**Confidential information has been omitted from this Exhibit and filedseparately with the Commission pursuant to a confidential treatment requestunder Rule 24b-2.**
**Exhibit 10.1**
**MASTER COAL PURCHASE AGREEMENT**
This **MASTER COAL PURCHASE AND SALE AGREEMENT**(“Agreement”) is entered into andis effective as of the 13th day of December, 2001, between Kennecott CoalSales Company (“Kennecott”), an Oregon corporation, and Otter Tail PowerCompany (“Otter Tail”), a division of Otter Tail Corporation, a Minnesotacorporation. Both Kennecott and Otter Tail may be individually referred toherein as a “Party” or collectively as “Parties”.
**RECITALS**
WHEREAS, each Party is engaged in the sale and/or purchase of Powder RiverBasin (“PRB”) Coal or other Coal. The Parties believe it will be mutuallybeneficial to set the terms and conditions under which such Coal sales andpurchases may be made between them.
IN CONSIDERATION of the mutual covenants and promises set forth hereafter, theParties to this Agreement, intending to legally bind themselves, agree now asfollows:
**ARTICLE 1. GENERAL TERMS AND DEFINITIONS**
**1.01** The terms of this Agreement shall govern all purchases and sales of Coalbetween the Parties for Otter Tail’s Hoot Lake Plant (hereinafter“Transactions”) or options thereon during the term of this Agreementunless the Parties expressly indicate otherwise. All amendments,modifications, revisions and changes to this Agreement or any relatedTransaction or option must be in writing and signed by both Parties. Ifthe Parties enter into an option concerning the purchase and/or sale ofCoal, the terms and conditions of this Agreement and the Confirmationshall govern the Transaction once the option has been exercised.
 

 

**1.02** For individual Transactions, the Parties shall enter into a writtenConfirmation Letter (hereinafter “Confirmation”) that sets forth anddefines the following: the Buyer, the Seller, the price, priceadjustments, quantity, term, quality specifications, mine(s), and anyother Transaction-specific provisions mutually agreed upon by the Parties.All Confirmations shall be in writing, signed by both Parties. TheParties intend the provisions of each individual Confirmation and theprovisions of this Agreement be construed as one single integratedagreement and that without a written Confirmation the Parties would nototherwise enter into a Transaction. Any inconsistency or conflict betweenprovisions of the individual Confirmation and provisions of this Agreementshall be resolved in favor of any provisions of the Confirmation. **1.03** Each of the following terms when used in this Agreement will have themeaning given to it in this section:
**a)** “***Actual Btu***” means the monthly ton-weighted averageas-received calorific value (stated in Btu/lb.). **b)** “***Buyer***” means the Party to a Transaction who isobligated to purchase and receive Coal, or causes Coal to bereceived. **c)** “***Claim***” means all claims or actions threatened or filedthat directly or indirectly relate to the subject matter ofindemnity including but not limited to the resulting losses,damages, expenses, reasonable attorneys’ fees and costs. **d)** “***Coal***” means any and all Coal to be sold by Seller andpurchased by Buyer pursuant to the terms and conditions of thisAgreement. **e)** “***Standard Btu***” means the standard calorific value asset forth in a Confirmation (stated in Btu/lb.) and is the basisfor a price adjustment as described in Section 9.03. **f)** “***Seller***” means the Party to a Transaction who isobligated to sell and deliver Coal or causes Coal to bedelivered. **g)** **“*****Ton*****”**means 2,000 pounds avoirdupois**.**
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***h)*** ***“Loading Provisions”***means the terms and conditions ofBuyer’s transportation contracts or excerpts thereof that Sellerhas reviewed and approved. The Loading Provisions are furtherdescribed in Section 4.04 and attached as Exhibit A.
**ARTICLE 2. TERM**
**2.01** This Agreement shall begin on the date first set forth above and shallcontinue in effect until terminated by either Party upon thirty (30) dayswritten notice to the other Party, which right of termination shall beeach party’s absolute right to exercise. Termination of this Agreementunder this Article shall not affect either Party’s rights and obligationswith respect to any Transactions that have been agreed to in writing in aConfirmation prior to termination.
**ARTICLE 3. QUANTITY**
**3.01** Buyer shall be obligated to purchase and pay for, and Seller shall beobligated to sell and tender for delivery, the amount of Coal agreed to ina Confirmation, except as may be limited by Article 11 of this Agreement. **3.02** Unless otherwise limited in the Confirmation, Buyer has the right to shipor use the Coal delivered under this Agreement at any location or for anysuch purpose Buyer designates.
**ARTICLE 4. DELIVERY AND TRANSPORTATION**
**4.01** For each Transaction, Seller agrees to tender to Buyer and Buyer agreesto accept from Seller the quantity of Coal as provided in the relevantConfirmation. Seller shall tender the Coal to Buyer in accordance withreasonable monthly delivery schedules to be submitted by Buyer inaccordance with the Agreement and the Confirmation. Schedules shall bebased on a ratable monthly basis unless otherwise agreed to by bothParties. In addition, Buyer shall provide Seller with monthly schedulesat least sixty (60) days prior to the beginning of
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  each applicable month. If the Seller objects to a schedule submitted byBuyer, Seller shall notify Buyer of its objections within fifteen (15)days of Seller’s receipt of such schedule and the Parties shall worktogether in good faith to agree on a reasonable and mutually acceptableschedule. The mine(s) used to source the Coal supplied under thisAgreement shall be any mine set forth in the Confirmation. **4.02** Buyer shall supply the appropriate unit train railcars. Said railcarsshall be of a size compatible with the loading requirements set forth inthis Agreement. Unit train sizes will normally vary from 105 to 135railcars per train; however, depending on railcar availability, shortertrains may occasionally be operated by mutual agreement. **4.03** Unless excused by Article 11 of this Agreement, if Buyer fails over aquarterly basis to schedule the appropriate unit trains for delivery of anamount of Coal scheduled under a Transaction, Seller shall have the rightat Seller’s sole option to reduce the annual quantities of thatTransaction by the deficit from the scheduled amount. This right shall bein addition to any other rights available to Seller hereunder. **4.04** Seller shall cause Coal to be loaded and delivered at the loadingfacilities into railcars supplied by Buyer. Seller agrees to comply withthe weighing and railcar Loading Provisions. Said Loading Provisions aresubject to Seller’s ability to load the required net tonnages in Buyer’srailcar without significant risk of spillage or exceeding overloadingrailcar limits and shall be in general compliance with industry standardsfor the applicable coal region. Seller shall have at least 48 hoursnotice of any changes to the Loading Provisions. If the changes to theLoading Provisions are inconsistent with Seller’s commitments as otherwiseset forth in this Agreement and Seller’s then current operating practice,Seller shall not be liable for noncompliance with such changes unlessexpressly accepted by Seller. Should the obligations as set forth in thisArticle 4 not be met, and as a result, Buyer incurs costs under itstransportation agreement with the rail carrier as a direct result ofSeller’s not meeting its obligation hereunder and such failure is not thefault of either Buyer or the railroad, then Seller shall reimburse Buyerfor any such costs as set forth in Exhibit A.
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**4.05** The scheduled Coal shall be F.O.B. loaded in Buyer-provided railcars atthe delivery point located at each individual mine (“Delivery Point”).Buyer’s railcars and unit train shall be compatible with Seller’strackage, storage and loading facilities, and shall be ready to load uponarrival at the individual mine. Seller shall load each railcar atSeller’s expense and shall complete the loading of all railcars in eachunit train within four hours after the first empty railcar is actuallyplaced by the railroad under the Seller’s loading chute. Unless excusedby Article 11 or due to actions of Buyer or Buyers rail carrier, Sellershall be responsible for demurrage or other charges invoiced to Buyer byBuyer’s rail carrier resulting directly from Seller’s failure to loadBuyer’s trains as provided above. **4.06** Seller is required to load each railcar to the gross weight(s) designatedin the Confirmation; however, under no circumstances, will the grossweight exceed the maximum limit established by the rail carrier(s) for therailcar type and for the designated train routes. Should Seller load anyrailcar on Buyer’s behalf outside of these specified limits, the Sellerassumes any and all reasonable costs which may be charged by the railcarrier(s) and paid by Buyer as a direct result of such underloading oroverloading of these railcars.
**ARTICLE 5. TITLE AND RISK OF LOSS; EQUIPMENT DAMAGE**
**5.01** Title to the Coal and all risk of loss shall pass to Buyer uponcompletion of loading all railcars in each unit train at the DeliveryPoint. **5.02** Seller shall be responsible for, and shall indemnify Buyer for, any andall direct reasonable costs resulting from damage to: (i) Buyer’s or itscontracted rail carriers’ equipment if such equipment is damaged while onSeller’s property except to the extent such damage is caused by thenegligence or recklessness of Buyer or its contracted rail carrier; and(ii) Buyer’s equipment, including mobile railcars and stationary equipmentat Buyer’s electric generating station, if said equipment is damaged as aresult of non-Coal material having been interspersed with the tenderedCoal prior to leaving Seller’s mine property.
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**ARTICLE 6. COAL QUALITY SPECIFICATIONS**
If the Parties set forth coal quality specifications in a Confirmation, thefollowing Articles 6.01 – 6.03 shall apply with respect to thosespecifications.
**6.01** At the Delivery Point, all tendered Coal shall be raw, substantially freeof magnetic material and other foreign material impurities, and crushed toa maximum size as set forth in the Confirmation as determined inaccordance with applicable American Society of Testing and Materials(ASTM) standards. **6.02** If there are three (3) Non-Conforming Shipments, as hereinafter definedbelow, whether rejected or not, under a Transaction in any three (3) monthperiod or, if two (2) out of four (4) consecutive Shipments under aTransaction are Non-Conforming Shipments, Buyer may upon written noticeconfirmed in writing and sent to Seller, suspend future shipments exceptthose shipments already loaded into railcars. Seller shall, within sixty(60) days, provide Buyer with reasonable assurances that subsequentdeliveries of coal shall meet or exceed the specifications set forth inthe Confirmation. If Seller fails to provide such assurances within thatsixty- (60) day period, Buyer shall have the right to terminate theTransaction without further obligation hereunder on the part of eitherparty. Termination shall be the sole remedy of Buyer under this Section.Buyer’s waiver of this right for any one train shall not constitute awaiver for subsequent trains. If Seller provides such assurances toBuyer’s reasonable satisfaction, deliveries hereunder shall resume and anytonnage deficiencies resulting from suspension may be made up at Buyer’ssole option subject to a mutually agreeable schedule. Buyer shall notunreasonably withhold its acceptance of Seller’s assurances, or delay theresumption of shipment. **6.03** The Parties recognize during the performance of a Transaction,legislative, regulatory bodies or the courts may adopt environmental laws,rules, and regulations that will, make it impossible or commerciallyimpracticable for Buyer to utilize or to remarket Coal
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  purchased under this Agreement. If, as a result of the adoption ofsuch laws, rules, and regulations or changes in the interpretation orenforcement thereof, Buyer, in good faith, decides it will beimpossible or commercially impracticable for Buyer to utilize or toremarket such Coal, Buyer shall promptly notify Seller in writing.After receiving such notification, Buyer and Seller shall promptlyconsider whether corrective actions can be taken in the mining andpreparation of the Coal, in the operation of Buyer’s generatingstation, or in Seller’s substituting different source Coal. If in theParties’ reasonable judgment such actions will, make it impossible andcommercially impracticable for Buyer to utilize or to remarket tenderedCoal without violating any applicable law, regulation, policy, ororder, Buyer shall have the right, upon sixty (60) days notice toSeller, to terminate the Transaction without further obligation on thepart of either party. Termination shall be the sole remedy of Buyerand Seller under this section.
If Rejection Limits are specified in the Confirmation, this Section 6.04 shallapply.
**6.04** If any Shipment of coal triggers any of the Rejection Limits specified inthe Confirmation for a Transaction (A “Non-Conforming Shipment”), Buyershall have the option, within twenty four (24) hours of Buyer’s receipt ofthe quality analysis of the Coal, of either (i) rejecting suchNon-Conforming Shipment prior to unloading the Coal, or, (ii) acceptingthe Non-Conforming Shipment and reducing the price of Coal for suchtrainload by **(*)**per ton. If Buyer fails to timely exercise its rejectionrights under this Section as to a Shipment, Buyer shall be deemed to havewaived such rights to reject with respect to that Shipment only. Buyer’sfailure to timely exercise such notice does not constitute a waiver of itsright to any penalty adjustment provided for herein or in the relevantConfirmation. If Buyer timely rejects the Non-Conforming Shipment, Sellershall be responsible for promptly transporting the rejected Coal to analternative destination determined by Seller and, if applicable, promptlyunloading such coal. Seller shall reimburse Buyer for all reasonablecosts and expenses associated with the transportation, storage, handlingand removal of the Non-Conforming Shipment. Buyer shall cooperate withSeller in minimizing Seller’ s cost of
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  redirecting the rejected Coal. Seller shall replace the rejected coalwithin a reasonable period of time.
**ARTICLE 7. SAMPLING AND ANALYSIS**
**7.01** Seller shall cause, at its expense, the Coal in each unit train to besampled and analyzed at the individual mine in accordance with applicableASTM standards. Buyer shall have the right, at its own risk and expense,to have a representative present at any and all times to observe samplingand analysis procedures. All samples shall be divided into three (3)parts and put in suitable airtight containers. One part shall befurnished to Buyer or its designee for its analysis, one part shall beretained for analysis by Seller or its designee (which analysis shall bethe basis for payment), and the third part shall be retained by Seller orits designee in one of the aforesaid containers properly sealed andlabeled for a period thirty (30) days after the date of sample collection.Buyer’s samples are to be clearly labeled as to mine, date of sampling,date of preparation, and other identification as to shipment (such astrain identification number) and are to be sent within forty-eight (48)hours of train loading to the address listed below unless a differentaddress is provided by Buyer in the Confirmation or otherwise in writing.Seller shall cause the following data, subject to future adjustment, to beprovided to Buyer by a mutually agreed upon method of electronic datatransmission within forty-eight (48) hours of train loading: tonnage(gross, net, and tare average for each railcar and the unit train intotal), and the average calorific value, % moisture, % ash, % sulfur, and% Na2O in ash (if set forth in the Confirmation), (the “Short ProximateAnalysis”). Any additional analysis requested by Buyer that exceeds theinformation provided in the Short Proximate Analysis shall be at Buyer’sexpense. **7.02** In the event a dispute arises between Buyer and Seller within thirty (30)days of Seller’s analysis due to a difference between Buyer and Seller’sshort proximate analyses of a sample that exceeds the ASTM interlabrepeatability limits, an independent testing laboratory, mutuallyagreeable to Buyer and Seller will be retained to analyze the third partof such sample. The Party whose calorific value analysis is closest tothe independent analysis
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  shall prevail and such Party’s calorific value analysis shall govern forthe trainload in question. In such case, the cost of the analysis madeby such independent testing laboratory will be borne by the Party whosecalorific value analysis is furthest from the independent analysis andtherefore, not used. In the event both Parties’ calorific value analysesdiffer from the independent testing laboratory’s result by the sameamount, the independent testing laboratory’s result shall govern for thetrainload in question and the Parties shall share equally the cost of theindependent testing.
**ARTICLE 8. WEIGHING**
**8.01** Certified commercial scales at Seller’s train loading facility at eachindividual mine will determine weights. Scales shall be calibrated andtested as customary in industry practice with copies of calibration andtesting reports provided to Buyer upon request. If Seller’s scales arenot available to determine the valid net weight of all of the railcars ina unit train but valid weights are obtained for thirty (30) or morerailcars in such train, the arithmetic average of all of the valid netweights of the thirty or more railcars in such train shall be used as thenet weight for each railcar in such train for which a valid net weight wasnot determined by Seller’s scales. If Seller’s scales are inoperative orfail to determine the valid net weight of at least thirty (30) railcars ina unit train, the weighted arithmetic average of the net railcar weightsof the previous ten (10) unit trainloads of Coal shipped to Buyer shall beused as the net weight for each of the unweighed railcars in such train.The calculation of the weighted arithmetic average net weight for theprevious ten (10) unit trainloads shall exclude all bad-order railcars,which were not loaded, and any trainload of Coal for which the net weightswere estimated on thirty (30) or more railcars. The Buyer shall benotified electronically immediately after the above instance occurs.
**ARTICLE 9. PRICE AND PRICE ADJUSTMENTS**
**9.01** For all Coal delivered under this Agreement, Buyer shall pay Seller thebase price as set forth in the Confirmation.
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**9.02** Seller shall be solely responsible for all assessments, fees, costs,expenses, and taxes relating to the mining, production, sale, use, loadingand tender of Coal to Buyer or in any way accruing or levied prior totransfer of title to the Coal to Buyer and including, without limitation,severance taxes, royalties, ad valorem, black lung fees, reclamation feesand other costs, charges and liabilities. The base price includesreimbursement to Seller of all environmental, land restoration andregulatory costs, including without limitation any reclamation costsrequired under applicable federal, state or local law as of the date ofthe Transaction. Buyer shall be responsible for any sales and/or use taxunless Buyer provides Seller an appropriate exemption certificate orsimilar document. The base price shall be subject to adjustments forchanges in laws and regulations or new laws or regulations or changes ininterpretations thereof enacted and in force during the term of sale setforth in the Confirmation that change Seller’s costs of producing Coal fordelivery pursuant to any Confirmation. Notwithstanding the above, if thecumulative effect of all such changes on the price of a ton of Coal doesnot exceed **(*)**per ton for any calendar year under a Transaction, saidchanges shall not adjust the base price under the Transaction. Sellershall use commercially reasonable best efforts to inform Buyer of any suchchange as soon as Seller becomes aware of such change and its effect onthe base price of Coal hereunder. **9.03** The base price may also include an adjustment based upon the calorificvalue, sulfur content or other qualities of the Coal as the Parties maymutually agree upon and as set forth in the Confirmation.
**ARTICLE 10. INVOICES, PAYMENTS, NETTING, AND SET OFF**
**10.01** Based on Seller’s weights, Seller will invoice Buyer for Coal deliveredduring each semi-monthly period. Invoices for quality adjustment, asprovided in a Transaction, shall be issued monthly, based on Seller’sanalyses. Seller shall clearly indicate Buyer’s applicable purchase ordernumber on all invoices. Each invoice shall state for each trainload ofCoal: the quantity of Coal delivered, the Actual Btu and SO2, %Na2O inash (if set forth in the
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  Confirmation) and the invoice price and any other required qualityadjustment. Invoices shall be mailed or electronically transmitted, asapplicable, to:     Invoices to:    Attn: Hoot Lake Plant Otter Tail Power Company 215 S Cascade Fergus Falls MN 56537    Invoices to Kennecott: Attn: Accounts Payable Kennecott Coal Sales 505 South Gillette Avenue Gillette, WY 82717
**10.02** For invoices received between the 1st and 15th of each month, paymentwill be made by the 25th of the same month. For invoices received betweenthe 16th and the end of the month, payment will be made by the 10th of thefollowing month. Amounts shall be paid via electronic means (i.e., ACH orFederal Reserve wire transfer of funds). The wire transfer of funds shallbe sent to Seller’s bank as indicated on the invoice. **10.03** In the event Buyer in good faith disputes part or all of an invoice,notice of the disputed portion, with reasons for dispute, must be givenprior to the due date of the invoice and the undisputed portion shall bepaid by the due date. If the disputed portion is determined to have beenproperly due and payable, interest on that portion not in dispute andwhich has not been paid shall accrue from the date that portion was dueand payable. If a disputed portion is paid and is later determined not tohave been properly due and payable, interest will similarly be refundedfrom the date payment had been received. Interest shall be paid at one(1) percentage point over the then current U.S. prime rate as listed inthe Money Rates section of The Wall Street Journal. All invoices will befinal and not subject to further adjustments or correction unlessobjection to the accuracy thereof is made prior to the lapse of one (1)year after the termination of the applicable Transaction.
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**10.04** If each Party is required to pay an amount to the other Party in thesame month, then such amounts with respect to each Party may be aggregatedand the Parties may discharge their obligations to pay through netting; inwhich case, the Party owing the greater aggregate amount shall pay to theother Party the difference between the amounts owed. **10.05** Each Party reserves to itself all rights, setoffs, counterclaims, andother remedies and defenses to the extent not expressly denied or waivedherein which such Party has or may be entitled to arising from or out ofthis Agreement. All outstanding Transactions and the obligations to makepayment in connection under this Agreement may be offset against eachother, set off, or recouped therefrom. **10.06** If a Party fails to pay amounts under this Agreement within 10 daysafter receipt of demand, unless such amount is the subject of a dispute asprovided above, or is excused by Article 11, in addition to the rights andremedies otherwise provided in this Agreement, the aggrieved Party shallhave the right to suspend performance under any or all Transactions underthis Agreement. If such failure to pay continues for an additional 20days, the aggrieved Party shall have the right to terminate this Agreementand all Transactions and shall be entitled to all other rights under thisAgreement.
**ARTICLE 11. FORCE MAJEURE**
**11.01** The term “Force Majeure” as used herein shall mean an act or event thatis not reasonably within the control and without the fault of the partyclaiming Force Majeure including without limitation, acts of God; acts ofthe public enemy; insurrections; riots; labor disputes; boycotts; fires;explosions; floods; breakdowns of or damage to major components orequipment of Buyer’s generating station, Seller’s mine, or transmissionsystems or Buyer’s transportation; embargoes; acts of judicial or militaryauthorities; acts of governmental authorities; inability to obtainnecessary permits, licenses, and governmental approvals after applying forsame with reasonable diligence; or other causes which prevent theproducing, processing, and/or loading of Coal by Seller, or thereceiving, accepting, unloading and/or utilizing of Coal by
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  Buyer. Force Majeure includes the failure of a Party’s contractor(s) tofurnish labor, services, Coal, materials or equipment in accordance withits contractual obligations (but solely to the extent such failure isitself due to Force Majeure). **11.02** If, because of Force Majeure, either Party fails to perform any of itsobligations under this Agreement (other than the obligation of a Party topay money), and if such Party shall promptly give to the other Partywritten notice of such Force Majeure, then the obligation of the Partygiving such notice shall be suspended to the extent made necessary by suchForce Majeure and during its continuance; provided, the Party giving suchnotice shall use good faith efforts to eliminate such Force Majeure,insofar as reasonably possible, with a minimum of delay. Should thesituation of Force Majeure exceed sixty (60) consecutive days, the Partynot affected by the Force Majeure event may, at its option, terminate theTransaction in whole or in part and neither Party shall have any furtherobligation to the other Party; however, each Party shall be obligated tomake any payments which had become due and payable prior to suchtermination. Any deficiencies in deliveries of Coal caused by an event ofForce Majeure shall not be made up, except by mutual consent. Theaffected Party shall provide suitable proof to the other Party tosubstantiate any claim made under this Article 11. **11.03** Both Parties agree significant capital expenditures and settlement ofstrikes and lockouts shall be entirely within the discretion of the partyhaving the difficulty. The above requirement that any Force Majeure shallbe remedied with all reasonable dispatch shall not require significantcapital expenditure or settlement of strikes and lockouts by acceding tothe demands of the opposing party when such course is inadvisable in thediscretion of the party having difficulty. **11.04** The loss of Buyer’s markets or Buyer’s inability to economically use orresell Coal purchased hereunder, the loss of Seller’s supply or Seller’sability to sell Coal to a market at a more advantageous price, the changein the market price of Coal or price of power, or regulatory orcontractual disallowance of the pass-through of the costs of Coal or otherrelated costs shall not constitute events of Force Majeure.
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**ARTICLE 12. RECORDS, AUDITS, ACCESS**
**12.01** Seller shall maintain books and records relating to the supply of Coalunder this Agreement and the applicable Transaction for a period of notless than two (2) years after the end of each calendar year for all Coaltendered during such calendar year. **12.02** Upon reasonable notice and during normal business hours, Buyer and/orBuyer’s independent auditors shall have the right to inspect Seller’sbooks and records relating to all provisions of this Agreement whichinclude Coal quality, quantity shipped, and price adjustments or as may benecessary to satisfy inquiries from governmental or regulatory agencies,but only to the extent necessary to verify the accuracy of any statement,charges or computations made pursuant to this Agreement and/or aTransaction. Seller shall make a reasonable effort to facilitate Buyer’sinspection of such records in Seller’s possession. Buyer and itsauditors, to the extent permitted by law or regulation, shall treat allsuch information as confidential.
**ARTICLE 13. DEFAULT, REMEDIES, AND TERMINATION**
**13.01** The remedies set forth in this Section 13.01 shall cover thenon-defaulting Party’s remedies for the defaulting Party’s failure toperform prior to any termination for default that may occur.
a) As an alternative to the damages provision below, ifthe Parties mutually agree in writing, the non-performing Partymay schedule deliveries or receipts, as the case may be,pursuant to such terms as the Parties agree in order todischarge some or all of the obligation to pay damages. In theabsence of such agreement, the damages provision of thisArticle shall apply.
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b) Unless excused by Force Majeure, if Seller fails todeliver the quantity of Coal in accordance with the applicableConfirmation and this Agreement, Seller shall pay to Buyer anamount for each ton of Coal of such deficiency equal to (i) thelowest reasonable market price on an equivalent per mmBtu SO2adjusted basis at which Buyer is able, or (ii) at the time ofSeller’s breach, would be able to purchase or otherwise receivecomparable supplies of Coal of comparable quality minus thebase price agreed to for the specific Transaction; except thatif such difference is negative, then neither Party shall haveany obligation to make any deficiency payment to the other. c) Unless excused by Force Majeure, if Buyer fails toaccept delivery of the quantity of Coal in accordance with theapplicable Confirmation and this Agreement, Buyer shall pay toSeller an amount for each ton of Coal of such deficiency equalto (i) the base price agreed to for the specific Transactionminus (ii) the highest reasonable market price on an equivalentper mmBtu SO2 adjusted basis at which Seller is able, or wouldbe able, to sell or otherwise dispose of the Coal at the timeof Buyer’s breach; except that if such difference is negative,then neither Party shall have any obligation to make anydeficiency payment to the other. d) Buyer and Seller shall be subject to commerciallyreasonable good faith obligation to mitigate any damageshereunder.
**13.02** The occurrence of any of the following shall constitute an “Event ofDefault”:
a) Failure by either Party to pay any amounts due. b) Either Party materially breaches any contractualobligation under this Agreement.
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c) Either Party (i) makes any general assignment or anygeneral arrangement for the benefit of creditors, (ii) files apetition or otherwise commences, authorizes or acquiesces in thecommencement of a proceeding or cause of action under anybankruptcy or similar law for the protection of creditors or hassuch a petition involuntarily filed against it and such petitionis not withdrawn or dismissed within thirty (30) days after suchfiling, (iii) otherwise becomes bankrupt or insolvent (howeverevidenced), or (iv) is unable to pay its debts as they fall due.
**13.03** In addition to the non-defaulting Party’s remedies under thisArticle, in the Event of Default with respect to a specificTransaction, the non-defaulting Party shall have the same rights withrespect to such specific Transaction as they have under this Agreementin addition to the right to exercise all other rights and remediesavailable under applicable law.
**ARTICLE 14. NOTICES**
**14.01** Except as expressly provided otherwise, any notice, election or othercorrespondence required or permitted hereunder shall become effectiveupon receipt and, except invoices and payments, shall be deemed to havebeen properly given or delivered when made in writing and deliveredpersonally to the Party to whom directed, or when sent by United Statescertified mail with all necessary postage prepaid and a return receiptrequested, or by a nationally recognized overnight delivery servicewith charges fully prepaid and addressed to the Party at thebelow-specified address:     Notices to Kennecott: Attn: Contract Administration Kennecott Energy Company 505 South Gillette Avenue Gillette, WY 82717 Facsimile Number: (307) 687-6009    Notices to Otter Tail: Attn: Energy Supply Otter Tail Power Company 215 South Cascade Fergus Falls MN 56537
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  The addresses may be changed upon written notice in the manner providedabove, and no amendment hereof shall be required for a change of addressunder this Article 14.
**ARTICLE 15. COOPERATION**
**15.01** Each Party agrees to take all further action that may be reasonablynecessary to perform and to effectuate the purposes and intent of theAgreement, the Confirmation, and any particular Transaction.
**ARTICLE 16. WARRANTY, LIMITATION ON LIABILITY, DUTY TO MITIGATE & INDEMNIFICATION**
**16.01** In no event shall either Party be liable to the other Party forincidental, consequential or punitive damages however and wherever arisingout of, or in connection with, this Agreement or any Transaction. **16.02** **EXCEPT AS EXPRESSLY WARRANTED, HEREIN, IT IS EXPRESSLY AGREED THATSELLER MAKES NO WARRANTY EXPRESSED OR IMPLIED AS TO THE QUALITY,MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OF THE COAL TO BEDELIVERED UNDER THIS AGREEMENT OR AS TO THE RESULTS TO BE OBTAINED FROMTHE USE OF SUCH COAL. SELLER SHALL NOT BE LIABLE FOR ANY INCIDENTAL,PUNITIVE, OR CONSEQUENTIAL DAMAGES, INCLUDING WITHOUT LIMITATION LOSS OFPROFITS OR OVERHEAD, BY VIRTUE OF ITS BREACH OF ANY OF ITS OBLIGATIONSUNDER THE AGREEMENT. NOTHING IN THIS ARTICLE SHALL BE CONSTRUED ASLIMITING BUYER’S RIGHT, SUBJECT TO THE TERMS OF THIS AGREEMENT, TO SEEKDIRECT DAMAGES FOR SELLER’S BREACH OF ANY OF ITS OBLIGATIONS HEREUNDER.**
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**16.03** Seller and Buyer shall each indemnify, defend and hold harmless theother Party from any Claims arising from an act or incident occurring whentitle and risk of loss to the Coal is vested in the indemnifying Party. **16.04** Each Party agrees it has a duty to mitigate damages and covenants. EachParty will use commercially reasonable efforts to minimize any damages itmay incur as a result of the other Party’s performance or non-performanceof the Agreement (except that neither Party shall be required to enterinto a replacement transaction as provided under this Agreement). **16.05** Each Party shall indemnify, defend, and hold the other Party harmlessfrom and against any and all claims arising out of or resulting from thewillful acts or negligence of such Party, its agents, and employees.
**ARTICLE 17. LIMITATION ON WAIVER**
**17.01** No waiver by either Party of any one or more defaults of the other Partyin the performance of this Agreement or any Transaction shall operate orbe construed as a waiver of any future default, or defaults, whether of alike or different character.
**ARTICLE 18. CONFIDENTIALITY**
**18.01** This Agreement and any Confirmation are deemed confidential. TheParties shall protect the confidentiality of the terms of this Agreementand neither this Agreement or any of its terms shall be disclosed to anyother person unless such disclosure is: (i) agreed to in writing by theParties prior to release, (ii) required by law, (iii) as required byjurisdictional regulation pursuant to the request of any regulatoryauthorities (including, without limitation, state utility commissions orboards, the Federal Energy Regulatory Commission, the U.S. Securities andExchange Commission and tax authorities); to attorneys, auditors,consultants or other outside experts of the parties if said individualsare advised of the
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  confidential nature of the information and said individuals agree tomaintain the confidentiality of the information; or to generating unitco-owner(s). Where the law requires such disclosure, notice shall begiven to the other Party, and to the extent possible, such notice shallbe given in advance of disclosure.
**ARTICLE 19. ENTIRETY, AMENDMENTS**
**19.01** This Agreement constitutes the entire agreement between the Parties.This Agreement may not be amended except in a written instrument makingreference hereto signed by the Parties.
**ARTICLE 20. SUCCESSORS AND ASSIGNS**
**20.01** This Agreement shall inure to the benefit of and be binding upon theParties hereto and their respective successors and assigns; provided,however, this Agreement may not be assigned by either Party without theprior written consent of the other Party, which consent shall not beunreasonably withheld or delayed.
**ARTICLE 21. GOVERNING LAWS**
**21.01** This Agreement shall be governed by and construed in accordance with thelaws in the State of Wyoming.
**ARTICLE 22. INTERPRETATION**
**22.01** The Parties acknowledge that each Party and its counsel have reviewedthis Agreement and that the rule of construction to the effect that anyambiguities are to be resolved against the drafting Party shall not beemployed in the interpretation of this Agreement.
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**ARTICLE 23. RESALE AND BUYER’S OBLIGATIONS**
**23.01** The Parties agree, unless specifically provided otherwise in a specificConfirmation, Buyer may resell the Coal purchased under a particularTransaction to another party (“Buyer’s Customer”). The Parties agree thatBuyer’s Customer may perform some of Buyer’s obligations; nevertheless,Buyer shall remain liable for all of Buyer’s obligations hereunder andBuyer shall indemnify and hold Seller harmless from and against any andall Claims made by Buyer’s Customer against Seller. In addition, Buyeragrees to the following:
a) Buyer shall inform Seller at least twenty-four (24)hours in advance of arrival of each unit train at the mine of theidentification number of the unit train, identification ofBuyer’s Customer, and destination of such unit trains. b) The loading of such unit train shall be in accordancewith the loading provisions set forth herein unless Buyernotifies Seller in advance of different loading provisions andsuch different loading provisions are in general accordance withgeneral operating parameters in the mine’s region, and do not, inSeller’s reasonable opinion, impose an undue operating oreconomic burden on Seller. c) All information to be supplied by Seller to Buyer underthis Agreement including but not limited to analysis, weights,train manifest and invoicing information shall be supplied toBuyer and Buyer shall be responsible for transmitting suchinformation to Buyer’s Customer. Buyer is specifically releasedfrom its confidentiality obligations (Article 18) with respect toquality and weighing information provided by Buyer to Buyer’sCustomer. d) If Buyer claims a Force Majeure event at Buyer’sgenerating station, such claim shall not apply to Coal takenunder this Agreement and sold by Buyer to Buyer’s Customer.Force Majeure claims shall also not apply to Force Majeure eventsoccurring at generating stations to which Buyer has resold Coal.
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**ARTICLE 24. SURVIVAL**
**24.01** The provisions of Articles 12 through 22 and Article 24 shall survivethe termination of this Agreement.
**IN WITNESS WHEREOF,**the parties have executed this Agreement by theirrespective, duly authorized representatives effective as of the date firstwritten above.       **Kennecott Coal Sales Company** **Otter Tail Power Company**       By: /s/ Malcolm R. Thomas By: /s/ Ward Uggerud    Malcolm R. Thomas    Vice President, Marketing & Sales Title: VP COO Energy Supply       Date: Dec. 7, 2001 Date: 12-13-01
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     Exhibit A – Not Used
**(*) Confidential information has been omitted and filed separately with theCommission pursuant to Rule 24b-2.**
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