall not
be responsible for any diminution in the Trust Funds due to losses resulting from investments,
unless such losses are the result of Trustee’s gross negligence, willful misconduct, or breach of
this Trust Agreement.



     3. Trust Account Procedures.



 









 







			
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     (a) Otter Tail shall notify the Trustee in writing which individuals are authorized to
make withdrawals from the Trust Account on behalf of Otter Tail, which individuals shall be
designated as contemplated in Section 3.05 of the O&M Agreement and shall be corporate
officers of Otter Tail or the BSP II Plant Manager;




     (b) On or before June 30, 2005, each BSP II Owner shall pay into the Trust Account the
amount indicated required for it on Exhibit B to finance the development of the BSP
II project until the BSP II financial closing;




     (c) After June 30, 2005, Trust Funds shall be requisitioned from the BSP II Owners as
follows:




     (i) In the event that the progress payment made pursuant to Section 3(b) of
this Agreement or any subsequent progress payment is not sufficient to fund the
completion of all Phase II (as such term is defined in the Participation Agreement)
activities, then prior to the depletion of all previously made progress payments,
Otter Tail, as directed by the BSP II E&O Committee, shall issue a written
requisition notice to the BSP II Owners, which written notice shall state the amount
required to be deposited into the Trust Account for each BSP II Owner to provide for
the Phase II project costs reasonably expected to be expended in excess of
previously made progress payments. The BSP II Owners shall pay such amounts within
forty-five (45) days of such requisition.




     (ii) During Phases II, III and IV (as such terms are defined in the
Participation Agreement), unless the BSP II Engineering and Operating Committee
directs otherwise, Trust Funds shall be requisitioned from the Owners from time to
time as reasonably determined by Otter Tail, as directed by the BSP II E&O
Committee. Unless otherwise directed by the BSP II Engineering and Operating
Committee, Otter Tail shall issue a requisition notice to the BSP II Owners no later
than the 15th of each month, which notice shall state amounts required to be
deposited into the Trust Account



 









 







			
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by each BSP II Owner on each Monday (or the next business day in the event a
Monday is a bank holiday) of the upcoming month, and include an accounting of the
BSP II project costs then due and payable (or that will become due and payable
before the end of the upcoming month) and copies of any invoices or other supporting
materials. The BSP II Owners shall promptly pay such amounts by electronic funds
transfer into the Trust Account on the Monday (or next business day) so indicated on
the notice.




     (d) No BSP II Owner shall have any right, title or ownership interest in the Trust
Account other than a beneficial interest, in proportion to its ownership share, nor any
right to withdraw or direct application of Trust Funds, nor otherwise exercise control over
the Trust Account. Trust Funds constitute and shall be a prepayment of the BSP II Owners’
obligations to pay BSP II project costs.




     (e) The BSP II Owners (either directly or through a third party retained by the BSP II
Owners) shall be entitled, at their own expense, to review and audit all deposits and
withdrawals by the Trustee from the Trust Account and Trustee shall cooperate with the BSP
II Owners in connection with any such audit; provided, however, that the BSP II Owners shall
provide the Trustee with at least twenty-four (24) hours prior written notice of their
intent to do so.




     (f) Otter Tail shall have the right, at any time and from time to time, to withdraw
from the Trust Account, with the prior concurrence of the BSP II E&O Committee, upon notice
to the Trustee in the form of a request for withdrawal substantially in the form of
Exhibit C attached hereto (“Request for Withdrawal”), signed by a duly authorized
representative of Otter Tail. Otter Tail shall not be required to present any other
statement or document in addition to a Request for Withdrawal in order to withdraw Trust
Funds. All Requests for Withdrawal shall be signed by one of Otter Tail’s authorized
representatives listed on Exhibit D attached hereto, which Exhibit D Otter
Tail may, with notice to Trustee, amend from time to time.



 









 







			
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     4. Termination of Trust. The BSP II Owners may terminate the Trust for any reason or
no reason with at least sixty (60) days’ prior written notice of such termination to the Trustee.
Upon termination, any Trust Funds and other deposits that have been made to or other assets that
have been placed into the Trust Account during the term of this Trust Agreement and that remain in
the Trust Account shall be distributed as contemplated by the BSP II Agreements.



     5. Trustee Duties. The Trustee shall be responsible for (i) the safekeeping of the
funds in the Trust Account and administering the Trust Account in accordance with the provisions of
this Trust Agreement, and (ii) for exercising the standard of care with respect to the Trust Funds
that a trustee engaged in the banking or trust company industry would observe in such affairs.
Trustee shall incur no liability whatsoever (except for its gross negligence, willful misconduct,
or breach of this Trust Agreement) so long as it has acted in good faith. The Trustee shall be
under no responsibility in respect of the Trust Funds deposited with it, other than to follow the
instructions herein contained. The Trustee may consult with counsel of its choice (and the BSP II
Owners shall reimburse Trustee for reasonable attorneys’ fees incurred by Trustee in connection
therewith) and shall be fully protected in any action taken in good faith pursuant to the Trust
Agreement and in accordance with the advice of such counsel. It shall not be required to defend any
proceeding which may be instituted against it by any third party with respect to the subject matter
of these instructions, unless requested to do so by the BSP II Owners and indemnified against the
reasonable and necessary cost and expense of such defense. The Trustee shall not be required to
institute legal proceedings of any kind. It shall have no responsibility for the genuineness or
validity of any document or other item deposited with it, and it shall be fully protected in
relying upon any written notice, demand, certificate, or document which it in good faith believes
to be genuine. The Trustee shall also be fully protected by acting in good faith in accordance with
any written instructions given to it hereunder and believed by it to have been signed by the proper
officers or persons from Otter Tail.



     6. Indemnification. The Trustee shall be indemnified, jointly and severally, and held
harmless by the BSP II Owners, from and against any and all liability to a third party, including
all



 









 







			
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expenses reasonably incurred in its defense, to which the Trustee shall be subject by reason
of any action taken or omitted or any investment or disbursement of any part of the Trust Funds
made by the Trustee pursuant to this Trust Agreement, except as a result of the Trustee’s own gross
negligence, willful misconduct, or breach of this Trust Agreement. This right of indemnification
shall survive for a period of ten (10) years after the termination of this Trust Agreement or
resignation of the Trustee. To be entitled to this indemnity, Trustee must timely notify Otter Tail
upon learning of an actual or potential claim against it that could result in a liability falling
within the scope of this indemnity. The BSP II Owners shall have twenty (20) business days after
receiving notice of such claim, unless such notice requires a response sooner, in which case the
BSP II Owners shall respond in a timely manner, to: (i) agree to defend Trustee, (ii) agree to pay
all reasonable and necessary costs incurred by Trustee in defending itself against the claim, or
(iii) notify Trustee that they in good faith believe they have no obligation to indemnify Trustee.




     7. Resignation of Trustee. The Trustee may resign at any time by giving prior written
notice thereof to Otter Tail; provided, however, that the Trustee must provide Otter Tail with at
least sixty (60) days’ prior written notice of its intent to resign, and further provided that such
resignation shall not be effective until a successor trustee shall have been appointed and shall
have accepted such appointment in writing agreeable to the BSP II Owners. If an instrument of
acceptance by a successor trustee shall not have been delivered to the Trustee within ninety (90)
business days after the giving of such notice of resignation, Trustee may petition any court of
competent jurisdiction for the appointment of a successor trustee. In the event of the appointment
of a new trust agent, once the Trustee transfers all remaining Trust Funds and other necessary
materials and information to the new trustee, the Trustee shall be fully released and relieved of
all duties, responsibilities, and obligations under this Trust Agreement.



     8. Notice. Any notice required or permitted under this Trust Agreement may be
personally delivered or may be given by registered or certified mail, return receipt requested,
overnight delivery via UPS, FedEx, or the U.S. Postal Service, or, provided that a copy is also
sent via first-class mail, by electronic facsimile (with acknowledgment of complete transmission),
to the parties hereto at the



 









 







			
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addresses set forth below. Such addresses may be changed by written notice by one party to the
other parties from time to time. Notice shall be deemed given when received if sent by overnight
deliver or electronic facsimile, or five days after being mailed if sent by registered or certified
mail.




     Notice to the Trustee shall be delivered, mailed or faxed to:


U.S.Bank National Association

Corporate Trust Services

60 Livingston Avenue- EP-MN-WS3C

St. Paul, MN 55107

Fax No.: (651) 495-8096

Tel. No.: (651) 495-3922

Attn: Beverly Thompson



     If to Otter Tail, addressed to such party as follows:


Otter Tail Corporation

4334 18th Avenue South West

Fargo, ND 58103

Attn: Chief Financial Officer

Fax No.: (701) 232-6414

Tel. No.: (701) 232-6414



     with a mandatory copy to:


Bruce Gerhardson, Esq.

Associate General Counsel

Otter Tail Corporation

215 South Cascade Street

Fergus Falls, MN 56537

Fax No.: (218) 998-3165

Tel. No.: (218) 998-7108



     If to any other BSP II Owner, as indicated on Exhibit E attached hereto.



     9. Expenses. All of the Trustee’s fees are set forth in the letter attached hereto as
Exhibit F. Such fees are payable as compensation for the ordinary administrative services
to be rendered hereunder.



     10. Binding Effect. This Trust Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and assigns.



     11. Counterparts. This Trust Agreement may be executed in one or more counterparts,
each of which shall for all purposes be deemed an original, but all such counterparts shall
together constitute but one and the same instrument. Signatures of the parties transmitted by facsimile shall be
deemed to be their original signatures for all purposes.




     12. Performance of Obligations. The parties hereto covenant, warrant, and represent
to each other good faith, complete cooperation, due diligence, and honesty in fact in the
performance of all obligations of the parties pursuant to this Trust Agreement.



     13. Governing Law. This Trust Agreement shall be construed, enforced, and administered
in accordance with the laws of the State of Minnesota except its choice of law provisions.



[The next page is the signature page.]





 









 







			
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     IN WITNESS WHEREOF, the parties have executed this Trust Agreement as of the date first
above written.


U.S. BANK NATIONAL ASSOCIATION, as Trustee




	 	 	 	 	 
	By:

	 	 
	 	 
	 

	 	 	 	 





BSP II OWNERS:




	 	 	 	 	 	 	 	 	 
	CENTRAL MINNESOTA MUNICIPAL POWER

AGENCY	 	 	 	GREAT RIVER ENERGY
	 
	 	 	 	 	 	 	 	 
	By

	 	 
	 	 	 	By
	 	 
	 

	 	 
	 	 	 	 	 	 
	Paul Leland	 	 	 	David Saggau
	Its President	 	 	 	Its President and Chief Executive Officer
	 
	 	 	 	 	 	 	 	 
	HEARTLAND CONSUMERS POWER DISTRICT	 	 	 	MONTANA-DAKOTA UTILITIES CO., a Division
of MDU Resources Group, Inc.
	 
	 	 	 	 	 	 	 	 
	By

	 	 
	 	 	 	By
	 	 
	 

	 	 
	 	 	 	 	 	 
	Michael McDowell	 	 	 	Bruce T. Imsdahl
	Its General Manager	 	 	 	Its President and Chief Executive Officer
	 
	 	 	 	 	 	 	 	 
	SOUTHERN MINNESOTA MUNICIPAL

POWER AGENCY	 	 	 	OTTER TAIL CORPORATION dba Otter Tail

Power Company
	 
	 	 	 	 	 	 	 	 
	By

	 	 
	 	 	 	By
	 	 
	 

	 	 
	 	 	 	 	 	 
	Raymond A. Hayward	 	 	 	Charles S. MacFarlane
	Its Executive Director and CEO	 	 	 	Its President
	 
	 	 	 	 	 	 	 	 
	WESTERN MINNESOTA MUNICIPAL

POWER AGENCY	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	By

	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	Donald E. Habicht	 	 	 	 	 	 
	Its President	 	 	 	 	 	 







 









 







			
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Exhibit A




AUTOMATIC MONEY MARKET INVESTMENTS

INVESTMENT AUTHORIZATION LETTER



U.S. Bank NA is hereby directed to invest and reinvest proceeds and other available moneys in the
following funds as permitted by the operative documents. Please mark one space with an X
for the investment vehicle selection.




     X First American Treasury Reserve Fund


SEE FIRST AMERICAN FUNDS, INC. PROSPECTUS WHICH HAS BEEN PROVIDED. NOTE THAT THE ABOVE FUNDS’
INVESTMENT ADVISOR, CUSTODIAN, DISTRIBUTOR AND OTHER SERVICE PROVIDERS AS DESCRIBED IN THE
PROSPECTUS ARE AFFILIATES OF U.S. BANK NA. SHARES OF THE ABOVE FUNDS ARE NOT DEPOSITS OR
OBLIGATIONS OF, OR GUARANTEED BY, ANY BANK INCLUDING U.S. BANK NATIONAL ASSOCIATION, U.S. BANK
TRUST NATIONAL ASSOCIATION, OR ANY OF THEIR AFFILIATES, NOR ARE THEY INSURED BY THE FEDERAL DEPOSIT
INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER AGENCY. AN INVESTMENT IN THE FUNDS
INVOLVES INVESTMENT RISK, INCLUDING POSSIBLE LOSS OF PRINCIPAL. U.S. Bank NA will not vote proxies
for the First American Funds. Proxies will be mailed to you for voting.



Fee Basis: Approval of investment of any of these First American mutual funds includes approval of
the fund’s fees and expenses as detailed in the enclosed prospectus, including advisory and
custodial fees and shareholder service expenses (which may be so-called 12b-1 shareholder service
fees), which fees and expenses are paid to U.S. Bank NA, a subsidiary of U.S. Bancorp.




 









 







			
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Exhibit B



Deposit requirements on June 30, 2005 for BSP II owners




	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Company	 	GRE	 	 	WMMPA	 	 	OTP	 	 	MDU	 	 	HCPD	 	 	SMMPA	 	 	CMMPA	 	 	Total	 
	Ownership
share
	 	 	116	 	 	 	150	 	 	 	116	 	 	 	116	 	 	 	25	 	 	 	47	 	 	 	30	 	 	 	600	 
	percentage
	 	 	19.33	%	 	 	25.00	%	 	 	19.33	%	 	 	19.33	%	 	 	4.17	%	 	 	7.83	%	 	 	5.00	%	 	 	100.00	%
	 
	Progress Payment
	 	 	1,933,333	 	 	 	2,500,000	 	 	 	1,933,333	 	 	 	1,933,333	 	 	 	416,667	 	 	 	783,333	 	 	 	500,000	 	 	 	10,000,000	 
	 
	Unreimbursed development costs
	 	 	128,889	 	 	 	166,666	 	 	 	128,889	 	 	 	128,889	 	 	 	27,778	 	 	 	52,222	 	 	 	33,333	 	 	 	666,665	 
	 
	 	 	 
	Total amount due
	 	 	2,062,222	 	 	 	2,666,666	 	 	 	2,062,222	 	 	 	2,062,222	 	 	 	444,444	 	 	 	835,555	 	 	 	533,333	 	 	 	10,666,665	 






 









 







			
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Exhibit C




Form of Request for Withdrawal




     Otter Tail hereby requests that Trustee immediately transfer to Otter Tail [$___] from
the Trust Account established by Otter Tail for the benefit of the BSP II Owners pursuant to the
Trust Agreement dated as of June 20, 2005 entered into by and between Trustee and Otter Tail.
[Insert transfer instructions.]



     This Request for Withdrawal is a “Request for Withdrawal” within the meaning of Section 3(f)
of the Trust Agreement. All terms used but not defined herein shall have the meanings ascribed to
them in the Trust Agreement.



	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	OTTER TAIL CORPORATION,
	 	 	 	 	 	 	DBA OTTER TAIL POWER COMPANY
	 
	 	 	 	 	 	 	 	 
	Dated:

	 	 	 	 	 	By	 	 
	 

	 	 
	 	 	 	 	 	 
	 

	 	 	 	 	 	Name:	 	 
	 

	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	Title:	 	 
	 

	 	 	 	 	 	 	 	 





 









 







			
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Exhibit D




Person(s) Designated to Authorize Disbursement of Trust Funds




	 	 	 	 	 
	 

	 	Name (printed)
	 	Signature
	 
	 	 	 	 
	1.
	 	 	 	 
	 

	 	 
	 	 
	 
	 	 	 	 
	2.
	 	 	 	 
	 

	 	 
	 	 
	 
	 	 	 	 
	3.
	 	 	 	 
	 

	 	 
	 	 
	 
	 	 	 	 
	4.
	 	 	 	 
	 

	 	 
	 	 





 









 







			
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Exhibit E




CENTRAL MINNESOTA MUNICIPAL POWER AGENCY

459 South Grove Street

Blue Earth, MN 56013

Attn: Donald E. Kom, Executive Director

Telephone: (507) 526-2193

Facsimile: (507) 526-2527

E-mail: donk@utplus.com



GREAT RIVER ENERGY

17845 East Highway 10

Elk River, MN 55330

Attn: David Saggau, President and Chief Executive Officer

Telephone: (763) 241-2286

Facsimile: (763) 241-2366

E-mail: dsaggau@grenergy.com



HEARTLAND CONSUMERS POWER DISTRICT

203 West Center Street

Madison, SD 57042

Attn: Michael McDowell, General Manager

Telephone: (605) 256-6536

Facsimile: (605) 256-2990

E-mail: mmcdow@hcpd.com



MONTANA-DAKOTA UTILITIES CO., a Division of MDU Resources, Inc.

400 North Fourth Street

Bismarck, ND 58501

Attn: Andrea L. Stomberg, Vice President – Electric Supply

Telephone: (701) 222-7752

Facsimile: (701) 222-7606

E-mail: andrea.stomberg@mdu.com



 









 







			
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SOUTHERN MINNESOTA MUNICIPAL POWER AGENCY

500 First Avenue SW

Rochester, MN 55902-3303

Attention: Mr. Peter J. Reinarts, P.E.

Manager – Generation, Operations and Marketing

Telephone: (507) 292-6452

Facsimile: (507) 292-6414

E-mail: pj.reinarts@smmpa.org



and



SOUTHERN MINNESOTA MUNICIPAL POWER AGENCY

500 First Avenue SW

Rochester, MN 55902-3303

Attention: Mr. David P. Geschwind, P.E.

Chief Operating Officer

Telephone: (507) 292-6460

Facsimile: (507) 292-6414

E-mail: dp.geschwind@smmpa.org



WESTERN MINNESOTA MUNICIPAL POWER AGENCY

25 N.W. 2nd Street, Suite 102

Ortonville, MN 56278-1411

Attention: Mr. Don Habicht

Telephone: (320) 839-2549

Facsimile: (320) 839-2540

E-mail: david.fhmab@midconetwork.com



and



MISSOURI RIVER ENERGY SERVICES

3724 West Avera Drive

P. O. Box 88920

Sioux Falls, SD 57109-8920

Attention: Mr. Ray Wahle

Telephone: (605)-338-4042

Facsimile: (605) 978-9360

E-mail: rwahle@mrenergy.com



 









 







			
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Exhibit F




TRUSTEE’S FEES




Annual administrative fee:

(first year’s fee payable upon opening account, nonrefundable)



	 	 	 	 	 	 	 	 	 
	 	 	If all funds are invested in a U.S. Bank proprietary investment vehicle	 	$2,000.00	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	If funds are invested other than above	 	$3,500.00	 	 
	 
	 	 	 	 	 	 	 	 
	Transactional Charges*
	 	 
	 
	 	 	 	 	 	 	 	 
	Disbursements (checks or wires)	 	$20.00 each	 	 
	 
	 	 	 	 	 	 	 	 
	Fee for security transactions:	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	A.
	 	Settlement of trades in the open market at
direction of customer
	 	$75.00 per buy or sell	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	B.
	 	Maturities
	 	$50.00 per maturity	 	 
	 
	 	 	 	 	 	 	 	 
	 


	*(if all funds are invested in a U.S Bank proprietary investment instrument, transactional charges
will not apply)
	 	 
	 
	 	 	 	 	 	 	 	 
	Out-of-Pocket Expenses:	 	 	 	 
	 	 	Expenses, including but not limited to stationery,	 	Billed at Cost	 	 
	 	 	postage, telephone, insurance, shipping, telex-telegram,	 	 	 	 
	 	 	reasonable services of outside counsel and agents.	 	 	 	 
	 	 	(Plus indirect out-of-pocket at 3% of administrative fee.)	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 


	Note:	 	Charges for performing other escrow services not specifically covered in this schedule will
be determined by an appraisal of the services rendered. The fees shown in this schedule may be
increased annually.






 









 







			
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SCHEDULE 10.01



Big Stone II Power Plant



Interconnection and

Transmission Upgrade

Allocation Agreement



By And Among




CENTRAL MINNESOTA MUNICIPAL POWER AGENCY,




GREAT RIVER ENERGY,




HEARTLAND CONSUMERS POWER DISTRICT,




MONTANA-DAKOTA UTILITIES CO., A DIVISION OF MDU RESOURCES GROUP, INC.,




OTTER TAIL CORPORATION dbaOTTER TAIL POWER COMPANY,




SOUTHERN MINNESOTA MUNICIPAL POWER AGENCY, AND




WESTERN MINNESOTA MUNICIPAL POWER AGENCY




JUNE 30, 2005









 









 





			
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TABLE OF CONTENTS




	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Page
	ARTICLE I	 	DEFINITIONS, RULES OF INTERPRETATION
	 	 	82	 
	 	1.01	 	 	Rules of Construction
	 	 	82	 
	 	1.02	 	 	Defined Terms
	 	 	82	 
	ARTICLE II	 	INTERCONNECTION AND TRANSMISSION ALLOCATION
	 	 	87	 
	 	2.01	 	 	Interconnection and Transmission Allocation
	 	 	87	 
	 	2.02	 	 	Generator Interconnection Study and Plan
	 	 	88	 
	 	2.03	 	 	Common Interconnection Facilities: Ownership and Cost
Responsibility
	 	 	89	 
	 	2.04	 	 	Common Interconnection Facilities Upgrades: Ownership and Cost
Responsibility
	 	 	90	 
	 	2.05	 	 	Delivery Service Upgrades: Ownership and Cost Responsibility
	 	 	91	 
	 	2.06	 	 	(*) Cost Allocation for Delivery Service Upgrades
	 	 	92	 
	 	2.07	 	 	Alternative Arrangements
	 	 	93	 
	 	2.08	 	 	Establishment and Restoration of Equitable Cost Impacts
	 	 	93	 
	 	2.09	 	 	Conditions
	 	 	94	 
	 	2.10	 	 	Financial Transmission Rights
	 	 	95	 
	 	2.11	 	 	Repayments and Credits
	 	 	95	 
	 	2.12	 	 	Implementation of Interconnection Plan by Operator
	 	 	95	 
	 	2.13	 	 	Transmission Service Requests
	 	 	96	 
	ARTICLE III	 	MISCELLANEOUS
	 	 	96	 
	 	3.01	 	 	Incorporation by Reference
	 	 	96	 
	 	3.01	 	 	Captions
	 	 	96	 
	 	3.02	 	 	Counterparts
	 	 	96	 
	EXHIBIT A	 	 
	 	 	98	 






 









 






			
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Interconnection and Transmission Upgrade

Allocation Agreement



     THIS INTERCONNECTION AND TRANSMISSION UPGRADE ALLOCATION AGREEMENT (the “Agreement”) is
made as of June 30, 2005 (the “Effective Date”), by and among Central Minnesota Municipal Power
Agency, an agency incorporated under the laws of Minnesota, Great River Energy, a cooperative
corporation incorporated under the laws of Minnesota (“GRE”), Heartland Consumers Power District, a
consumers power district formed and organized under the South Dakota Consumers Power District Law
(Chapter 49-35 of the South Dakota Codified Laws), Montana-Dakota Utilities Co., a Division of MDU
Resources Group, Inc., a corporation incorporated under the laws of the State of Delaware, Otter
Tail Corporation, a corporation incorporated under the laws of Minnesota, doing business as Otter
Tail Power Company (“Otter Tail”), Southern Minnesota Municipal Power Agency, a municipal
corporation and political subdivision of the State of Minnesota, and Western Minnesota Municipal
Power Agency, a municipal corporation and political subdivision of the State of Minnesota (“WMMPA”)
(each individually a “Party” and, collectively, the “Parties”).



RECITALS




     WHEREAS, the Parties have entered into the Participation Agreement, the 2005 Joint Facilities
Agreement, and the O&M Agreement (as such terms are defined below) as of the Effective Date; and



     WHEREAS, under the Participation Agreement, each Party has determined that the sharing and
allocation of BSP II’s generating capacity can best be accomplished by acquiring, owning and
managing the related property rights necessary to build, own and operate BSP II as tenants in
common; and



     WHEREAS, under the Participation Agreement, each Party intends to rely on the capacity and
electric energy generated by BSP II as part of its system planning and reliability obligations and
to serve the needs of its current and future customers; and



     WHEREAS, the Parties, under this Agreement, desire to document their agreement with respect to
the interconnection and transmission upgrades to be made in connection with BSP II.



     NOW, THEREFORE, in consideration of the agreements and covenants set forth herein, and other
good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, and
intending to be legally bound by this Agreement, the Parties covenant and agree as follows:




 









 






			
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AGREEMENTS




ARTICLE I

DEFINITIONS, RULES OF INTERPRETATION




     1.01 Rules of Construction. The capitalized terms listed in this Article shall have the
meanings set forth herein whenever the terms appear in this Agreement, whether in the singular or
the plural or in the present or past tense. Other terms used in this Agreement but not listed in
this Article shall have meanings as commonly used in the English language and, where applicable, in
Prudent Utility Practice (as such term is defined below). Words not otherwise defined herein that
have well-known and generally accepted technical or trade meanings are used herein in accordance
with such recognized meanings. In addition, the following rules of interpretation shall apply:




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





     1.02 Defined Terms. In addition to definitions appearing elsewhere in this Agreement, the
following terms have the following meanings:



     2005 Joint Facilities Agreement: Shall mean that certain Big Stone I and Big Stone II 2005
Joint Facilities Agreement dated as of June 30, 2005 by and among the Parties and NorthWestern
Corporation.



     Affiliate(s): Shall mean with respect to any Person:




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




For the purposes of this definition, “control,” “controlled by,” and “under common control with,”
mean the possession, directly or indirectly, of the power to direct or cause the direction of the
management or policies of a Person, whether through the ownership of voting securities or by




 









 






			
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contract or otherwise. Notwithstanding the foregoing provisions, Operator and Owners (except with
regard to Otter Tail) shall not be deemed to be Affiliates of each other and any Person that is
otherwise an Affiliate of Operator shall not be deemed to be an Affiliate of Operator for purposes
of this Agreement to the extent such Person is acting in its capacity as an Owner.




     Agreement: Shall mean this Agreement, as amended from time to time.



     Applicable Law: Shall mean:




	 	(a)	 	any and all Laws, legislation, statutes, codes, acts, rules, regulations,
ordinances, treaties or other similar legal requirements enacted, issued or promulgated
by a Governmental Authority;
	 
	 	(b)	 	any and all orders, judgments, writs, decrees, injunctions, Governmental
Approvals or other decisions of a Governmental Authority; and
	 
	 	(c)	 	any and all legally binding announcements, directives or published practices or
interpretations, regarding any of the foregoing in (a) or (b) of this definition,
enacted, issued or promulgated by a Governmental Authority;




to the extent, for each of the foregoing in (a), (b) and (c) of this definition, applicable to or
binding upon (i) BSP II; (ii) a Party, its Affiliates, its members, it partners or their respective
Representatives, to the extent any such Person is engaged in activities related to BSP II; or (iii)
the property of a Party, its Affiliates, its members, its partners or their respective
Representatives, to the extent such property is used in connection with BSP II or an activity
related to BSP II.




     ATRR: Shall have the meaning given to such term in Section 2.08(a).



     Baseline Rate Impact: Shall have the meaning given to such term in Section 2.08(a).



     BSP I: Shall mean the existing 450 MW coal-fired electrical generating plant located in Grant
County, South Dakota known as the Big Stone Plant.



     BSP II or Plant: Shall mean the new, approximately 600 MW coal-fired electrical generating
plant to be located adjacent to BSP I, and owned jointly by the Parties.



     Capacity: Shall mean an electrical rating expressed in megawatts (MW).



     Commercial Operation: Shall mean that the Plant is operating and producing Capacity and
Energy on a continuous basis, and is delivering such Energy to the Owners at the Interconnection
Point in accordance with Prudent Utility Practice and Applicable Law.



     Commercial Operation Readiness: Shall mean such time as the Plant has been completed in
accordance with the Plans and Specifications, has successfully completed construction and
operational testing specified in the Construction Contracts, is able to operate



 









 






			
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and produce
Capacity and Energy on a continuous basis, and is able to deliver such Energy to the Owners at the
Interconnection Point in accordance with Prudent Utility Practices and Applicable Law.




     Common Interconnection Facilities: Shall mean (i) the new interconnection facilities
identified in the Interconnection Study, which have been determined and specified pursuant to
Attachment X of the Midwest ISO Tariff to be required to physically and electrically interconnect
the Plant to the Transmission System, and (ii) Contributing Owner Facilities pursuant to Section
2.03.



     Common Interconnection Facilities Upgrades: Shall mean the minimum necessary upgrades to the
Transmission System that would not have been required but for the Owners’ interconnection request,
including (i) upgrades necessary to remove overloads and voltage criteria violations, and (ii)
upgrades necessary to remedy short-circuit and/or stability problems resulting from the connection
of the Plant to the Transmission System, and (iii) other necessary transmission facilities as
determined by the Owners to facilitate the needs of the Project. Interconnection System Upgrades
shall not include upgrades to the Transmission System that may be required solely to move power
from the Point of Physical Connection to load and shall not include facilities and equipment owned
and/or controlled, operated and maintained by the Transmission Owner on the Transmission Owner’s
side of the Point of Physical Connection, including any modifications, additions, or upgrades made
to such facilities and equipment, that are necessary to physically and electrically interconnect
the Facility to the Transmission System.



     Construction Contracts: Shall mean the contracts and agreements for the construction of the
Plant, including any transmission or other Common Interconnection Facilities, that are duly
authorized and executed, as provided herein.



     Contributing Owner: Shall have the meaning given to such term in Section 2.03(a).



     Contributing Owner Facilities: Shall have the meaning given to such term in Section 2.03(a).



     Delivery Service Upgrades or DSUs: Shall mean upgrades to the Transmission System that are
necessary for any of the Owners to deliver Energy from the Plant via firm transmission service to
their respective native customer loads, as identified in their respective delivery service requests
made prior to the Effective Date; provided, however, that Delivery Service Upgrades shall not
include Common Interconnection Facilities or Common Interconnection Facilities Upgrades.



     Effective Date: Shall have the meaning given to such term in the preamble of this Agreement.



     Energy: Shall mean electric energy having characteristics commonly known as three phase
alternating current, with a nominal frequency of sixty (60) Hertz, a nominal voltage
equivalent to that of Otter Tail’s or its successor’s Transmission System, and measured in
kilowatt-hours (kWh) or megawatt-hours (MWh).



 









 






			
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     Facility Book Value: Shall have the meaning given to such term in Section 2.03(b)(i).



     FERC: Shall mean the Federal Energy Regulatory Commission or any Governmental Authority which
preceded or hereafter may succeed the Federal Energy Regulatory Commission.



     Final Baseline Rate Impact: Shall have the meaning given to such term in Section 2.08(a).



     Governmental Approvals: Shall mean any material authorizations or permissions issued or
granted by any Governmental Authority to BSP II, its Owners and their Affiliates in connection with
any activity related to BSP II.



     Governmental Authority: Shall mean any federal, state, local or municipal governmental body;
any governmental, quasi-governmental, regulatory or administrative agency, commission, body or
other authority exercising or entitled to exercise any administrative, executive, judicial,
legislative, policy, regulatory or taxing authority or power; or any court or governmental
tribunal; any independent system operator, regional transmission organization, reliability
organization, or other regulatory body; in each case having jurisdiction over an Owner, the
Project, BSP II, the Plant Site, or the Transmission System to which either BSP I or BSP II is
interconnected.



     GRE: Shall have the meaning given to such term in the preamble to this Agreement.



     Interconnection Study: Shall mean the Big Stone II Generator Interconnection Study performed
by Otter Tail for the Midwest ISO dated November, 2004 prepared pursuant to Attachment X of the
Midwest ISO open access transmission tariff in connection with large generator interconnection
request (MISO generator identification number G392) associated with the Project, and any
amendments, supplements, subsequent studies, and interconnection agreement which may be issued
pursuant to the aforementioned large generator interconnection request.



     Laws: Shall mean any and all federal, state, and local statutes, laws, judicial decisions,
regulations, ordinances, rules, judgments, orders, decrees, codes, plans, injunctions, permits,
tariffs, governmental agreements and governmental restrictions, whether now or hereafter in effect.



     Midwest ISO or MISO: Shall mean the Midwest Independent Transmission System Operator, Inc.,
its successor, or any other applicable regional transmission organization.



     Midwest ISO Tariff: Shall mean the then effective Open Access Transmission Tariff of the
MISO.



     Net Energy Generation: Shall mean the Energy generated by the Plant that is available to the
Owners at the Point of Interconnection.



     Non-Owner System DSUs: Shall have the meaning given to such term in Section 2.05.



 









 






			
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     O&M Agreement: Shall mean the then effective Operating and Maintenance Agreement related to
the operation and maintenance of the Plant.



     Operator: Shall mean the operator of the Plant pursuant to the O&M Agreement.



     Otter Tail: Shall have the meaning given to such term in the preamble to this Agreement.



     Owner System DSUs: Shall have the meaning given to such term in Section 2.05.



     Owner(s): Shall mean the Parties to this Agreement and, thereafter, any permitted successors
and assigns to the Parties’ rights, title and interests in the Plant Property.



     Ownership Share: Shall mean the undivided percentage ownership interest of a particular Owner
in Plant Property as set forth on Exhibit B of the Participation Agreement, as the same may be
changed pursuant to the Participation Agreement.



     Participation Agreement: Shall mean that certain Big Stone II Power Plant Participation
Agreement dated as of June 30, 2005 by and among the Parties.



     Party(ies): Shall have the meaning given to such term in the preamble to this Agreement.



     Person: Shall mean an individual, a partnership, limited liability company, an association, a
joint-stock company, corporation, a business trust, consumer power district, cooperative,
unincorporated association, government or any subdivision thereof, or an organized group of
individuals (whether incorporated or not), or a receiver, trustee or other liquidating agent of any
of the foregoing in his capacity as such.



     Plans and Specifications: Shall mean the plans and specifications for the construction and
design of the Plant, including the scope of work performed by any contractor under one or more of
the Construction Contracts; all work drawings, engineering and construction schedules, project
schedules, project monitoring systems, specifications status lists, material and procurement
ledgers, drawings and drawing lists, manpower allocation documents, management and project
procedures documents, project design criteria, and any other document referred to in the
Construction Contracts, in each case as approved by the Operator.



     Plant Property: Shall have the meaning given to such term in the Participation Agreement.



     Plant Site: Shall mean the real property adjacent to BSP I on which the Plant is to be
located, including the real property to be acquired pursuant to the Option to Purchase Contract
and any and all easements, leases, licenses, option rights, rights-of-way and other rights
used in connection with the Plant.



     Point of Interconnection: Shall mean the high-voltage terminals of the Plant generator step
up transformer located at the Plant.



 









 






			
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     Point of Physical Connection: Shall mean the physical and electrical interconnection between
(i) the Common Interconnection Facilities or the Common Interconnection Facilities Upgrades and
(ii) the Transmission System.



     Project: Shall mean the undertaking of the Owners with respect to the development and
construction of BSP II as set forth in the Participation Agreement.



     Project Funds: Shall mean funds maintained in the segregated interest-bearing trust account
already established by the Operator on behalf of the Owners to provide for obligations with respect
to the Project and the Plant, which Trust Account is an express trust, as defined under South
Dakota Statutes Section 55-1-3, and was created pursuant to South Dakota Statutes Sections 55-1-4
and 55-1-5, and governed by South Dakota Statutes Chapter 55-3.



     Prudent Utility Practice: Shall mean any of the practices, methods or acts required by
Applicable Law, the National Electric Safety Code, MISO, the North American Electric Reliability
Council, or the successors of any of them, whether or not a Party is a member thereof, or otherwise
engaged in or approved by a significant portion of the utility electric generation industry during
the relevant time period or any of the practices, methods and acts that in the exercise of
reasonable judgment in light of the facts known at the time the decision was made, could have been
expected to accomplish the desired result at a reasonable cost consistent with good business
practices, reliability, safety and expedition. Prudent Utility Practice is not intended to be
limited to the optimum practice, method or act to the exclusion of all others, but rather to be
acceptable practices, methods or acts generally accepted in the upper Midwest region.



     Transmission Owner: Shall have the same meaning as assigned to such term in the Midwest ISO
Tariff, or the entity owning the Transmission System in the event the MISO ceases to exist.



     Transmission Provider: Shall have the same meaning as assigned to such term in the Midwest
ISO Tariff, or the entity owning the Transmission System in the event the MISO ceases to exist.



     Transmission System: Shall mean the facilities that are used to provide transmission service
necessary for any of the Owners to deliver the Energy from the Point of Physical Connection to
their respective points of delivery. The Transmission System includes, but is not limited to,
facilities, the operational control of which has been transferred to the Midwest ISO subject to
FERC approval under Section 203 of the Federal Power Act.



     WMMPA: Shall have the meaning given to such term in the preamble to this Agreement.



ARTICLE II




INTERCONNECTION AND TRANSMISSION ALLOCATION




     2.01 Interconnection and Transmission Allocation.



 









 






			
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	 	(a)	 	The provisions of the following Sections 2.02 through 2.13 express the
intention of the Owners to enter into appropriate agreements that will allocate among
them their respective obligations for, and rights to, transmission facilities that are
the result of the Interconnection Request and Delivery Service Requests contemplated
herein. Those facilities shall include: (i) Common Interconnection Facilities; (ii)
Common Interconnection Facility Upgrades; and (iii) DSUs. The Owners agree that any
transmission facilities and/or upgrades associated with generator interconnection and
delivery of energy from the Plant to their respective customers will be assigned to one
of the three types of facilities.
	 
	 	(b)	 	The Owners acknowledge that they will, in order to interconnect the Plant to
the Transmission System, become parties to a Midwest ISO Interconnection Agreement and
other definitive agreements setting forth the terms and conditions to implement the
intentions expressed in Sections 2.02 through 2.13. The Owners agree to incorporate the
principles and economic effect expressed herein into that Midwest ISO Interconnection
Agreement and definitive agreements to the fullest extent possible. To the extent there
is any conflict between this Agreement and the Midwest ISO Interconnection Agreement
and other definitive agreements with regard to interconnection and transmission-related
issues, those agreements shall control.
	 
	 	(c)	 	The Parties acknowledge that this Agreement must be filed with and approved by
FERC. Accordingly, the Parties shall cooperate with the preparation of such filing and
the pursuit of such approval.





     2.02 Generator Interconnection Study and Plan.




	 	(a)	 	Interconnection Study and Updates to Request. The Owners acknowledge receipt
of a copy of the Interconnection Study results. The Owners shall cooperate and
promptly make any updates or revisions to the interconnection request that may be
required for any proposed changes in the Plant design, size, interconnection
configuration, or modeling data given in the request, recognizing that there may be
additional interconnection costs incurred as a result. The E&O Committee shall approve
any such changes.
	 
	 	(b)	 	Interconnection and Transmission Plan Identification. The Owners acknowledge
that transmission tariffs of the Owners, Midwest ISO and other
affected transmission providers in existence on the Effective Date may change one or
more times prior to the date on which engineering and construction for the Common
Interconnection Facilities, Common Interconnection Facilities Upgrades and DSUs must
begin in order for the Plant to achieve scheduled Commercial Operation and therefore
the allocation of costs for Common Interconnection Facilities and Common
Interconnection Facilities Upgrades may not be readily ascertainable. In light of
this, the Owners agree that they will as soon as practicable, develop, to facilitate
planning and financing of the Project, a range of possible transmission scenarios
and estimate the likelihood of each scenario




 









 






			
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occurring, with the goal of identifying
the best plan for construction and usage of the Common Interconnection Facilities,
Common Interconnection Facilities Upgrades and DSUs. The Owners shall use their best
efforts to complete this by December 31, 2005. The development of such plans shall
take into account the following goals: (i) equitable allocation of all costs (among
Owners and appropriate non-Owners); (ii) to the greatest extent possible, allocation
of all interconnection and delivery costs over areas wider than the Owners’ service
territories; (iii) consistency with the regional transmission plans; (iv) avoidance
of transmission rate pancaking to an Owner to deliver its entitlement of Capacity
and Energy from the Plant to its load; (v) the intent of the Owners to implement the
ownership, cost responsibility, and usage rights set forth in Sections 2.02 through
2.07 hereof; and (vi) the desire of the Owners to have a plan that will have the
greatest likelihood of being permitted and constructed within the Project’s
timelines; provided, however, that the Owners recognize that they may not be able to
effectuate all of the above-referenced goals, and that if no single best approach is
identified, the Owners shall pursue the most reasonable approach that does not
unduly delay Commercial Operation.



     2.03 Common Interconnection Facilities: Ownership and Cost Responsibility.




	 	(a)	 	Ownership. The Owners acknowledge that GRE, Otter Tail and WMMPA (each a
“Contributing Owner”) have made investments in, and are currently the owners of certain
transmission facilities (the “Contributing Owner Facilities”). Prior to Commercial
Operation, the Owners shall use their respective best efforts to restructure the
existing individual ownership of the Contributing Owner Facilities and structure the
ownership of the new Common Interconnection Facilities so that prior to Commercial
Operation each Owner will own a pro rata tenancy-in-common interest in all Common
Interconnection Facilities and the right to a share of transfer capability in the
Common Interconnection Facilities equal to (*). Responsibility, control
and decision-making regarding the scheduling, operations and maintenance of such Common
Interconnection Facilities shall vest in Otter Tail, unless otherwise agreed by the
Owners. A definitive agreement shall be entered into among the Owners setting forth the
maintenance arrangements for the Common Interconnection Facilities.
	 
	 	(b)	 	Cost Responsibility. The Owners acknowledge and agree that:






	 	(i)	 	as of December 31, 2004, each of the Contributing Owner
Facilities had a corresponding book value which shall be provided by the
Contributing Owners to the other Owners as soon as reasonably practicable after
the date hereof (the “Facility Book Value”);
	 
	 	(ii)	 	each Owner shall bear (*) of the total
costs of the new Common Interconnection Facilities and the total value of the
Contributing Owner Facilities to be provided by the Contributing Owners as soon
as reasonably practicable after the date hereof; and




 









 






			
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	 	(iii)	 	the Contributing Owner shall be compensated for the Facility
Book Value of the Contributing Owner Facilities (*) to the extent ownership in Contributing Owner
Facilities is restructured as described in Section 2.03(a). Therefore:






	 	(x)	 	in consideration of receipt of its undivided
ownership interest in the new Common Interconnection Facilities and the
Contributing Owner Facilities, each Owner shall (*)
	 
	 	(y)	 	in consideration of the restructured ownership
and conveyance of such undivided interest in the Contributing Owner
Facilities, each Contributing Owner shall (*)





     2.04 Common Interconnection Facilities Upgrades: Ownership and Cost Responsibility.




	 	(a)	 	Ownership. To the extent Common Interconnection Facilities Upgrades are owned
by the Owners, or any of them, the Owners shall use their best efforts to allocate
ownership (*). It is contemplated
that the provisions herein will be accomplished by allocating ownership in the new
Common Interconnection Facilities Upgrades. The Owners acknowledge that each Owner may
use the facilities comprising the Common Interconnection Facilities Upgrades, but owned
by any other Owner, consistent with any applicable tariff.
	 
	 	(b)	 	Cost Responsibility. The Owners shall share in the cost of Common
Interconnection Facilities Upgrades on the basis of (*). Each
Owner shall be responsible for the cost of the Common Interconnection Facilities
Upgrades in which it is allocated ownership pursuant to Section 2.04(a), subject to
payment or credit of the difference between the cost so allocated and the cost
determined on the basis of (*).
	 
	 	(c)	 	Direct Assignment Facilities (Non-Owner System). For any Common
Interconnection Facilities Upgrades that are directly assigned to a non-Owner
Transmission System, and the non-Owner offers such direct assignment Common
Interconnection Facilities Upgrades for sale, the Owners may elect to purchase




 









 






			
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such facilities. If all Owners do not elect to purchase such facilities, then any Owner may
elect to offer to purchase such facilities individually, subject to agreement among all
Owners on a method of crediting or compensating the electing Owner for that Owner’s
investment in such facilities.




	 	(d)	 	Operation and Maintenance Costs. Responsibility for operation and maintenance
costs for Common Interconnection Facility Upgrades shall be addressed, if at all, in a
separate agreement with the owners of such facility.





     2.05 Delivery Service Upgrades: Ownership and Cost Responsibility. The Owners currently
contemplate two categories of DSUs: (A) “Owner System DSUs,” which shall include all DSUs made on
the Transmission System of an Owner; and (B) “Non-Owner System DSUs,” which shall include all DSUs
made on the Transmission System of any Person that is not an Owner.




	 	(a)	 	Owner System DSUs: Modifications to Existing Facilities. With respect to
Delivery Service Upgrades that involve modification, upgrade, or replacement of the
existing facilities belonging to an Owner, each Owner’s Ownership thereof and Cost
responsibility therefor shall be as follows:






	 	(i)	 	Ownership: Each Owner shall be entitled to retain one hundred
percent (100%) of its ownership interest in any existing facilities (including
modifications) comprising the Owner System DSUs.
	 
	 	(ii)	 	Cost Responsibility: The total cost of Owner System DSUs
facilities that have been identified in the Midwest ISO delivery service
request studies pursuant to the Owners’ delivery service requests (after taking
into account any salvage value and unrecoverable investment in existing
facilities that are to be upgraded or replaced, and the advancement costs of
planned transmission projects) shall be allocated to each Owner by applying the
cost allocation described in Section 2.06 hereof.






	 	(b)	 	Owner System DSUs: New Facilities. With respect to Delivery Service Upgrades
that require the installation of new facilities and that do not fall under Section
2.04(a) hereof, each Owner’s Ownership thereof and Cost responsibility therefor shall
be as follows:






	 	(i)	 	Ownership: The Owners agree to use their best efforts to
allocate Ownership so that each Owner will, as nearly as possible, own new
discrete facilities (*) (rather than
jointly owning such facilities). In order to give effect to this provision, as
part of finalizing any delivery service plan the Owners shall agree on a plan
to transfer and/or vest title to each of the Owners in new discrete facilities
and/or equipment comprising the Owner System DSUs such that each Owner receives
title to Owner System DSU new facilities and/or equipment that are, as near as
possible, equal in value to (*)




 









 






			
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By
way of example, the Owners may accomplish this by assigning title to new substations
and related new facilities, capacitor banks, and/or segments of transmission
lines comprising the Owner System DSUs to individual Owners, or using such
other methods or new facilities to which the Owners may agree.




	 	(ii)	 	Cost Responsibility: Notwithstanding the ratio of ownership
interests in new facilities comprising Owner System DSUs set forth in Section
2.05(b)(i) above, each Owner shall be responsible for the cost of all new
discrete facilities and/or equipment comprising the Owner System DSUs by
applying the cost allocation described in Section 2.06 below.






	 	(c)	 	Non-Owner System DSUs: Ownership. Ownership of Non-Owner System DSUs shall be
as permitted by the tariff applicable to the relevant Transmission Owner.
	 
	 	(d)	 	Non-Owner System DSUs: Cost Responsibility. Each Owner shall be responsible
for the cost of all Non-Owner System DSUs assessed directly to the Project by applying
the cost allocation described in Section 2.06 below. Owners shall be entitled to any
crediting or reimbursements that may be available pursuant to any applicable tariff in
the same proportion as costs for such facilities were allocated to the Owners pursuant
to this Section 2.05.
	 
	 	(e)	 	Operation and Maintenance Costs. Responsibility for operation and maintenance
costs for DSUs shall be addressed, if at all, in a separate agreement with the owners
of such facility.





     2.06 (*) Cost Allocation for Delivery Service Upgrades. In connection with the request made
by the Owners for transmission delivery service to commence upon Commercial Operation of the Plant,
certain likely and/or possible DSUs have been identified in the Midwest ISO delivery
service study. As further Midwest ISO transmission delivery studies are performed the likely
and/or possible DSUs may be supplemented following more definitive determinations of all DSUs. In
consideration of the mutual obligations and benefits under this Agreement and as an essential
element of their respective participation in the Project, the Owners agree to allocate the costs of
the final DSUs identified by the Midwest ISO and agreed to by the Owners in the final
interconnection and delivery plan as follows:




	 	(a)	 	(*) 
	 
	 	(b)	 	The amount of the costs due from each Owner based on (*) under this
Section 2.06(b) shall be determined by the E&O Committee utilizing (*).
	 
	 	(c)	 	In no event shall any Owner be entitled to cost allocations hereunder for DSUs
in excess of those necessary to deliver its Ownership Share of Net Energy Generation to
its loads.




 









 






			
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     2.07 Alternative Arrangements. If after using their best efforts the Owners are unable to
implement one or more of the specific facility ownership and cost allocation structures set forth
in Sections 2.02 through 2.06 above, then the Owners shall use their best efforts to implement an
alternative structure that is consistent with the goals of Section 2.01 hereof and, to the extent
possible, results in the Owners being in the same economic positions as if the relevant Section of
this Article II had been implemented; provided, however, that no Owner shall be required to: (i)
sell, lease, assign or otherwise dispose of any existing facilities in order to mitigate any
shortfall in the value of new facilities; or (ii) transfer or receive any facilities in such a
manner that would jeopardize the tax-exempt status of that Owner’s debt. Successful implementation
of any alternative structure shall not be a condition to the obligations of the Owners under this
Agreement.



     2.08 Establishment and Restoration of Equitable Cost Impacts.




	 	(a)	 	Establishment of Rate Impacts. As soon as reasonably practicable after the
date hereof the Owners shall provide their best estimate, as of the Effective Date, of
the impact (the “Baseline Rate Impact”) of the allocation to the specified Owners of
the costs of the Common Interconnection Facilities, Common Interconnection Facilities
Upgrades, and DSUs pursuant to Sections 2.02 through 2.07 on each such Owner’s annual
transmission revenue requirements for all transmission facilities (“ATRR”). The Owners
agree to periodically update such estimate as more current and reliable information
becomes available, including prior to adoption of any final interconnection or
transmission plan by the Owners. After actual construction of the Common
Interconnection Facilities, Common Interconnection Facilities Upgrades, and DSUs
pursuant to Sections 2.02 and 2.07, the Owners shall cause the E&O Committee to adopt a
Final Baseline Rate Impact (the “Final Baseline Rate Impact”).
	 
	 	(b)	 	Restoration of Equitable Cost Impacts. If any Owner determines that (*)
because of deviations from the cost allocation methodology agreed to by the Owners
pursuant to this Agreement, and such Owner is without full cost recovery from parties
other than the Owners, then such Owner shall promptly notify the other Owners. Any
such notice shall be given by the later of Commercial Operation Readiness or the date
that the last transmission facility (i.e., the Common Interconnection Facilities,
Common Interconnection Facilities Upgrades, and DSUs) is placed in service. Upon
receipt of such notice, the Owners, through the E&O Committee, shall use their best
efforts to implement a true-up or other restoration mechanism, and/or payment or
credit, that would result in (*). For illustration purposes only, and without
limitation, the determination of the extent to which an Owner’s (*) shall take into
account cost allocations required by MISO, or other Persons with jurisdiction over
transmission facilities, that differ from this Agreement.




 









 






			
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2.09 Conditions.





	 	(a)	 	Conditions. In order that a final interconnection agreement with the Midwest
ISO can be finalized in accordance with the Project schedule, each Owner shall in a
timely fashion cooperate in the implementation of the provisions set forth in Sections
2.02 through 2.09; provided, however, no Party shall be obligated to implement any such
ownership structure contemplated thereunder that would be inconsistent with the
following:






	 	(i)	 	each Owner shall have received all Governmental Approvals
necessary to implement such ownership structures;
	 
	 	(ii)	 	each Owner shall have received any approvals or consents
required by any Lender, trustee, bondholder or other Person providing any
existing or proposed financing to such Owner;
	 
	 	(iii)	 	ownership and cost responsibility of the Common
Interconnection Facilities, Common Interconnection Facilities Upgrades, and
Delivery Service Upgrades shall be in accordance with Sections 2.02 through
2.08 above;
	 
	 	(iv)	 	the value of the Contributing Owner Facilities is recognized in
accordance with Section 2.03;
	 
	 	(v)	 	implementation of any of the specific ownership structures set
forth in Sections 2.03 through 2.08 shall not jeopardize the tax-exempt status
of an Owner’s debt;
	 
	 	(vi)	 	any Owner that is or becomes a transmission owning member of
the Midwest ISO shall have all rights under the Midwest ISO Tariff, or if not a
transmission owning member of the Midwest ISO then under such other
lawful tariff, in effect from time to time to: (A) recover its revenue
requirements associated with its ownership of Common Interconnection
Facilities, Common Interconnection Facilities Upgrades and DSUs; and/or (B)
charge any lawful transmission service rate for service thereon;
	 
	 	(vii)	 	each Contributing Owner that is a transmission owning member
of the Midwest ISO shall modify its transmission facilities controlled by the
Midwest ISO under Appendix H of their respective MISO Agreement and adjust its
rates for transmission revenue and rate recovery submitted under Attachment O
and other provisions of the Midwest ISO Tariff to reflect the implementation of
ownership structure for Common Interconnection Facilities pursuant to Section
2.03 (Owners who are not transmission owning members of Midwest ISO shall
similarly remove the purchase price received from purchasing Owners from their
transmission revenue requirements);




 









 






			
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	 	(viii)	 	implementation of any of the proposed ownership structure of the Contributing
Owner Facilities shall not be inconsistent with the terms of any grandfathered
integrated transmission agreements or joint use obligations in effect and in
favor of current transmission users with respect to the relevant structure;
provided, however, that the Owners shall cooperate and make such revisions with
respect to facility ownership restructuring, equalization accounts and facility
investment records as required under such grandfathered agreements; and
	 
	 	(ix)	 	each Owner shall be responsible for its share of losses
involved with transmission over the Common Interconnection Facilities and
Interconnection Facility Upgrades.






	 	(b)	 	Waiver. The above conditions are for the benefit of each Owner and any Owner
may choose to waive any or all conditions, but only as to itself.





     2.10 Financial Transmission Rights. The proceeds of any financial transmission rights that
are allocated to, or received by, an Owner at no cost and as a result of the construction of any
Common Interconnection Facilities, Common Interconnection Facilities Upgrades or DSUs shall be
distributed to the Owners (*).



     2.11 Repayments and Credits. The Owners agree to share any and all cash repayments and
credits received by any Owner from a Transmission Provider for direct assignment costs paid or
embedded rate paid for such transmission Delivery Service Upgrades in accordance with this
Agreement; such credits shall be calculated and determined on a discounted present value basis in
accordance with commonly accepted accounting practices and procedures in a reasonable manner. The
Owners shall assign or otherwise transfer any transmission credits, as necessary to effectuate the
terms of this Agreement.



     2.12 Implementation of Interconnection Plan by Operator.




	 	(a)	 	Construction of Common Interconnection Facilities and Common Interconnection
Facilities Upgrades. The Owners shall cause the Operator to disburse Project Funds on
behalf of the Owners for design, procurement, installation and construction of the
Common Interconnection Facilities, the Common Interconnection Facilities Upgrades and
the DSUs. The Owners shall also cause the Operator to supervise and oversee the
execution of such construction as required by the Interconnection Study.
	 
	 	(b)	 	Third Party Interconnection Facility Upgrades. It is acknowledged that the
Owners shall likewise cause the Operator to request and disburse Project Funds on
behalf of the Owners for design, procurement, installation and construction of the
Interconnection Facility Upgrades that are owned by third parties and identified in the
Interconnection Study. The Owners shall also cause the Operator, on their behalf, to
supervise and oversee the construction of any




 









 






			
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additions, modifications or upgrades of
Common Interconnection Facilities Upgrades to achieve completion as required by the
Interconnection Study.



     2.13 Transmission Service Requests. Each Owner acknowledges it is individually responsible
for preparing and making all transmission service arrangements to deliver its entitlement from the
Plant to its load. Each Owner that is not subject to the jurisdiction of the FERC under Part II of
the Federal Power Act and that may own an undivided tenant-in-common interest in the Common
Interconnection Facilities and the Common Interconnection Facilities Upgrades agrees to provide
transmission service to the other Owners that is not unduly discriminatory or preferential;
provided, however, that no Owner shall be required to provide any service that does not allow it to
collect its revenue requirement and appropriate return, and to reliably serve its customers.



ARTICLE III




MISCELLANEOUS




     3.01 Incorporation by Reference. To the extent not inconsistent with the terms of this
Agreement, the terms, conditions and agreements of the Participation Agreement are hereby
incorporated herein by reference.



     3.02 Captions. All indexes, titles, subject headings, section titles, and similar items are
provided for the purpose of reference and convenience and are not intended to affect the meaning of
the content or scope of this Agreement.



     3.02 Counterparts. This Agreement may be executed in several counterparts, each of which
shall be an original and all of which together shall constitute but one and the same instrument,
and may be executed by facsimile signature, which shall be considered as an original.



[The next page is the signature page.]





 









 






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



	 	 	 	 	 	 	 	 	 
	OWNERS:
	 
	 	 	 	 	 	 	 	 
	CENTRAL MINNESOTA MUNICIPAL POWER AGENCY	 	 	 	GREAT RIVER ENERGY
	 
	 	 	 	 	 	 	 	 
	By

	 	 
	 	 	 	By
	 	 
	 

	 	 
	 	 	 	 	 	 
	Paul Leland	 	 	 	David Saggau
	Its President	 	 	 	Its President and Chief Executive Officer
	 
	 	 	 	 	 	 	 	 
	HEARTLAND CONSUMERS POWER DISTRICT	 	 	 	SOUTHERN MINNESOTA MUNICIPAL POWER AGENCY
	 
	By

	 	 
	 	 	 	By
	 	 
	 

	 	 
	 	 	 	 	 	 
	Michael McDowell	 	 	 	Raymond A. Hayward
	Its General Manager	 	 	 	Its Executive Director and CEO
	 
	 	 	 	 	 	 	 	 
	MONTANA-DAKOTA UTILITIES CO., a Division
of MDU Resources Group, Inc.	 	 	 	WESTERN MINNESOTA MUNICIPAL

POWER AGENCY
	 
	 	 	 	 	 	 	 	 
	By

	 	 
	 	 	 	By
	 	 
	 

	 	 
	 	 	 	 	 	 
	Bruce T. Imsdahl	 	 	 	Donald E. Habicht
	Its President and Chief Executive Officer	 	 	 	Its President
	 
	 	 	 	 	 	 	 	 
	OTTER TAIL CORPORATION dba Otter Tail

Power Company	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	By

	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	Charles S. MacFarlane	 	 	 	 	 	 
	Its President	 	 	 	 	 	 






 









 






			
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EXHIBIT A




PARTY




CENTRAL MINNESOTA MUNICIPAL POWER AGENCY

459 South Grove Street

Blue Earth, MN 56013

Attn: Donald E. Kom, Executive Director

Telephone: (507) 526-2193

Facsimile: (507) 526-2527

E-mail: donk@utplus.com



GREAT RIVER ENERGY

17845 East Highway 10

Elk River, MN 55330

Attn: David Saggau, President and Chief Executive Officer

Telephone: (763) 241-2286

Facsimile: (763) 241-2366

E-mail: dsaggau@grenergy.com



HEARTLAND CONSUMERS POWER DISTRICT

203 West Center Street

Madison, SD 57042

Attn: Michael McDowell, General Manager

Telephone: (605) 256-6536

Facsimile: (605) 256-2990

E-mail: mmcdow@hcpd.com



MONTANA-DAKOTA UTILITIES CO., a Division of MDU Resources, Inc.

400 North Fourth Street

Bismarck, ND 58501

Attn: Andrea L. Stomberg, Vice President – Electric Supply

Telephone: (701) 222-7752

Facsimile: (701) 222-7606

E-mail: andrea.stomberg@mdu.com



OTTER TAIL CORPORATION

dba Otter Tail Power Company

215 South Cascade St.

P.O. Box 496

Fergus Falls, MN 56538-0496

Attn: Charles MacFarlane

Telephone: (218) 739-8353

Facsimile: (218) 739-8218

E-mail: cmacfarlane@otpoc.com



 









 






			
	Interconnection and Transmission Upgrade Allocation Agreement
	 	Page
99
	Big Stone II Power Plant
	 	June 30, 2005
	 
	 	 





SOUTHERN MINNESOTA MUNICIPAL POWER AGENCY

500 First Avenue SW

Rochester, MN 55902-3303

Attention: Mr. Peter J. Reinarts, P.E.

Manager – Generation, Operations and Marketing

Telephone: (507) 292-6452

Facsimile: (507) 292-6414

E-mail: pj.reinarts@smmpa.org



and



SOUTHERN MINNESOTA MUNICIPAL POWER AGENCY

500 First Avenue SW

Rochester, MN 55902-3303

Attention: Mr. David P. Geschwind, P.E.

Chief Operating Officer

Telephone: (507) 292-6460

Facsimile: (507) 292-6414

E-mail: dp.geschwind@smmpa.org



WESTERN MINNESOTA MUNICIPAL POWER AGENCY

25 N.W. 2nd Street, Suite 102

Ortonville, MN 56278-1411

Attention: Mr. Don Habicht

Telephone: (320) 839-2549

Facsimile: (320) 839-2540

E-mail: david.fhmab@midconetwork.com



and



MISSOURI RIVER ENERGY SERVICES

3724 West Avera Drive

P.O. Box 88920

Sioux Falls, SD 57109-8920

Attn: Mr. Ray Wahle

Telephone: (605) 338-4042

Facsimile: (605) 978-9360

E-mail: rwahle@mrenergy.com



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