Document:

exv10w3

 

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

Exhibit 10.3

Big
Stone I and Big Stone II

2005 Joint Facilities

Agreement

By And Among

CENTRAL MINNESOTA MUNICIPAL POWER AGENCY,

GREAT RIVER ENERGY, 

HEARTLAND CONSUMERS POWER DISTRICT, 

MONTANA-DAKOTA UTILITIES CO., A DIVISION OF MDU 

RESOURCES
GROUP, INC.,

NORTHWESTERN CORPORATION dba NORTHWESTERN ENERGY,

OTTER TAIL CORPORATION dba OTTER TAIL POWER COMPANY,

SOUTHERN MINNESOTA MUNICIPAL POWER AGENCY, AND

WESTERN MINNESOTA MUNICIPAL POWER AGENCY

June 30, 2005

 

 

			
	 	 	 
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TABLE OF CONTENTS

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

 

 

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

 

 

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

 

 

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

 

 

			
	 	 	 
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Joint Facilities Agreement

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

RECITALS

     WHEREAS, Montana-Dakota, NorthWestern, and Otter Tail, together with such other Persons that
from time to time may be Owners of BSP I (as such term is defined below) (collectively, the “BSP I
Owners”) as tenants in common, own an undivided interest in one hundred percent (100%) of the
existing 450 MW coal-fired electric generating plant located in Grant County, South Dakota, known
as the Big Stone Plant (“BSP I”); and

     WHEREAS, CMMPA, GRE, Heartland, Montana-Dakota, Otter Tail, SMMPA and WMMPA, for as long as
they remain Owners of BSP II (as such term is defined below), along with such other Persons that
from time to time may be Owners of BSP II (collectively, the “BSP II Owners”), are
contemporaneously with the execution of this Agreement, entering into that certain BSP II
Participation Agreement (as such term is defined below), which sets forth their agreement and the
terms under which they will jointly develop, own and operate a new, approximately 600 MW coal-fired
electric generating plant to be known as the Big Stone II Power Plant (“BSP II”) to be located
adjacent to BSP I; and

     WHEREAS, the BSP I Owners and the BSP II Owners have determined that, when compared to the
cost of independent facilities, sharing the use of certain critical facilities will satisfy their
respective requirements for operations that are efficient, economical and in accord with Prudent
Utility Practice (as such term is defined below); and

     WHEREAS, the BSP I Owners believe that the development of BSP II will yield benefits to them,
whether or not they participate in BSP II as an Owner; and

 

 

			
	 	 	 
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     WHEREAS, the BSP I Owners and BSP II Owners have determined that certain BSP I assets must be
purchased from the BSP I Owners in order to develop and operate BSP II in an efficient manner; and

     WHEREAS, BSP I is currently being operated by Otter Tail, and the BSP II Owners are
contemporaneously with the execution of this Agreement entering into the Operation & Maintenance
Services Agreement (as such term is defined below) with Otter Tail for the operation by Otter Tail
of BSP II and the Parties desire to have the same Operator (as such term is defined below) for both
Plants so as to maximize efficiencies and cost savings.

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

AGREEMENTS

ARTICLE I

RULES OF CONSTRUCTION AND INTERPRETATION, DEFINED TERMS

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

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

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

 

 

			
	 	 	 
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Agreement among Otter Tail, Montana-Dakota, and NorthWestern dated October 3, 2002 and all
other agreements entered into by Otter Tail, Montana-Dakota, and NorthWestern in connection
therewith shall be terminated without further action and without liability to any Party thereto as
a result of such termination.

     1.03 Failure of BSP II Owner to Participate in the BSP II Financial Closing. If a BSP II
Owner shall fail to participate in the BSP II Financial Closing (as such term is defined below),
then it shall automatically cease to be a Party hereunder and shall have no further liabilities or
obligations under the Joint Facilities Agreements, except for those liabilities or obligations
arising on or before the date such Person shall cease to be a BSP II Owner. If a Third Party (as
such term is defined below) replaces a BSP II Owner, such Third Party must agree to become a Party
hereto by executing the appropriate joinder agreement to effect the same.

     1.04 Defined Terms. In addition to definitions of other terms appearing elsewhere in this
Agreement, the following terms, when used herein, have the meanings specified:

     Additional Joint Facilities: Shall have the meaning given to such term in Section 6.01.

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

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

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

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

     Annual
Fixed Charge: Shall have the meaning given to such given to such
term in Section 9.05(b).

     Blanket Easement Agreement: Shall mean that certain Blanket Easement Agreement by and among
the BSP I Owners and the BSP II Owners, substantially in the form attached hereto as Schedule
10.02(A).

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

 

 

			
	 	 	 
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     BSP I Joint Facilities: Shall mean those Joint Facilities owned by BSP I Owners and used by
both BSP I and BSP II pursuant to the terms of this Agreement.

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

     BSP I Ownership Agreement: Shall mean the Big Stone Plant Agreement for Sharing Ownership of
Generating Plant by and among Otter Tail Power Company, Montana-Dakota and NorthWestern dated
January 7, 1970 and all supplements and amendments thereto.

     BSP I Plant Site: Shall mean the real property on which BSP I is located and any and all
easements, leases, licenses, option rights, rights-of-way and other rights used in connection with
the BSP I Plant; provided, however, that for purposes of Section 10.06 of this Agreement, it shall
only mean the real property located at the BSP I Plant.

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

     BSP II Cooling Tower Blowdown Pond: Shall have the meaning given to such term in Section 4.07.

     BSP II Financial Closing: Shall mean the date on which the BSP II Owners shall have delivered
and consummated their respective Financing necessary to fund their share of the cost of the BSP II
Plant, including, but not limited to, the execution of all documentation required to consummate
said Financing.

     BSP II Joint Facilities: Shall mean those Joint Facilities owned by BSP II Owners and used by
both BSP I and BSP II pursuant to the terms of this Agreement.

     BSP II Legal Counsel: Shall mean Leonard, Street and Deinard Professional Association, a
professional association under the laws of Minnesota, for purposes of Section 10.09 hereof.

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

     BSP II Participation Agreement: Shall mean the Big Stone II Participation Agreement entered
into by and among CMMPA, GRE, Heartland, Montana-Dakota, Otter Tail, SMMPA, and WMMPA.

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

     Business Day: Shall mean any day other than Saturday, Sunday or any weekday that is a legal
holiday in the State of South Dakota.

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

 

 

			
	 	 	 
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     Change: Shall have the meaning given to such term in Section 2.06(a).

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

     Coal and Ash Joint Facilities: Shall have the meaning given to such term in Section 5.01.

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

     Coordination Committee(s): Shall mean the BSP I or BSP II coordination committees established
and maintained pursuant to the respective Participation Agreement.

     Designated Easement Agreement: Shall mean the instrument that amends or restates the Blanket
Easement Agreement pursuant to the terms of Section 10.02(b).

     Designated Easement Area: Shall mean the real property designated by the Owners pursuant to
Section 10.02(b).

     Designated Representative: Shall have the meaning given to such term in Section 9.02.

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

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

     Election Period: Shall have the meaning given to such term in Section 3.02(a)(ii).

     Electrical Substation: Shall have the meaning given to such term in Section 7.02.

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

     Engineering and Operating Committee(s) or E&O Committee(s): Shall mean the BSP I or BSP II
engineering and operating committees established and maintained pursuant to the Participation
Agreements.

     Environmental Law: Shall mean any Law relating to the environment and/or human health or
safety, or governing, regulating or pertaining to the generation, treatment, storage, handling,
transportation, use, release or disposal of any Hazardous Substance, including, without limitation,
the Comprehensive Environmental Response, Compensation and Liability Act of 1980, 42 U.S.C. § 9601
et seq., the Resource Conservation and Recovery Act, 42 U.S.C. § 6901 et
seq., the Federal Water Pollution Control Act, 33 U.S.C. § 1251 et seq.,
the Clean Water Act of 1977, 33 U.S.C. § 1251 et seq., the Clean Air Act, 42 U.S.C.
§ 7401 et seq., and the Toxic Substances Control Act, 33 U.S.C. § 2601 et
seq., all as amended from time to time.

 

 

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

     FERC Accounts: Shall mean the uniform system of accounts established by FERC for public
utilities and licensees subject to the provisions of the Federal Power Act, as in effect from time
to time.

     Financing: Shall mean the financing undertaken by each of the BSP II Owners to purchase an
ownership interest in BSP II.

     Force Majeure Event: Shall mean a cause or event beyond the reasonable control of, and
without the fault or negligence of the Party claiming force majeure, including, without limitation,
an emergency, acts of God, floods, earthquakes, hurricanes, or tornadoes; sabotage; vandalism
beyond that which could reasonably be prevented by a Party; terrorism; war; riots; fire; explosion;
blockades; insurrection; strike; slow down or labor disruptions (even if such difficulties could be
resolved by conceding to the demands of a labor group); and action or failure to take action by any
Governmental Authority after the Effective Date (including the adoption or change in any rule or
regulation or environmental constraints lawfully imposed by such Governmental Authority), but only
if such requirements, actions, or failures to act prevent or delay performance; and inability,
despite due diligence, to obtain any licenses, permits, or approvals required by any Governmental
Authority; provided, however, that the following shall not be Force Majeure Events:

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

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

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

     Group(s): Shall mean either the BSP I Owners, as a group, or the BSP II Owners, as a group,
or both, as the case may be, when acting collectively with regard to BSP I or BSP II.

 

 

			
	 	 	 
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     Hazardous Substance: Shall mean any pollutant, contaminant, substance, chemical or material
known to cause cancer or reproductive toxicity, or listed or identified in, or governed or
regulated by, any Environmental Law, and also expressly includes urea formaldehyde, polychlorinated
biphenyls, dioxin, radon, lead-based paint, asbestos, asbestos-containing materials, nuclear fuel
or waste, radioactive materials, explosives, and petroleum products, including but not limited to
crude oil or any fraction thereof, natural gas, natural gas liquids, gasoline and synthetic gas,
and coal ash and any other waste material, substance, pollutant or contaminant the presence of
which on, in, about or under a site could subject the owner or operator thereof to any damages,
penalties, fines or liabilities under any applicable Environmental Law.

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

     Indemnified Parties: Shall have the meaning given to such term in Section 10.04.

     Insurance:
Shall have the meaning given to such term in Section 9.05(a).

     Joint Facilities: Shall mean the facilities designated as Joint Facilities in this Agreement
and any improvements thereto.

     Joint Facilities Agreements: Shall mean this Agreement and the Property Agreements.

     Joint Facilities Fee: Shall have the meaning given to such term in Section 9.03.

     Joint Scrubber: Shall have the meaning given to such term in Section 8.05.

     Law(s): Shall mean any and all federal, state, and local statutes, laws, judicial decisions,
regulations, ordinances, rules, judgments, orders, decrees, codes, plans, injunctions, permits,
governmental agreements and governmental restrictions of any Governmental Authority, whether now or
hereafter in effect.

     Losses: Subject in all respects to Section 12.01 of this Agreement, shall mean any and all
costs, expenses, liabilities, damages, injuries or other financial losses of any kind or nature,
including fines, penalties, claims, awards, judgments, demands, insurance deductibles, court costs
and reasonable attorneys’ fees, incurred by such Person.

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

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

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

     Net
Investment: Shall have the meaning given to such term in Section
9.05(b).

 

 

			
	 	 	 
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     Non-Transferring Group: Shall have the meaning given to such term in Section 3.02(a).

     NorthWestern: Shall have the meaning given to that term in the preamble to this Agreement.

     O&M
Costs: Shall have the meaning given to that term in Section
9.05(a).

     Operation & Maintenance Services Agreement or O&M Agreement: Shall mean that certain
Operation & Maintenance Services Agreement entered into by and among the BSP II Owners and Otter
Tail, as Operator.

     Operator: Shall mean the operator of each of or both, as the case may be, of the BSP I and
BSP II Plants.

     Option to Purchase Contract: Shall mean that certain Option to Purchase Contract by and among
the BSP I Owners and Otter Tail, as administrative agent on behalf of itself and the other BSP II
Owners, substantially in the form attached hereto as Schedule 10.01(A).

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

     Owner(s): Shall mean those Persons that from time to time own an Ownership Share in one or
both Plants, including, as of the Effective Date, those Parties named in the preamble to this
Agreement.

     Owners’ Insurance: Shall have the meaning given to such term in Section 11.02.

     Ownership Share: Shall mean the ownership interest of a particular Owner in a Plant.

     Participation Agreement(s): Shall mean the BSP II Participation Agreement and the BSP I
Ownership Agreement.

     Party or Parties: Shall have the meaning given to those terms in the preamble to this
Agreement.

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

     Plant(s): Shall mean BSP I or BSP II or both, as the case may be.

     Plant Property: Shall mean property comprising the Plant and all other property (real,
personal or fixtures, tangible or intangible), as well as property owned by the Owners for use
exclusively in the construction, operation, maintenance or repair of the Plants.

     Property Agreements: Shall mean the Option to Purchase Contract, memorandum thereof, and the
Blanket Easement Agreement.

 

 

			
	 	 	 
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     Property
Taxes: Shall have the meaning given to that term in Section
9.05(a).

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

     Representative: Shall mean, with respect to a Party, any principal, shareholder, director,
officer, employee or agent of such Party or its Affiliates, but only to the extent, in each case,
such individual is engaged in the fulfillment of an obligation under this Agreement and is
fulfilling such obligation in his or her capacity as a principal, shareholder, director, officer,
employee or agent of such Party or its Affiliate.

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

     Term: Shall have the meaning given to such term in Section 16.01.

     Third Party(ies): Shall mean any Person other than an Owner or an Affiliate of an Owner.

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

     Transferring Group: Shall have the meaning given to such term in Section 3.02(a).

     Use
Factor: Shall have the meaning given to such term in Section
9.05(a).

     Water Resources Joint Facilities: Shall have meaning given to such term in Section 4.01.

     Willful Action: Shall mean any act or omission of a Party (including an Owner acting as
Operator), done or not done, at the direction of its directors, a corporate officer or other
employee having management responsibilities in respect of the matter involved, which:

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

 

 

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

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

ARTICLE II

JOINT FACILITIES: IDENTIFICATION, OWNERSHIP, ADEQUACY, AND

CHANGES

     2.01 Identification and Common Use of Joint Facilities. The Joint Facilities shall consist of
the BSP I Joint Facilities and the BSP II Joint Facilities described in this Agreement and the
Schedules and Exhibits attached hereto, including, without limitation, those Joint Facilities
specifically described in Article IV, Article V and Article VI of this Agreement. As contemplated
by this Agreement, the Option to Purchase Contract (if exercised), and the Blanket Easement
Agreement, each Group shall have the right to use and have access to the Joint Facilities.

     2.02 Ownership of Joint Facilities. Each Group shall own, lease, or otherwise provide its
respective Joint Facilities hereunder. No instruments by which title or other property interest in
any Joint Facilities is acquired by the Owners, or by which the title or other property interest of
the Owners in any Joint Facilities is evidenced, shall contain any provisions inconsistent with the
provisions or intent of this Agreement.

     2.03 Waiver of Partition Rights. No Owner or Group shall resort to any action at law or in
equity to partition any Joint Facility (either by partition in kind or by the sale of the subject
property and division of the proceeds), and each Owner and Group hereby expressly waives the
benefit of all Laws that may now or hereafter authorize such partition for a term that is
coterminous with the Term or for such lesser period as may be required or permitted by applicable
Law.

     2.04 Right of Possession. No Owner or Group shall lease or otherwise grant to another Person
the right of possession as to any of the Joint Facilities, except as provided under this Agreement.

     2.05 Adequacy of Property. While the real property described in the Property Agreements is
intended to include land, easements and other rights adequate for the investigation, design,
construction and operation of BSP II and the continuing operation of BSP I, the Groups acknowledge
that it is anticipated that either Group may require additional real property in connection
therewith. Accordingly, at any time during the Term, if the Groups reasonably determine additional
real property or new Joint Facilities or modifications to existing Joint Facilities are necessary
or desirable, the Groups agree to negotiate in good faith for the rights to acquire and to acquire
any additional real property which may be necessary for the construction and operation of such new
Joint Facilities or such modifications to Joint Facilities, including, but not limited to, real
property and rights to use real property owned by the other Group.

 

 

			
	 	 	 
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     2.06 Changes to Joint Facilities.

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

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

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

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

 

 

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

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

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

 

 

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

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

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

 

 

			
	 	 	 
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Plant site without the prior consent of the other Group and without making any such new
facility available to the other Group as a Joint Facility. Except as provided in Section 2.06(c),
a Group may not construct a facility that, to any extent, is located on or requires the use of the
other Group’s Plant site without the prior written consent of the other Group, which prior written
consent may be denied in the sole discretion of the other Group. The Groups may, however, choose
to cooperate with each other in the construction of new Joint Facilities.

ARTICLE III

TRANSFER OF OWNERSHIP INTERESTS IN AND OF JOINT FACILITIES

     3.01 Transfers of Ownership Interests in Joint Facilities. A Party’s or a Group’s ownership
interest in a Joint Facility may only be Transferred as permitted under the Participation Agreement
applicable to that Party or Group.

     3.02 Right of First Refusal for Joint Facilities. Beginning on the Effective Date, a Group
may not Transfer (including, without limitation, by sale) ownership (whether partial or all) of a
Joint Facility, except as provided in Section 3.01, unless it first complies in all respects with
the right of first refusal process contained in this Section 3.02.

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

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

 

 

			
	 	 	 
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     3.03 Decommissioning.

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

     3.04 Covenants Run With Land. The provisions of this Agreement, including, without
limitation, the right of first refusal provisions contained in Section 3.02, shall constitute
covenants running with the land as to the interests in real property which are made subject hereto
and shall bind each Owner and its successors and assigns.

ARTICLE IV

WATER RESOURCES JOINT FACILITIES

     4.01 Water Resources Joint Facilities. For purposes of this Agreement, the “Water Resources
Joint Facilities” are those water resources and related facilities used to transport, store and
treat water necessary in the operation of BSP I and BSP II. Water Resources Joint Facilities shall
consist of the facilities described in this Article IV and the Water Resources Joint Facilities set
forth in Schedule 4.01 attached hereto.

     4.02 Water Restrictions Caused By Drought or Other Conditions.

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

 

 

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

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

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

 

 

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

     4.04 Lake Water Intake and Pipeline Structure. The lake water intake and pipeline structure,
and its various components set forth on Schedule 4.04, and including, without limitation, the water
intake building and all associated pumping and operational equipment located on the shore of Big
Stone Lake and the forty-eight (48) inch concrete pipeline from the Long Lake building on the shore
of Big Stone Lake to the existing discharge structure, which consists of the concrete weir located
in the brine concentrator make-up pond and existing on the Effective Date shall be BSP I Joint
Facilities. The BSP II Owners shall pay a fee for the use of the lake water intake and pipeline
structure as calculated pursuant to Section 9.05.

     4.05 Cooling Water Pond. The three hundred forty (340) acre cooling water pond immediately
adjacent to BSP I, used by BSP I, existing as of the Effective Date, and identified on Schedule
4.05, shall be a BSP I Joint Facility. Any makeup water necessary for the operation of the BSP II
cooling towers will come from the cooling water pond. Any makeup water necessary for the cooling
water pond will come from the BSP I storage ponds, described in Section 4.06 hereof. There will be
no fee charged for the use of the cooling water pond and the Groups shall share the ongoing cost of
maintenance of the cooling water pond equally.

     4.06 Water Storage Ponds. The approximately one hundred (100) surface acres holding pond
closest to Highway 109 and the approximately two hundred (200) surface acre evaporation ponds used
by BSP I and existing as of the Effective Date, and identified on Schedule 4.05, shall be BSP I
Joint Facilities. As of the date of Commercial Operation, the holding pond and the evaporation
pond will be used as water storage ponds for both Plants, but shall remain BSP I Joint Facilities.
The BSP II Owners shall construct an additional water storage pond, to be located Southwest of the
Plant site, that will be a BSP II Joint Facility. Collectively, the storage ponds will supply
makeup water to the cooling water pond. The BSP II Owners shall construct, pay for, and own any
pumps and a pipeline necessary to connect the storage ponds to the cooling pond. These pumps and
pipeline shall be BSP II Joint Facilities. There will be no Joint Facilities Fees or other fees
charged for the use of the storage ponds. BSP II Owners shall be solely responsible for the
ongoing cost of maintenance of any pumps and pipeline necessary to connect the storage ponds to the
cooling pond.

     4.07 BSP II Cooling Tower Blowdown Pond. The BSP II Owners shall construct, pay for, and own
a new cooling tower blowdown pond on the western edge of the BSP II Plant Site, identified on
Schedule 4.07 (“BSP II Cooling Tower Blowdown Pond”). The BSP II Cooling Tower Blowdown Pond shall
be maintained at the sole cost of the BSP II Owners and will not be a Joint Facility.
Notwithstanding the foregoing sentence, the BSP II Cooling Tower Blowdown Pond shall be used to
provide water supply to both the existing BSP I brine concentrator and new BSP II brine
concentrator. The BSP II Owners shall construct, pay for,

 

 

	 	 	 
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and own any pumps or pipeline necessary
to connect the BSP II Cooling Water Blowdown Pond to the existing and new brine concentrators. No
fee shall be charged for the BSP I Owners use of the BSP II Cooling Water Blowdown Pond to provide
water supply to the existing brine concentrator. BSP II Owners shall be solely responsible for the
ongoing cost of maintenance of any pumps and pipeline necessary to connect the BSP II Cooling Water
Blowdown Pond to the existing BSP I brine concentrator and the new BSP II brine concentrator.

     4.08 Demineralizer Trains. The BSP II Owners shall purchase and erect a new demineralizer
train at BSP I to supplement the existing system of vessels, piping, valves, and controls for
preparing the main boiler supply water on the ground floor of the BSP I main building, between
column lines C6 to L and column lines 8 to 9, with all three demineralizer trains operated out of
the same location. The two existing demineralizer trains shall be BSP I Joint Facilities and the
new demineralizer train shall be a BSP II Joint Facility. There will be no fee charged for the use
of the existing or new demineralizer trains and the BSP I Owners and BSP II Owners shall split the
ongoing cost of maintenance of the three demineralizer trains between the two Plants in proportion
to the demineralized water use of the Plants, measured (and not calculated) in gallons during the
previous calendar year.

     4.09 Cold Lime Softener. The BSP II Owners intend to purchase from the BSP I Owners the
existing BSP I cold lime softener at depreciated book value and associated real estate identified
on Schedule 4.05. If the BSP II Owners exercise their option to purchase the real estate described
in the Option to Purchase Contract, they shall purchase the cold lime softener from the BSP I
Owners on the date the Option to Purchase Contract is exercised. If this purchase occurs, the cold
lime softener shall not be a BSP II Joint Facility. The BSP II Owners shall construct, pay for,
and own a new pipeline and any additional facilities necessary to connect the cold lime softener
discharge to the BSP II Plant’s circulating water system. The new facilities referred to in the
preceding sentence shall not be Joint Facilities. The BSP II Owners shall be solely responsible
for the ongoing costs of maintenance for the cold lime softener, if purchased from the BSP I
Owners.

ARTICLE V

COAL AND ASH JOINT FACILITIES

     5.01 Coal And Ash Joint Facilities. For purposes of this Agreement, the “Coal and Ash Joint
Facilities” are those facilities used to receive and store coal and ash necessary in the operation
of, or produced from the operation of, BSP I and BSP II. Coal and Ash Joint Facilities shall
consist of the facilities
described in this Article V and in the “Coal and Ash Joint Facilities” set forth in Schedule
5.01 attached hereto.

     5.02 Coal Dead Storage Area. The coal dead storage pile area used by BSP I and existing as of
the Effective Date shall be a BSP I Joint Facility. Contemporaneously herewith, the Owners have
entered into the Option to Purchase Contract, which, among other things, contemplates the purchase
by the BSP II Owners of a portion of the existing coal dead storage area. If the BSP II Owners
purchase a portion of the existing coal dead storage area, the portion purchased shall be a BSP II
Joint Facility. The existing coal dead storage area is adequate for the storage and stockpiling of
coal in sufficient quantities for both BSP I and BSP II and both Groups may use the coal dead
storage area to store any amount of coal as may be needed for the

 

 

	 	 	 
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operation of BSP I and BSP II.
There will be no Joint Facilities Fees or other fee charged for the use of the coal dead storage
areas (other than costs related to the initial development by BSP II of its share of the site
(which costs shall be borne exclusively by BSP II)), and the Groups shall share the ongoing cost of
maintenance of the coal dead storage areas equally.

     5.03 BSP II Live Coal Storage. The BSP II Owners shall construct, pay for, and own a new
conveyor from the head of the #2 conveyor (located in the coal dead storage area) to the new BSP II
coal storage silos. The new conveyor shall have a retractable plow suitable for use to provide
stack-out to dead storage. A description of the new conveyor system and the stack-out chute is set
forth on Schedule 5.03 attached hereto. The new conveyor shall be maintained at the sole cost of
the BSP II Owners and will not be a Joint Facility. The new stack-out chute will be a BSP II
Joint Facility. There will be no fee charged for the use of the new stack-out chute and the
ongoing cost of maintenance of the new stack-out chute shall be shared equally between the Groups.

     5.04 Coal Measuring Procedure. All coal that enters or leaves the coal dead storage pile area
shall be measured and accounted for pursuant to procedures to be developed by the Operator. Such
procedures shall provide for the accurate and complete measurement of the coal inventory of each
Group and the use of such coal and, as appropriate, shall reflect the quality of coal and any
shrinkage.

     5.05 New Coal Yard Shop. The BSP II Owners shall construct, pay for, and own a new coal yard
shop for storage and maintenance of mobile equipment used in connection with coal and ash handling.
The new coal yard shop shall be located on land that the BSP II Owners anticipate purchasing from
the BSP I Owners pursuant to the Option to Purchase Contract. The new coal yard shop shall be a
BSP II Joint Facility. Although a Joint Facility, no Joint Facilities Fee or other fee shall be
charged to the BSP I Owners for use of the new coal yard shop, and the BSP II Owners shall be
solely responsible for the cost of maintenance of the new coal yard shop.

     5.06 Mobile Equipment. The BSP I mobile equipment, consisting of the types of mobile
equipment listed on Schedule 5.06 hereto, shall be BSP I Joint Facilities. Ninety (90) days before
the date of the first coal delivery to BSP II, the BSP II Owners shall purchase one-half of such
mobile equipment from the BSP I Owners at its depreciated book value. Any new mobile equipment
that the Groups agree is required for
joint use by BSP I and BSP II shall be purchased with one-half of the cost borne by the BSP I
Owners and one-half borne by the BSP II Owners, so that, to the extent possible, ownership of the
mobile equipment is divided equally between the Groups. With respect to the types of mobile
equipment required to have certificates of title under applicable Law, the BSP I Owners and BSP II
Owners shall each endeavor to purchase individual units of such mobile equipment in order that the
value, measured by the purchase price, shall approximate, as much as possible, half of the value of
such mobile equipment required to have certificates of title. All new mobile equipment purchased
by the BSP I Owners that is intended to be used jointly by the Groups shall be BSP I Joint
Facilities. All new mobile equipment purchased by the BSP II Owners that is intended to be used
jointly by the Groups shall be BSP II Joint Facilities. Each Group shall split the cost of
maintaining all mobile equipment in proportion to the coal consumption at the two Plants; provided,
however, that each Group shall pay all costs associated with owning and operating its own motor
vehicles. The

 

 

	 	 	 
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E&O Committees shall, to the extent necessary, develop policies and procedures to
implement the mobile equipment ownership arrangement of this Section 5.06.

     5.07 Coal Receiving System, Rail Spur and Coal Unloading Facilities. The coal receiving
system, rail spur and fuel unloading facilities used for BSP I and existing on the Effective Date
shall be BSP I Joint Facilities. The coal receiving system, rail spur and fuel unloading
facilities consist of such facilities as are necessary for transporting, loading and unloading coal
and other materials, including but not limited to BSP I’s rail spur, rail car rotary dumper,
positioner and #1 and #2 conveyors all as described more fully in Schedule 5.07 attached hereto.
The BSP II Owners shall pay a fee for the use of the coal receiving system, rail spur and fuel
unloading facilities as calculated pursuant to Section 9.05.

     5.08 Rail Cars. BSP I currently leases rail cars under a fifteen (15) year lease, which lease
terminates in 2011, and thereafter shall lease or purchase, as it deems appropriate, its rail cars.
BSP II shall purchase or lease rail cars, as it deems appropriate. The BSP I rail cars shall be
BSP I Joint Facilities and the BSP II rail cars shall be BSP II Joint Facilities. Each Group’s
rail cars shall be used principally for the benefit of the Group that owns or leases the rail cars,
but the Operator may use any of the rail cars for both Plants if it determines such use is
efficient. For rail cars of one Plant being used by the other, a usage fee for rail cars shall be
determined by the Operator at the end of each calendar year based on the actual usage of the rail
cars by BSP I and BSP II and the actual costs associated with the same. Each Plant will bear its
own costs for leasing, operating or maintaining its rail cars.

     5.09 Ash Disposal Area. The existing BSP I ash disposal site shall be a Big Stone I Joint
Facility. Both Groups shall pay for ongoing capital improvements made to the ash disposal site
after the date BSP II first achieves Commercial Operation, including but not limited to any
reclamation costs and any environmental remediation costs, in proportion to each Plant’s total
volume of ash deposited in the site. Other than as specifically included herein, the BSP II Owners
shall not pay for any volume of the existing ash disposal site consumed as a result of BSP II Plant
ash being deposited. Instead, a calculation will be made of the volume of the existing site
consumed by the ash from the BSP II Plant, and when and if it becomes necessary to construct a new
ash disposal site, the BSP II Owners shall pay for all costs associated with creation of a new site
with a capacity equal to the
volume of ash that was disposed by BSP II into the existing ash disposal site. Nothing herein
shall prevent the Groups from agreeing to the creation of a new site larger in capacity than that
required by the previous sentence, and in such event, the costs of creating such ash disposal site
shall be as the Groups may agree. All costs of maintaining a new site shall be shared between the
Groups in proportion to the volume of ash deposited by each Plant on an ongoing basis. Each Group
will pay its costs associated with delivering its respective ash to the existing ash disposal site
and any new ash disposal site.

     5.10 Relocation of Ash Silo. The existing BSP I ash silo, a thirty-five (35) feet by
sixty-four (64) feet and three (3) inches steel fly ash bin manufactured by the United Conveyor
Corporation, shall be relocated by the BSP II Owners, at their sole expense, to a location at the
BSP II Plant Site agreed to by the Groups. The relocated BSP I ash silo shall continue to be owned
by BSP I Owners and shall not be a Joint Facility. The BSP I Owners shall not be charged for the
use of the BSP II property on which ash silo will be relocated. BSP I Owners shall be responsible
for all costs of maintaining the BSP I Ash Silo.

 

 

	 	 	 
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ARTICLE VI

ADDITIONAL JOINT FACILITIES

     6.01 Plant Joint Facilities. The “Additional Joint Facilities” are those facilities described
in this Article VI and in those Additional Joint Facilities set forth in Schedule 6.01 attached
hereto.

     6.02 Warehouse. The existing BSP I fifty-eight (58) feet by two hundred and ten (210) feet
coal yard shop building adjacent to the existing BSP I cooling pond and north of the existing BSP I
pollution control equipment currently being used by BSP I as of the Effective Date will be a BSP I
Joint Facility and will become a warehouse for both BSP I and BSP II for storage of Materials and
Supplies. Although a Joint Facility, there will be no Joint Facilities Fee or other fee charged
for the use of the warehouse and the Groups shall share the ongoing cost of maintenance of the
warehouse equally. The BSP II Owners shall construct and pay for all costs associated with
converting the existing BSP I coal yard shop into a warehouse, including, without limitation, any
upgrades or modifications to the existing computerized tracking system for parts and inventory
required to permit tracking of parts and inventory so that if either Plant uses Materials and
Supplies owned by the other Plant and which are stored in the warehouse, an accounting of such use
shall be possible. Reimbursement for any Materials and Supplies of one Plant used by the other
Plant will be at original cost plus twenty percent (20%).

     6.03 Office and Locker Room. The BSP II Owners shall construct, pay for and own additional
office and locker room space as needed. Any new office or locker room space constructed by the BSP
II Owners will be a BSP II Joint Facility. BSP I Owners shall be allowed to use any office and
locker room space built by the BSP II Owners and needed in connection with the operation of BSP I
at no charge. The existing office and locker room will be BSP I Joint Facilities. BSP II Owners
shall be allowed to use any existing office and locker room space needed in connection with the
operation of BSP II
at no charge. The Groups shall share the ongoing cost of maintenance of the office and locker
rooms equally.

     6.04 Roads and Parking. The BSP II Owners shall construct, pay for and own additional roads
and parking as needed. The existing roads and parking will be BSP I Joint Facilities. Any new
roads and parking constructed by the BSP II Owners will be BSP II Joint Facilities. The Groups
shall share the ongoing cost of maintenance of the roads and parking equally.

     6.05 Control Room. Except for the distributed control systems and all other systems necessary
for the operation and control of BSP I, the control room used for the operation and control of BSP
I and existing on the Effective Date shall be a BSP I Joint Facility. The BSP II Owners shall
construct, pay for and own all distributed control systems and all other systems necessary for the
operation and control of BSP II and located in the control room. Any new distributed control
systems and all other systems necessary for the operation and control of BSP II and located in the
control room and paid for by the BSP II Owners shall not be Joint Facilities. Except for the
distributed control systems and all other systems necessary for the operation and control of each
Plant which will be separately owned by each Plant, BSP I Owners and BSP II Owners shall share the
ongoing cost of maintenance of the control room equally between the two Plants. BSP I Owners and
BSP II Owners shall cooperate to direct the Operator on the most

 

 

	 	 	 
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effective use of the control room
to operate both Plants. Nothing herein shall prevent the Owners from establishing a common
distributed control system.

     6.06 Common Fire System. The existing fire system, consisting of the electric and diesel fire
pumps in the circulating water inlet building and all associated supply piping, valves, hydrants,
and hydrant buildings at the BSP I Plant Site and currently used for BSP I and existing on the
Effective Date will be a BSP I Joint Facility. The BSP II Owners shall construct and pay for
additions and upgrades to the fire system which the Groups agree are needed for the construction
and operation of BSP II. Any new additions to the fire system constructed and paid for by the BSP
II Owners shall be BSP II Joint Facilities. There will be no Joint Facilities Fees or other fee
charged for the use of the existing fire system or any additions or upgrades and the BSP I Owners
and BSP II Owners shall share the ongoing cost of maintenance of the common fire system in
proportion to the nameplate Capacity of the two Plants.

ARTICLE VII

ELECTRICAL SUBSTATION

     7.01 MISO Interconnection Request. The BSP II Owners have submitted an interconnection
request to the MISO and pursuant to MISO’s FERC-filed tariff addressing such interconnection
requests, the BSP II Owners anticipate entering into an interconnection agreement with MISO and
affected transmission owners. The BSP II Owners shall provide a copy of all interconnection studies
done by or with MISO regarding BSP II to the BSP I Owners.

     7.02 Transmission Owners’ Additions and Upgrades. To the extent any additions or upgrades to
the BSP I electrical substation (the “Electrical Substation”) are required due to the construction
of BSP II, and such additions or upgrades are deemed to be on the transmission owners’ side of the
point of interconnection (as defined in the MISO interconnection agreement or pursuant to the BSP
II Participation Agreement), then the costs of such additions or upgrades shall be as directed in
the MISO interconnection agreement. The BSP II Owners shall reimburse the BSP I Owners for any such
costs, but only to the extent any such additions or upgrades are required to be made pursuant to
the MISO interconnection agreement.

     7.03 Generation Owners’ Additions and Upgrades. Any additions or upgrades required to be made
to the Electrical Substation that are deemed to be on the generators’ side of the point of
interconnection (as defined in the MISO interconnection agreement) shall be made by, owned,
maintained, and paid for by the BSP II Owners and shall be BSP II Joint Facilities. Those
components of the Electrical Substation that do not require additions or upgrades shall continue to
be owned by the BSP I Owners and shall be BSP I Joint Facilities. Before making any such additions
or upgrades, the BSP II Owners shall provide information regarding the same to the BSP I Owners.
This information shall include, but not be limited to, a one-line diagram showing the proposed
additions and upgrades to the Electrical Substation. All such additions or upgrades (including,
without limitation, the one-line diagram) must be approved by the BSP I Owners, which approval
shall not be unreasonably withheld, before the BSP II Owners make any such additions or upgrades.

     7.04 Direct Cost Reimbursements Before Commercial Operation. Prior to the first date of
Commercial Operation, no additions or upgrades shall have or cause a material adverse

 

 

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

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

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

provided, however, that if the market price of such Capacity or Energy is less than what it would
have cost the BSP I Owners to produce such Capacity or Energy, then the BSP II Owners shall have no
obligations under this Section 7.04.

     7.05 No Cost Reimbursement After Commercial Operation. After the first date of Commercial
Operation, each Group shall be responsible for maintaining its own Electrical Substation Joint
Facilities and shall be responsible, under applicable Law, for obtaining its own replacement
Capacity and Energy in the event of an outage or any other service interruption that is related to
the Electrical Substation. Nothing herein shall affect, alter or modify any rights or obligations
created by that certain Settlement Agreement entered into on or around March 24, 2005 by and among
MISO, Otter Tail, Montana-Dakota, Minnkota Power Cooperative, Inc. as agent for Northern Municipal
Power Agency, and NorthWestern.

ARTICLE VIII

CONSUMABLES, PRODUCT SALES AND EMISSIONS

     8.01 Electricity Consumed by the Joint Facilities. The electricity necessary for the
operation of the lake water intake and pipeline structure addressed in Section 4.04 hereof and the
coal receiving system, rail spur and coal unloading facilities addressed in Section 5.07 hereof
shall be provided by the BSP I Owners and the BSP II Owners in proportion to the respective water
usage (on a calculated basis) and coal consumption, respectively, of the Plants for the previous
calendar year. For all Joint Facilities, other than the lake water intake and pipeline structure
and the coal receiving system, rail spur and fuel unloading facilities, the cost of electricity
shall be recovered through the particular arrangement for ongoing cost of maintenance for such
Joint Facility.

 

 

	 	 	 
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     8.02 Fuel Oil Sales to BSP II. The BSP I Owners own a five hundred thousand (500,000) gallon
fuel oil storage tank, forty-eight (48) feet in diameter and forty (40) feet tall, constructed of
carbon steel and designated V60-B, located closest to the existing cooling pond on the BSP I Plant
site. The fuel oil storage tank has sufficient capacity to meet the ongoing fuel oil needs of both
Plants. The fuel oil storage tank will not be a Joint Facility, but the BSP II Operator shall
purchase all of the fuel oil necessary for the operation of BSP II from the BSP I Owners. All fuel
oil stored in the fuel oil storage tank shall be No. 2 fuel oil. The purchase price for the fuel
oil shall be the BSP I cost of the fuel oil, plus a fee of twenty percent (20%). The BSP II Owners
shall construct, pay for, own, and maintain at their expense any new pipeline or other facilities
necessary to transport the fuel oil to the BSP II Plant and these facilities will not be Joint
Facilities. The BSP I Owners shall keep reasonable fuel oil supplies on hand to meet the fuel oil
needs of BSP II.

     8.03 Brine Concentrator Product Water and Steam Sales. Nothing in this Agreement shall alter
any existing agreements between the BSP I Owners and Northern Lights Ethanol, LLC for the sale of
steam or brine concentrator product water from any BSP I Joint Facilities, nor require the BSP I
Owners to compensate the BSP II Owners for the use of a new BSP II brine concentrator
contemplated by Section 4.03 hereof in connection with any existing agreement between the BSP
I Owners and Northern Lights Ethanol, LLC.

     8.04 Permits.

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

 

 

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

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

ARTICLE IX

OPERATION OF JOINT FACILITIES, USAGE FEE AND

PAYMENT, SINGLE OPERATOR

     9.01 Operation of the Joint Facilities. Except as otherwise provided for in this Agreement,
the single Operator contemplated by Section 9.06 shall be responsible for operating the BSP I Joint
Facilities and the BSP II Joint Facilities pursuant to separate agreements with each Group for the
operation of each Plant and, so long as there is a single Operator, each Group’s Operator shall
fairly allocate its time between BSP I and BSP II.

     9.02 Designated Representatives. Each Group shall appoint an individual representative to
serve as its official representative (a “Designated Representative”) to communicate the decisions
of each Group to the other Group with respect to matters related to each Group’s respective Plant,
Joint Facilities, and all other matters contemplated hereunder. Each Group shall be entitled to
rely on a communication with respect to a Plant matter, whether written or oral, from a Designated
Representative, unless it receives written notice signed by all Owners of a Group (with the
exception of the former Designated Representative), as may be required under the applicable
Participation Agreement, that the Designated Representative of a Group is no longer the Group’s
Designated Representative and naming the Group’s new Designated Representative.

     9.03 Joint Facilities Charges. The BSP II Owners shall pay to the BSP I Owners or, in
relevant instances, the BSP I Owners shall pay the BSP II Owners, a monthly amount determined by
the application of Joint Facilities Fee formula in Section 9.05 hereof (each, a “Joint Facilities
Fee”). All cost allocations contemplated in this Agreement and all payments of any Joint
Facilities Fees hereunder shall not commence until the date on which BSP II receives its first
shipment of coal, except that the BSP II Owners shall reimburse the BSP I Owners for all costs
incurred for filling any of BSP II’s water facilities that occur prior to the aforementioned first
shipment.

     9.04 Netting of Payment. There shall be a monthly netting of amounts due between BSP I Owners
and BSP II Owners of the Joint Facilities Fees, so that one payment will be made by one Group to
the other Group each month. The Operator shall prepare the monthly net invoice.

     9.05 Joint Facilities Fee Formulas. The Joint Facilities Fee formula in this Section

 

 

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

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

 

 

	 	 	 
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The additional terms within the above Formula shall be defined as follows:

Net Investment: Shall mean the (*) of the (*) of the Joint Facility.

     Annual Fixed Charge: For the Joint Facilities identified herein, the Annual
Fixed Charge shall be (*).

     9.06 Single Operator.

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

 

 

	 	 	 
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     9.07 Joint Ownership of Joint Facilities. The Groups may jointly own Joint Facilities,
provided that all Owners unanimously agree to such joint ownership in writing prior to the transfer
of title or acquisition of a jointly-owned Joint Facility.

ARTICLE X

ACQUISITION OF PROPERTY AND ACCESS; INDEMNIFICATION

     10.01 Option to Purchase Contract. Contemporaneously with the execution of this Agreement,
the BSP I Owners and Otter Tail, as administrative agent for itself and the other BSP II Owners,
shall enter into the Option to Purchase Contract, substantially in the form attached hereto as
Schedule 10.01(A). The BSP I Owners and Otter Tail, as administrative agent for itself and the
other BSP II Owners, shall also, contemporaneously with the execution of this Agreement, execute
and deliver a memorandum of the Option to Purchase Contract, substantially in the form attached
hereto as Schedule 10.01(B). Otter Tail and the other BSP II Owners shall have the option to
purchase none, some or all of the property that is the subject of the Option to Purchase Contract,
based (in the BSP II Owners’ sole discretion) on the results of the environmental due diligence
conducted pursuant to Section 10.09 below. Otter Tail, in its capacity as administrative agent for
itself and the other BSP II Owners for purposes of the Option to Purchase Contract, shall, with
respect thereto, only act or not act, as directed by the BSP II E&O Committee.

     10.02 Easement Agreement.

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

 

 

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

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

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

 

 

	 	 	 
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shall remove all equipment and material from the BSP I Plant Site
and restore the BSP I Plant Site to the condition existing prior to BSP II activities pursuant to
this Section 10.03, normal wear and tear alone excepted.

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

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

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

provided, however, that if the market price of such Capacity or Energy is less than what it would
have cost the BSP I Owners to produce such Capacity or Energy, then the BSP II Owners shall have no
obligations under this Section 10.04.

     The BSP II Owners further shall indemnify and hold harmless the BSP I Owners individually,
their Affiliates, directors, officers, employees, agents, contractors, subcontractors, licensees,
invitees, and the respective heirs, legal representatives, successors and assigns of all such
Person (hereinafter collectively referred to as “Indemnified Parties”) from and against any workers
compensation claims, and any mechanic’s or supplier’s claim for lien in connection with work done
or materials furnished for BSP II and associated facilities. The BSP II Owners waive all claims
against the Indemnified Parties for damage to BSP II materials or property placed

 

 

	 	 	 
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upon the BSP I
Plant Site from any cause except Willful Action arising at any time during the course of activities
under Section 10.03.

     10.05 Compliance with Laws. The BSP II Owners covenant that during the activities conducted
pursuant to Section 10.03 and their use of the temporary easement rights, the BSP II Owners will,
at their own expense, comply with all Laws affecting the activities conducted pursuant to Section
10.03 and will indemnify and hold harmless the BSP I Owners, each BSP I Owner individually, their
directors, officers, employees and invitees, BSP I and BSP I Plant Property from the consequences
of any violation of any Laws, and against any tax, fee or other charge or penalty imposed or levied
on account of any failure to comply with any such Law, and from any liens or other encumbrances
that might arise from the activities pursuant to Section 10.03.

     10.06 Environmental Indemnification. The BSP II Owners shall indemnify, defend, and hold
harmless the Indemnified Parties from and against any and all Losses, including reasonable
attorneys’ fees and consultants’ fees, arising from or relating to: (i) the presence of any
Hazardous Substance in, upon, under or over the property purchased pursuant to Section 10.01 or the
Designated Easement Areas (upon designation thereof pursuant to the terms of Section 10.02(b))
prior to or following the date of this Agreement (the “Existing Contamination”), and the migration
of such Existing Contamination from such property before or after the date of this Agreement,
whether or not the BSP I Owners, a BSP I Owner, individually, their Affiliates, directors,
officers, employees, agents, contractors, subcontractors, licensees, invitees or anyone else acting
for or on behalf of the BSP I Owners placed, located, deposited or released such Existing
Contamination, or is otherwise responsible or liable therefor; whether or not the Existing
Contamination violated or violates an applicable Environmental Law; whether or not the Existing
Contamination is known or unknown, suspected or unsuspected as of the date of this Agreement or
thereafter; and whether such liabilities arise in equity or under an Environmental Law; and (ii)
the presence of any Hazardous Substance in, upon, under or over the BSP I Plant Site or the
Designated Easement Areas (upon designation thereof pursuant to the terms of Section 10.02(b))
following the date of this Agreement arising from acts or omissions of the BSP II Owners, their
Affiliates, directors, officers, employees, agents, contractors, subcontractors, licensees, or
invitees from and after the date of this Agreement (the “Future Contamination”) and the migration
of such Future Contamination from the BSP II Plant Site and the Designated Easement Areas after the
date of this Agreement.

     10.07 Cross-Indemnification. Each Group shall indemnify, defend, and hold harmless the other
Group for any Losses arising out of or related to:

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

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

 

 

	 	 	 
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subcontractors to maintain similar insurance. The provisions of this Article X shall not be construed to relieve any insurer, if
any, of its obligation to pay any insurance proceeds in accordance with the terms and conditions of
policies of Owners’ Insurance or otherwise.

     10.09 Environmental Due Diligence. The BSP II Owners shall cause the BSP II Legal Counsel to
retain a consultant to conduct, on behalf of the BSP II Owners, a Phase I environmental site
assessment and any Phase II environmental site assessment or other environmental investigation the
steering committee of the BSP II Owners deems necessary or desirable, prior to transfer of any real
property or granting easements to the BSP II Owners from BSP I Owners hereunder. The costs of such
environmental due diligence shall be paid for by the BSP II Owners. If Hazardous Substances or
other environmental conditions are discovered during such environmental due diligence that the BSP
II Owners choose not to assume, the BSP II Owner’s sole options shall be to (a) not purchase the
objectionable real property from the BSP I Owners under Section 10.01, (b) accept replacement
property or easement areas selected pursuant to Section 2.05, or (c) accept remediated property or
easement areas as provided in this Section 10.09. Should the environmental due diligence result in
environmental remediation requirements by a Governmental Authority, the BSP I Owners, in their sole
discretion, may decide to remove the affected real property from the Option to Purchase Contract or
Blanket Easement Agreement and propose other property pursuant to Section 2.05 or add the costs of
environmental remediation to the purchase price per acre of the affected property to be purchased
under the Option to Purchase Contract or to be obtained under the Blanket Easement Agreement. The
BSP II Owners may then, in their sole discretion, accept or reject the purchase of, or easements
for use upon, such affected property at their option. Any real property sold by the BSP I Owners
or easement granted by them shall be “as is, where is” with all faults, including the presence of
Hazardous Substances and other environmental conditions. The BSP I Owners shall cooperate fully
with such activities, consistent with the cooperation required of the Groups and Parties under
Section 18.11 below, and the BSP I Owners hereby grant to the BSP II Owners, the BSP II Legal
Counsel, and their consultants, the right to enter the BSP I Plant Site and the BSP II Plant Site
and all improvements located thereon, for purposes of conducting such activities.

ARTICLE XI

CASUALTY LOSS AND INSURANCE

     11.01 Repair or Replacement. The BSP I Owners and BSP II Owners shall maintain their
respective Joint Facilities in good repair according to Prudent Utility Practice. If, for any
reason, a Joint Facility shall be damaged or destroyed, the BSP I Owners or the BSP II Owners as
owners of the particular Joint Facility shall, as expeditiously as is possible, cause the damaged
or destroyed Joint Facility to be repaired or replaced so as to restore the Joint Facility to
substantially the same general character and use as existed immediately prior to such damage or
destruction and shall bear all costs associated therewith. If the damage to, or destruction of a
Joint Facility, is determined to be the fault of a contractor, subcontractor or other Person acting
on behalf of the Group that does not own that Joint Facility, that Group shall be responsible for
and reimburse the other Group for the cost of repair or reconstruction of the damaged or destroyed
Joint Facility.

 

 

	 	 	 
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     11.02 Insurance. As soon as reasonably practicable after the Effective Date, the E&O
Committees shall jointly develop a plan for purchasing an insurance policy or policies on a joint
or several basis as may be agreed upon, which may include, without limitation, those types of
insurance policies listed on Schedule 11.02 and any other insurance policies the E&O Committees
deem necessary with respect to the Joint Facilities and the operation of the same (such policies,
collectively, “Owners’ Insurance”). When developing the plan pursuant to this Section 11.02, the
E&O Committees shall endeavor, if possible, to recommend the purchase of a single policy and shall
also decide whether to purchase a joint loss endorsement with respect to the Owners’ Insurance;
provided, however, that each Group shall maintain insurance against loss or damage from such
hazards and risks for which it provides indemnification pursuant to this Agreement with reasonable
limits, deductibles, self-insured retentions, and such endorsements that are reasonable under the
circumstances. The BSP II Group shall require its contractors and subcontractors to maintain
similar insurance. Each Group shall also provide the other Group with reasonable proof of the same
upon reasonable request from the other Group.

ARTICLE XII

LIABILITY

     12.01 Remedies and Limitation of Damages. Subject to the express limitations contained in
this Agreement, a Group or Party may avail itself of any remedies available to it, either in law or
at equity, including, without limitation, specific performance, injunctive relief, and damages for
breach of contract; provided, however, except as otherwise specifically provided for in this
Agreement, including, but not limited to Section 7.04 and Section 10.04, in no event shall a Group
or Party be liable to any Person entitled to damages or indemnification under this Agreement for
loss of profits, loss of business, indirect, incidental, consequential (with the sole exception of
consequential damages caused by the refusal of one Group to allow the other Group access to and use
of a Joint Facility as required hereunder), special, punitive, or exemplary damages of any kind.
If a Group does not allow the other Group to use a Joint Facility for any period of time, no matter
how short, except for scheduled or unscheduled down time of the Joint Facility that affects the
Groups equally, the other Group may seek a court order requiring immediate specific performance or,
alternatively, the retention of a Third Party to operate the Joint Facilities at the other Group’s
sole cost and expense.

     12.02 Release of Liability and Associated Covenant. With the sole exceptions of Losses for
which a Group has obtained a judgment resulting from a Group’s Willful Action, a Group’s material
breach of this Agreement, a Group’s failure to make a Joint Facility available for use by the other
Group, and matters covered by the indemnification obligations under this Agreement (whether covered
by insurance or not), each Group intends to and hereby does release the other Group from any
liability associated with any Losses with respect to and under the terms of this Agreement. In
furtherance thereof, except as provided for in this Agreement, no Group shall initiate, pursue or
otherwise attempt to engage in mediation, arbitration or litigation with respect to any claims
other than for those relating to a Group’s Willful Action, a Group’s material breach of this
Agreement, a Group’s failure to make a Joint Facility available for use by the other Group, or
matters covered by the indemnification obligations under this Agreement.

 

 

	 	 	 
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ARTICLE XIII

FORCE MAJEURE

     The performance of any obligation required hereunder shall be excused for the duration of any
Force Majeure Event suffered by the Group whose performance is hindered in respect thereof, and the
time for performance of any obligation that has been delayed due to the occurrence of a Force
Majeure Event shall be similarly extended. The Group experiencing the delay or hindrance shall use
commercially reasonable efforts to notify the other Group in writing of the occurrence of such
Force Majeure Event and the anticipated period of delay as soon as practicable after the
commencement of the Force Majeure Event. Each Group suffering a Force Majeure Event shall take, or
cause to be taken, such action as may be necessary to overcome or otherwise to mitigate, in all
material respects, the effects of any Force Majeure Event suffered by it and to resume performance
hereunder as soon as practicable under the circumstances. Notwithstanding anything in this
Agreement to the contrary, the occurrence of a Force Majeure Event shall not excuse or relieve a
Group or any Owner from any payments obligations under this Agreement.

ARTICLE XIV

DISPUTE RESOLUTION

     14.01 Joint Meeting of Committees. With the sole exception of disputes that may arise under
Section 2.06 hereunder, disputes arising under this Agreement (each, “Dispute”) shall first be
addressed by a joint meeting of the Engineering and Operating Committees. Any Group may request in
writing that a Dispute be brought to a joint meeting of the Engineering and Operating Committees by
delivering a written request of a Dispute to the other Group. The Engineering and Operating
Committees shall meet, negotiate, and attempt in good faith to resolve the Dispute quickly,
informally and inexpensively. In the event the Engineering and Operating Committees cannot resolve
the Dispute within ten (10) days after commencement of negotiations, any Group may request that the
Dispute be presented to a joint meeting of the Coordination Committees of BSP I and BSP II. No
later than ten (10) days after referral from the Engineering and Operating Committees, the
Coordination Committees shall meet, negotiate and attempt in good faith to resolve the Dispute
quickly, informally and inexpensively. In the event the Coordination Committees cannot resolve the
Dispute within ten (10) days after commencement of negotiations, either Group may seek all
available legal remedies to resolve the Dispute, whether at law or in equity subject, in all
respects, to the terms, limitations and conditions of this Agreement.

     14.02 Continued Performance. Pending the outcome of a Dispute being resolved in accordance
with this Article XIV or Section 2.06, the Groups shall continue to perform their respective
obligations under this Agreement to the extent such obligations and the continued performance
thereof are not the subject of such Dispute.

ARTICLE XV

RELATIONSHIP OF PARTIES

     15.01 Nature of Obligations. Nothing herein, including, without limitation, the use of the
defined term “Group,” shall be construed to create an association, joint venture, trust or

 

 

	 	 	 
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partnership, or to impose a trust or partnership covenant, obligation or liability on or with
regard to any one or more of the Parties. No Party or Group shall be under the control of, or
shall be deemed to control, any other Party or Group. No Party shall be the agent of or have a
right or power to bind any other Party without its express written consent, except as provided in
this Agreement, the Operation & Maintenance Services Agreement and the Participation Agreements.

ARTICLE XVI

TERM AND TERMINATION

     16.01 Term. This Agreement shall become effective on the Effective Date and, unless earlier
terminated pursuant to the terms hereof, shall continue in effect until either the BSP I Plant or
the BSP II Plant shall have been decommissioned (the “Term”); provided, however, that the Owners of
the Plant that has been decommissioned must have fully complied with the requirements of Section
3.03 hereof. Additionally, this Agreement shall automatically terminate if there are no longer any
Joint Facilities in existence.

     16.02 Automatic Termination. This Agreement shall automatically terminate and be of no
further force and effect, except as otherwise provided herein, and no Party shall have any further
obligation to another Party hereunder, if the BSP II Financial Closing, as contemplated under the
BSP II Participation Agreement, does not occur on or before (*).

ARTICLE XVII

REPRESENTATIONS, WARRANTIES

     Each Owner represents and warrants as follows:

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

 

 

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

ARTICLE XVIII

MISCELLANEOUS

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

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

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

 

 

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

If a Party desires to release information described in Sections 18.01(c)(i)-(iv), then that Party
shall describe the intended release of information to the Engineering and Operating Committees of
BSP I and BSP II and the Engineering and Operating Committees of BSP I and BSP II shall respond
promptly to the Party with any concerns about such release.

     18.02 Successors and Assigns. This Agreement shall inure to the benefit of and be binding
upon the successors and assigns of the Parties hereto, except as such assignment is otherwise
explicitly not permitted herein.

     18.03 Notices. Notices required by this Agreement from a Party hereto shall be addressed to
the other Parties, at the addresses noted in Exhibit A, and may be updated from time to time by
written notice to all Parties. Any notice, request, consent, or other communication required or
authorized under this Agreement to be given by one Party to another Party shall be in writing. It
shall either be hand delivered or mailed, postage prepaid, to the representative of said Party. If
mailed, the notice, request, consent or other communication shall be simultaneously sent by
facsimile or other electronic means. Any such notice, request, consent, or other communication
shall be deemed to have been received by the close of the Business Day on which it was hand
delivered or transmitted electronically (unless hand delivered or transmitted after the close of
business, in which case it shall be deemed received at the close of the next Business Day).
Real-time or routine communications concerning the operation of the Joint Facilities shall be
exempt from this Section 18.03.

     18.04 Amendments. No amendments or modifications of this Agreement, including the Exhibits
and Schedules hereto, shall be valid unless evidenced in writing and signed by a Group’s Designated
Representative.

     18.05 Waiver. Failure to enforce any right or obligation by any Owner or Group with respect
to any matter arising in connection with this Agreement shall not constitute a waiver as to that
matter or any other matter. Any waiver by any Owner or Group of its rights with
respect to a breach of this Agreement or with respect to any
other matters arising in connection with this Agreement must be in writing. Such waiver shall not
be deemed a waiver with respect to any subsequent default or other matter.

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

 

 

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

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

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

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

     18.10 No Third-Party Beneficiaries. This Agreement is intended solely for the benefit of the
Parties hereto and nothing contained herein shall be construed to create any duty to, or standard
of care with reference to, or any liability to, or any benefit for, any Third Party.

     18.11 Cooperation. The Parties hereto acknowledge that they are entering into a long-term
arrangement in which the cooperation of all of them will be required. If, during the Term, changes
in the operations, facilities or methods of any Group or Party, including, without

 

 

			
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Big Stone II Power Plant

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limitation, regarding real property matters, will materially benefit a Group or Party without detriment to the
other Group or Parties, the Groups and Parties commit to each other to make reasonable good faith
efforts to cooperate and assist each other in making such change.

     18.12 Consents and Delivery of Documents. Each Party shall cooperate in good faith with the
other Parties in its efforts to fulfill its obligations under this Agreement. To that end, (a)
except as expressly provided elsewhere in this Agreement, no Party shall unreasonably deny,
condition, or withhold or otherwise delay its approval or consent upon the reasonable request for
such approval or consent by the other Part(ies); and (b) each Party shall, upon written notice from
any Party, take all actions and sign, execute and deliver all agreements, deeds, documents and
other instruments, and shall use its reasonable efforts to cause each of its Affiliates, its
partners and their respective Representatives to take all actions and sign, execute and deliver all
agreements, deeds, documents and other instruments reasonably required of it or them to carry out
and give full effect to this Agreement and the rights and obligations of the Parties hereunder.

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

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

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

     18.16 No Waiver. No waiver by a Group of its rights with respect to a material breach of this
Agreement shall be deemed a waiver of its rights hereunder with respect to any subsequent default.
No delay in asserting or enforcing any right hereunder shall be deemed a waiver of such right.

     18.17 Cumulative Rights. Subject in all respects to the provisions of this Agreement, the
rights and remedies provided in this Agreement shall be in addition to any other legal or equitable
relief that may be otherwise available.

     18.18 Certain Limitations. Notwithstanding anything to the contrary contained in this
Agreement, nothing contained herein and no action to be taken hereunder or pursuant hereto, in each
case relating to or affecting an option, an easement, or another interest in the BSP I Plant Site,
shall, individually or in the aggregate, materially impair the use of the BSP I Plant Site by any
of the BSP I Owners for the purpose for which such BSP I Owner holds its interest in BSP I and/or
the BSP I Plant Site.

[The next page is the signature page.]

 

 

			
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June 30, 2005
	 
	 	 

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

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

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

	 	 
	 	 	 	 	 	 
	Michael McDowell	 	 	 	Bruce T. Imsdahl
	Its General Manager	 	 	 	Its President and Chief Executive Officer
	 
	 	 	 	 	 	 	 	 
	NORTHWESTERN CORPORATION	 	 	 	OTTER TAIL CORPORATION dba Otter Tail
	dba NorthWestern Energy	 	 	 	Power Company
	 
	 	 	 	 	 	 	 	 
	By /s/ Michael J. Hanson	 	 	 	By /s/ Charles S. MacFarlane
	 

	 	 
	 	 	 	 	 	 
	Michael J. Hanson	 	 	 	Charles S. MacFarlane
	Its President and Chief Executive Officer	 	 	 	Its President
	 
	 	 	 	 	 	 	 	 
	SOUTHERN MINNESOTA MUNICIPAL	 	 	 	WESTERN MINNESOTA MUNICIPAL
	POWER AGENCY	 	 	 	POWER AGENCY
	 
	 	 	 	 	 	 	 	 
	By /s/ Raymond A. Hayward	 	 	 	By /s/ Donald E. Habicht
	 

	 	 
	 	 	 	 	 	 
	Raymond A. Hayward	 	 	 	Donald E. Habicht
	Its Executive Director and CEO	 	 	 	Its President

 

 

			
	Joint Facilities Agreement
Big Stone II Power Plant

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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

MISSOURI RIVER ENERGY SERVICES

3724 West Avera Drive

P.O. Box 88920

Sioux Falls, SD 57109-8920

Attn: Mr. Ray Wahle

Telephone: (605) 338-4042

Facsimile: (605) 978-9360

E-mail: rwahle@mrenergy.com

MONTANA-DAKOTA UTILITIES CO., a Division of MDU

Resources, Inc.

400 North Fourth Street

Bismarck, ND 58501

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

Telephone: (701) 222-7752

Facsimile: (701) 222-7606

E-mail: andrea.stomberg@mdu.com

NORTHWESTERN CORPORATION

dba NorthWestern Energy

600 Market Street West

Huron, SD 57350

Attn: Dennis Wagner

Telephone: (605) 353-7503

Facsimile: (605) 353-7519

E-mail: dennis.wagner@northwestern.com

 

 

			
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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

WESTERN MINNESOTA MUNICIPAL POWER AGENCY

25 N.W. 2nd Street, Suite 102

Ortonville, MN 56278-1411

Attention: Mr. Don Habicht

Telephone: (320) 839-2549

Facsimile: (320) 839-2540

Email: david.fhmab@midconetwork.com

 

 

			
	Joint Facilities Agreement
Big Stone II Power Plant

	 	Page 43

June 30, 2005
	 
	 	 

SCHEDULE 4.01

Water Resources Joint Facilities

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

 

 

			
	Joint Facilities Agreement
Big Stone II Power Plant

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June 30, 2005
	 
	 	 

SCHEDULE 4.04

Lake Water Intake and Pipeline Structure

	 	 	 	 	 
	Otter Tail	 	 	 	 
	Number	 	Quantity	 	Description
	31356

	 	1 Lot
	 	Lighting
	31284

	 	1 Lot
	 	Heating & Ventilation
	31373

	 	2,650 SF
	 	Roof
	31402

	 	1 Lot
	 	Structure
	31403

	 	1 Lot
	 	Make-up Pipe Discharge Structure
	31477

	 	7,243 LF
	 	Pond Make-up Pipeline
	32595

	 	1 Each
	 	Air Compressor
	32596

	 	200 LF
	 	Pipe
	32597

	 	2 Each
	 	Pump A & B
	32599

	 	1 Each
	 	Pump
	32600

	 	2 Each
	 	Pump Motors
	32601

	 	1 Each
	 	Pump Motor
	32602

	 	2 Each
	 	30" Butterfly Valve
	32603

	 	1 Each
	 	16" Butterfly Valve
	32604

	 	3 Each
	 	Flow Meters
	32605

	 	15,600 LF
	 	Wire
	32642

	 	1 Each
	 	Traveling Crane
	32726

	 	1 Lot
	 	Switchgear
	32727

	 	1 Lot
	 	MCC
	33123

	 	1 Each
	 	Heater

 

 

			
	Joint Facilities Agreement
Big Stone II Power Plant

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June 30, 2005
	 
	 	 

SCHEDULE 4.05

BSP I Cooling Pond

[MAP OF EXISTING BSP I PLANT.]

 

 

			
	Joint Facilities Agreement
Big Stone II Power Plant

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June 30, 2005
	 
	 	 

SCHEDULE 4.07

BSP II Cooling Tower Blowdown Pond

[MAP OF BSP II PLANT SITE]

 

 

			
	Joint Facilities Agreement
Big Stone II Power Plant

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June 30, 2005
	 
	 	 

SCHEDULE 5.01

Coal and Ash Joint Facilities

	 	 	 	 	 	 	 	 	 
	 	 	BSP I or BSP II	 	 	 	 	 	Construction/
	Description	 	Joint Facility	 	Fee or No Fee	 	Maintenance Costs	 	Other Costs
	Existing rotary dumper, #1 and #2 conveyors

	 	BSP I
	 	(*)
	 	(*)	 	 
	1/2 Existing coal dead storage area

	 	BSP I
	 	(*)
	 	(*)	 	 
	1/2 Existing coal dead storage area

	 	BSP II
	 	(*)
	 	(*)
	 	BSP II will purchase 1/2 from BSP I
	New concrete storage silos and conveyor

	 	Not Joint Facilities
	 	(*)
	 	(*)
	 	BSP II
	New stack-out chute

	 	BSP II
	 	(*)
	 	(*)
	 	BSP II
	New coal yard shop for
storage and maintenance of
mobile equipment

	 	BSP II
	 	(*)
	 	(*)
	 	BSP II
	New coal transfer house

	 	Not a Joint Facility
	 	(*)
	 	(*)
	 	BSP II
	Existing mobile yard equipment

	 	BSP I
	 	(*)
	 	(*)
	 	BSP II will purchase 1/2 from BSP I
	New mobile yard equipment

	 	BSP II
	 	(*)
	 	(*)
	 	50-50 BSP I and BSP II
	Existing rail spur and coal
unloading facilities

	 	BSP I
	 	(*)
	 	(*)	 	 
	Existing rail cars

	 	BSP I
	 	(*)
	 	(*)	 	 
	BSP II rail cars

	 	BSP II
	 	(*)
	 	(*)	 	 
	BSP I ash disposal area

	 	BSP I Joint Facility
	 	(*)
	 	(*)	 	 
	BSP I ash silo

	 	Not a Joint Facility
	 	(*)
	 	(*)
	 	BSP II will pay cost of relocation

 

 

			
	Joint Facilities Agreement
Big Stone II Power Plant

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June 30, 2005
	 
	 	 

SCHEDULE 5.03

New Conveyor System and Stack-Out Chute

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

 

 

			
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Big Stone II Power Plant

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June 30, 2005
	 
	 	 

SCHEDULE 5.06

Mobile Equipment

	 	 	 
	Technicians – ’91 GMC Sierra

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

 

 

			
	Joint Facilities Agreement
Big Stone II Power Plant

	 	Page 50

June 30, 2005
	 
	 	 

SCHEDULE 5.07

Coal Receiving System, Rail Spur and Coal Unloading Facilities

	 	 	 	 	 
	Otter Tail	 	 	 	 
	 Number	 	Quantity	 	Description
	31277

	 	1 Each
	 	Relay room – 3-ton Lennox
	31280

	 	1 Lot
	 	Car Dumper Cab – 1-ton Lennox
	33103

	 	1 Lot
	 	Dumper dust collector house
	50013

	 	32 CY
	 	Dumper dust collector floor
	31645

	 	1 Lot
	 	Positioner – carriage guide rails
	31646

	 	1 Each
	 	Positioner – truck lock system
	31647

	 	1 Each
	 	Positioner – rope haulage system
	31648

	 	1 Each
	 	Positioner – carriage and arm
	31652

	 	1 Each
	 	Dumper and positioner – motor control center
	31654

	 	1 Each
	 	Dumper and positioner – operators cab
	31658

	 	4 Each
	 	Rotary Cary dumper – vibratory feeders
	31659

	 	4 Each
	 	Rotary Cary dumper – chutes
	31684

	 	1 Each
	 	Conveyor No. 1 – drive motor, F-32
	31685

	 	1 Each
	 	Conveyor No. 1 – reducer
	31686

	 	1 Each
	 	Conveyor No. 1 – high speed coupling
	31687

	 	1 Each
	 	Conveyor No. 1 – low speed coupling
	31689

	 	1 Each
	 	Conveyor No. 1 – headshaft w/pulleys & pillow blocks
	31690

	 	1 Each
	 	Conveyor No. 1 – snubshaft w/pulleys & pillow blocks
	31691

	 	1 Each
	 	Conveyor No. 1 – bendshaft w/pulleys & takeup shaft
	31692

	 	45 Each
	 	Idlers
	31693

	 	2 Each
	 	Conveyor No. 1 – belt cleaners
	31694

	 	1 Each
	 	Conveyor No. 1 – discharge hood w/dust curtain, M-15
	31695

	 	1 Each
	 	Conveyor No. 1 – discharge chute to conveyor #2
	31696

	 	1 Each
	 	Conveyor No. 1 – electrical controls
	31697

	 	1 Each
	 	Conveyor No. 1 – steel structure supports
	31698

	 	2 Each
	 	Conveyor No. 2 – drive motors
	31699

	 	2 Each
	 	Conveyor No. 2 – reducers, m-15
	31701

	 	2 Each
	 	Conveyor No. 2 – low speed couplings
	31703

	 	1 Each
	 	Conveyor No. 2 – headshaft
	31704

	 	1 Each
	 	Conveyor No. 2 – hold back unit
	31705

	 	1 Each
	 	Conveyor No. 2 – drive snub shaft
	31706

	 	2 Each
	 	Conveyor No. 2 – takeup bend shaft
	31707

	 	1 Each
	 	Conveyor No. 2 – auto gravity takeup
	31708

	 	2 Each
	 	Conveyor No. 2 – tail snubshafts, m-15
	31709

	 	213 Each
	 	Conveyor No. 2 – idlers
	31710

	 	1 Each
	 	Conveyor No. 2 – creep drive motor
	31711

	 	1 Each
	 	Conveyor No. 2 – creep drive reducer
	31712

	 	1 Each
	 	Conveyor No. 2 – creep high speed coupling

 

 

			
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June 30, 2005
	 
	 	 

	 	 	 	 	 
	Otter Tail	 	 	 	 
	 Number	 	Quantity	 	Description
	31713

	 	1 Each
	 	Conveyor No. 2 – creep clutch coupling
	31714

	 	1 Each
	 	Conveyor No. 2 – electrical switches
	31715

	 	1 Each
	 	Conveyor No. 2 – steel structure supports
	31716

	 	1 Each
	 	Conveyor No. 2 – stairs & walkways – tail end
	31717

	 	2 Each
	 	Conveyor No. 2 – walk through conveyor galleries
	31718

	 	1 Each
	 	Conveyor No. 2 – support bent – 36 ft.
	31719

	 	1 Each
	 	Conveyor No. 2 – discharge hood
	31720

	 	1 Each
	 	Conveyor No. 2 – discharge chute to conv. No. 3
	31721

	 	1 Each
	 	Conveyor No. 2 – hinged chute to ground
	31722

	 	1 Each
	 	Conveyor No. 2 – instrumentation, M-15
	31959

	 	1 Each
	 	Conveyor No. 1 dust collector – Ray Jet collector
	31960

	 	1 Each
	 	Conveyor No. 1 dust collector – screw drive damper
	31961

	 	1 Lot
	 	Conveyor No. 1 dust collector – C.E. Controls
	31962

	 	1 Lot
	 	Conveyor No. 1 dust collector – fans & motors
	31963

	 	1 Lot
	 	Conveyor No. 1 dust collector – CO2 system
	31964

	 	1 Lot
	 	Conveyor No. 1 Dust Collector – Electrical
	31965

	 	1 Lot
	 	Conveyor No. 1 Dust Collector – Ductwork
	31966

	 	4 Each
	 	Car Dumper – Ray Jet Collectors
	31967

	 	4 Each
	 	Car Dumper – screw drive dampers
	31968

	 	1 Lot
	 	Car Dumper – C.E. Controls
	31969

	 	4 Each
	 	Car Dumper – Fans and motors
	31970

	 	1 Lot
	 	Car Dumper – CO2 System
	31971

	 	1 Lot
	 	Car Dumper – Electrical
	31972

	 	1 Lot
	 	Car Dumper – Ductwork
	31988

	 	71 Ton
	 	Rotary car dumper hopper
	31991

	 	1 Each
	 	Galigher coal sampler
	32008

	 	43818 SF
	 	Car Dumper – forms
	32009

	 	3,151 SF
	 	Fuel System Forms – Train Positioner Building
	32010

	 	19,104 SF
	 	Fuel System Forms – Conveyor No. 2
	32016

	 	420 Ton
	 	Car Dumper – rebar
	32017

	 	69 Ton
	 	Train Positioner building – rebar
	32018

	 	95 Ton
	 	Fuel System Rebar, Conveyor No. 2
	32024

	 	25873 Lbs
	 	Car Dumper – Embeds
	32025

	 	9013 Lbs
	 	Train Positioner Building – embeds
	32026

	 	8,322 lbs
	 	Fuel System Embeds – Conveyor No. 2
	32032

	 	5154 Cy
	 	Car Dumper – concrete
	32033

	 	1800 Cy
	 	Train Positioner – concrete
	32034

	 	1,662 CY
	 	Fuel System Concrete, Conveyor No. 2
	32038

	 	59 ton
	 	Car Dumper – Steel
	32047

	 	45500 Cy
	 	Car Dumper – excavation
	32048

	 	2000 Cy
	 	Train Positioner – excavation

 

 

			
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June 30, 2005
	 
	 	 

	 	 	 	 	 
	Otter Tail	 	 	 	 
	 Number	 	Quantity	 	Description
	32049

	 	24,900 CY
	 	Fuel System Excavation – Conveyor No. 2
	32055

	 	35700 Cy
	 	Car Dumper – backfill
	32056

	 	1600 Cy
	 	Train Positioner – backfill
	32057

	 	25,000 CY
	 	Fuel System Backfill – Conveyor No. 2
	32059

	 	1 Lot
	 	Car Dumper – Drains
	32069

	 	59 Ton
	 	Car Dumper – Structural Steel
	32070

	 	81 Ton
	 	Train Positioner building – Structural Steel
	32071

	 	20 Ton
	 	Car Dumper – Misc. Iron and Steel
	32072

	 	9 ton
	 	Train Positioner Building – Misc. Iron and Steel
	32073

	 	14000 SF
	 	Car Dumper – exterior siding
	32074

	 	6 each
	 	Car Dumper – doors
	32075

	 	300 SF
	 	Car Dumper – Windows
	32076

	 	14900 SF
	 	Train Positioner – exterior siding
	32077

	 	3 Each
	 	Train Positioner – doors
	32078

	 	900 SF
	 	Train Positioner – Blockwall insulation
	32083

	 	8900 SF
	 	Conveyor No. 2 – Exterior Siding
	32084

	 	1 Each
	 	Conveyor No. 2 – Doors
	32088

	 	668,000 CY
	 	Plant Access Railroad – Earthwork C-L, FSC-26
	32089

	 	25,182 LF
	 	Plant Access Railroad – Trackage C-3, FSC-42, 44 & 63
	32090

	 	1 Lot
	 	Track Detection Equipment, FSC-64
	32091

	 	1 Each
	 	Track Switch Heater
	36989

	 	1 Lot
	 	Mtce. Platform under electrical cable junction
	37016

	 	1 Each
	 	Car Dumper – Dust collection hood
	37025

	 	1 Lot
	 	Car Dumper – Dust collector
	37536

	 	1 Lot
	 	Tachometer Loss Circuit for Train Positioner Haulage Controller
	48822

	 	2 Each
	 	Rail Flange Lubricators
	52299

	 	1 Each
	 	Motor, 30 HP, 1800 RPPM. #1 & #2 Conveyor Area
	52300

	 	1 Each
	 	Foundation for Blower and Motor. # 1 & #2 Conveyor Area
	52301

	 	1 Each
	 	Rotary Airlock, with 1 HP gearmotor drive. #1 & #2 Conveyor Area
	52302

	 	1 Lot
	 	Piping with Hangers and Accessories. #1 & #2 Conveyor Area
	52303

	 	1 Each
	 	Cyclone dust collector, Fuller/Draco 1DC12 Mark V. #1 & #2 Conveyor Area
	52304

	 	2 Each
	 	Trickle Valve, 7". #1 & #2 Conveyor Area
	52305

	 	1 Each
	 	Relay room AC
	52306

	 	18 Each
	 	Dumper Dust Collector Building – Translucent corrugated panels
	65122

	 	1 Each
	 	Wheel clamp system for dumper
	67313

	 	1 Each
	 	Dumper positioner brake
	67314

	 	1 Each
	 	Positioner SCR Drive
	67315

	 	1 Each
	 	Positioner arm SCR drives
	67316

	 	3 Each
	 	Dumper car clamp assemblies
	67317

	 	2 Each
	 	Dumper variable speed drives
	67318

	 	1 Each
	 	Dumper car clamp hydraulic unit

 

 

			
	Joint Facilities Agreement
Big Stone II Power Plant

	 	Page 53

June 30, 2005
	 
	 	 

	 	 	 	 	 
	Otter Tail	 	 	 	 
	 Number	 	Quantity	 	Description
	67319

	 	2 Each
	 	Dumper hydraulic pumps
	67320

	 	1 Each
	 	Dumper hydraulic building
	67321

	 	4 Each
	 	Dumper trunnion wheels
	67322

	 	1 Each
	 	Dumper control computer
	67323

	 	1 Each
	 	Dumper PLC
	67324

	 	2 Each
	 	Dumper Gearboxes
	67325

	 	2 Each
	 	Dumper drive motors
	67326

	 	1 Each
	 	Dumper Drive Brakes
	67327

	 	1 Each
	 	Dumper stairway to pit
	67328

	 	1 Lot
	 	Dumper Exit bridge section
	67329

	 	1 Each
	 	Dumper platen and girders
	67330

	 	1 Each
	 	Dumper entrance door
	70747

	 	1 Each
	 	Positioner drive isolation transformer
	32710

	 	1 Each
	 	Car Dumper – Motor control center
	32723

	 	1 Each
	 	Car Dumper dust collection – motor control center

 

 

			
	Joint Facilities Agreement
Big Stone II Power Plant

	 	Page 54

June 30, 2005
	 
	 	 

SCHEDULE 6.01

Additional Joint Facilities

	 	 	 	 	 	 	 	 	 
	 	 	BSP I or BSP II	 	 	 	 	 	Construction/
	Description	 	Joint Facility	 	Fee or No Fee	 	Maintenance Costs	 	Other Costs
	Existing coal yard shop (warehouse)

	 	BSP I
	 	(*)
	 	(*)
	 	The cost of
converting the coal
yard shop into a
warehouse shall be
allocated solely to
BSP II.
	New office and locker room

	 	BSP II
	 	(*)
	 	(*)
	 	BSP II
	New roads and parking

	 	BSP II
	 	(*)
	 	(*)
	 	BSP II
	Existing roads and parking

	 	BSP I
	 	(*)
	 	(*)	 	 
	Existing control room

	 	BSP I
	 	(*)
	 	(*)	 	 
	Distributed control system and all
other systems necessary located
in the control room

	 	BSP II
	 	(*)
	 	(*)
	 	BSP II
	Existing fire system

	 	BSP I
	 	(*)
	 	(*)	 	 
	Additions/upgrades
to fire system

	 	BSP II
	 	(*)
	 	(*)
	 	BSP II

 

 

	 	 	 
	Joint Facilities Agreement

	 	Page 55
	Big Stone II Power Plant

	 	June 30, 2005
	 

SCHEDULE 9.05

Joint Facilities Fee Formula

Joint Facilities Components Existing as of the date of Commercial Operation: This Schedule 9.05
provides the (*) of Joint Facilities existing as of the date of Commercial Operation. The sum of
the (*) listed herein, when (*) by the (*), as that term is defined in Section 9.05(b), (*) the (*)
used in the calculation of the Joint Facilities Fee existing as of the date of Commercial Operation
pursuant to Section 9.05(a).

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

	 	 	 	 	 	 	 	 	 
	Otter	 	 	 	 	 	 	 	 
	Tail	 	 	 	 	 	 	 	 
	Number	 	Quantity	 	Description	 	Original Cost	 	Adjusted Cost
	Lake Pumping Related Equipment	 	 	 	 
	31356

	 	1 Lot
	 	Lighting
	 	(*)
	 	(*)
	31284

	 	1 Lot
	 	Heating & ventilation
	 	(*)
	 	(*)
	31373

	 	2,650 SF
	 	Roof
	 	(*)
	 	(*)
	31402

	 	1 Lot
	 	Structure
	 	(*)
	 	(*)
	31403

	 	1 Lot
	 	Make-up pipe discharge structure
	 	(*)
	 	(*)
	31477

	 	7,243 LF
	 	Pond make-up pipeline
	 	(*)
	 	(*)
	32595

	 	1 Each
	 	Air compressor
	 	(*)
	 	(*)
	32596

	 	200 LF
	 	Pipe
	 	(*)
	 	(*)
	32597

	 	2 Each
	 	Pump A & B
	 	(*)
	 	(*)
	32599

	 	1 Each
	 	Pump
	 	(*)
	 	(*)
	32600

	 	2 Each
	 	Pump motors
	 	(*)
	 	(*)
	32601

	 	1 Each
	 	Pump motor
	 	(*)
	 	(*)
	32602

	 	2 Each
	 	30" Butterfly valve
	 	(*)
	 	(*)
	32603

	 	1 Each
	 	16" Butterfly valve
	 	(*)
	 	(*)
	32604

	 	3 Each
	 	Flow meters
	 	(*)
	 	(*)
	32605

	 	15,600 LF
	 	Wire
	 	(*)
	 	(*)
	32642

	 	1 Each
	 	Traveling crane
	 	(*)
	 	(*)
	32726

	 	1 Lot
	 	Switchgear
	 	(*)
	 	(*)
	32727

	 	1 Lot
	 	MCC
	 	(*)
	 	(*)
	33123

	 	1 Each
	 	Heater
	 	(*)
	 	(*)
	Dumper, Rail, and Conveyor #1& #2 Related Equipment	 	 	 	 
	31277

	 	1 Each
	 	Relay room — 3-ton Lennox
	 	(*)
	 	(*)

 

	 	 	 
	Joint Facilities Agreement

	 	Page 56
	Big Stone II Power Plant

	 	June 30, 2005
	 

	 	 	 	 	 	 	 	 	 
	Otter	 	 	 	 	 	 	 	 
	Tail	 	 	 	 	 	 	 	 
	Number	 	Quantity	 	Description	 	Original Cost	 	Adjusted Cost
	31280

	 	1 Lot
	 	Car Dumper Cab — 1-ton Lennox
	 	(*)
	 	(*)
	33103

	 	1 Lot
	 	Dumper dust collector house
	 	(*)
	 	(*)
	50013

	 	32 CY
	 	Dumper dust collector floor
	 	(*)
	 	(*)
	31645

	 	1 Lot
	 	Positioner — carriage guide rails
	 	(*)
	 	(*)
	31646

	 	1 Each
	 	Positioner — truck lock system
	 	(*)
	 	(*)
	31647

	 	1 Each
	 	Positioner — rope haulage system
	 	(*)
	 	(*)
	31648

	 	1 Each
	 	Positioner — carriage and arm
	 	(*)
	 	(*)
	31652

	 	1 Each
	 	Dumper and positioner — motor control center
	 	(*)
	 	(*)
	31654

	 	1 Each
	 	Dumper and positioner — operators cab
	 	(*)
	 	(*)
	31658

	 	4 Each
	 	Rotary Cary dumper — vibratory feeders
	 	(*)
	 	(*)
	31659

	 	4 Each
	 	Rotary Cary dumper — chutes
	 	(*)
	 	(*)
	31684

	 	1 Each
	 	Conv. No. 1 — drive motor, F-32
	 	(*)
	 	(*)
	31685

	 	1 Each
	 	Conv. No. 1 — reducer
	 	(*)
	 	(*)
	31686

	 	1 Each
	 	Conv. No. 1 — high speed coupling
	 	(*)
	 	(*)
	31687

	 	1 Each
	 	Conv. No. 1 — low speed coupling
	 	(*)
	 	(*)
	31689

	 	1 Each
	 	Conv. No. 1 — headshaft w/pulleys & pillow
blocks
	 	(*)
	 	(*)
	31690

	 	1 Each
	 	Conv. No. 1 — snubshaft w/pulleys & pillow
blocks
	 	(*)
	 	(*)
	31691

	 	1 Each
	 	Conv. No. 1 — bendshaft w/pulleys & takeup
shaft
	 	(*)
	 	(*)
	31692

	 	45 Each
	 	Idlers
	 	(*)
	 	(*)
	31693

	 	2 Each
	 	Conv. No. 1 — belt cleaners
	 	(*)
	 	(*)
	31694

	 	1 Each
	 	Conv. No. 1 — discharge hood w/dust
curtain, M-15
	 	(*)
	 	(*)
	31695

	 	1 Each
	 	Conv. No. 1 — discharge chute to conveyor #2
	 	(*)
	 	(*)
	31696

	 	1 Each
	 	Conv. No. 1 — electrical controls
	 	(*)
	 	(*)
	31697

	 	1 Each
	 	Conv. No. 1 — steel structure supports
	 	(*)
	 	(*)
	31698

	 	2 Each
	 	Conv. No. 2 — drive motors
	 	(*)
	 	(*)
	31699

	 	2 Each
	 	Conv. No. 2 — reducers, m-15
	 	(*)
	 	(*)
	31701

	 	2 Each
	 	Conv. No. 2 — low speed couplings
	 	(*)
	 	(*)
	31703

	 	1 Each
	 	Conv. No. 2 — headshaft
	 	(*)
	 	(*)
	31704

	 	1 Each
	 	Conv. No. 2 — hold back unit
	 	(*)
	 	(*)
	31705

	 	1 Each
	 	Conv. No. 2 — drive snub shaft
	 	(*)
	 	(*)
	31706

	 	2 Each
	 	Conv. No. 2 — takeup bend shaft
	 	(*)
	 	(*)

 

 

	 	 	 
	Joint Facilities Agreement

	 	Page 57 
	Big Stone II Power Plant

	 	June 30, 2005
	 

	 	 	 	 	 	 	 	 	 
	Otter	 	 	 	 	 	 	 	 
	Tail	 	 	 	 	 	 	 	 
	Number	 	Quantity	 	Description	 	Original Cost	 	Adjusted Cost
	31707

	 	1 Each
	 	Conv. No. 2 — auto gravity takeup
	 	(*)
	 	(*)
	31708

	 	2 Each
	 	Conv. No. 2 — tail snub shafts, m-15
	 	(*)
	 	(*)
	31709

	 	213 Each
	 	Conv. No. 2 — idlers
	 	(*)
	 	(*)
	31710

	 	1 Each
	 	Conv. No. 2 — creep drive motor
	 	(*)
	 	(*)
	31711

	 	1 Each
	 	Conv. No. 2 — creep drive reducer
	 	(*)
	 	(*)
	31712

	 	1 Each
	 	Conv. No. 2 — creep high speed coupling
	 	(*)
	 	(*)
	31713

	 	1 Each
	 	Conv. No. 2 — creep clutch coupling
	 	(*)
	 	(*)
	31714

	 	1 Each
	 	Conv. No. 2 — electrical switches
	 	(*)
	 	(*)
	31715

	 	1 Each
	 	Conv. No. 2 — steel structure supports
	 	(*)
	 	(*)
	31716

	 	1 Each
	 	Conv. No. 2 — stairs & walkways — tail end
	 	(*)
	 	(*)
	31717

	 	2 Each
	 	Conv. No. 2 — walk through conveyor
galleries
	 	(*)
	 	(*)
	31718

	 	1 Each
	 	Conv. No. 2 — support bent — 36 ft.
	 	(*)
	 	(*)
	31719

	 	1 Each
	 	Conv. No. 2 — discharge hood
	 	(*)
	 	(*)
	31720

	 	1 Each
	 	Conv. No. 2 — discharge chute to Conv. No. 3
	 	(*)
	 	(*)
	31721

	 	1 Each
	 	Conv. No. 2 — hinged chute to ground
	 	(*)
	 	(*)
	31722

	 	1 Each
	 	Conv. No. 2 — instrumentation, M-15
	 	(*)
	 	(*)
	31959

	 	1 Each
	 	Conv. No. 1 Dust Collector — Ray Jet
collector
	 	(*)
	 	(*)
	31960

	 	1 Each
	 	Conv. No. 1 Dust Collector — screw drive
damper
	 	(*)
	 	(*)
	31961

	 	1 Lot
	 	Conv. No. 1 Dust Collector — C.E. Controls
	 	(*)
	 	(*)
	31962

	 	1 Lot
	 	Conv. No. 1 Dust Collector — fans & motors
	 	(*)
	 	(*)
	31963

	 	1 Lot
	 	Conv. No. 1 Dust Collector — CO2 system
	 	(*)
	 	(*)
	31964

	 	1 Lot
	 	Conv. No. 1 Dust Collector — electrical
	 	(*)
	 	(*)
	31965

	 	1 Lot
	 	Conv. No. 1 Dust Collector — ductwork
	 	(*)
	 	(*)
	31966

	 	4 Each
	 	Car Dumper — Ray Jet collectors
	 	(*)
	 	(*)

 

 

	 	 	 
	Joint Facilities Agreement

	 	Page 58
	Big Stone II Power Plant

	 	June 30, 2005
	 

	 	 	 	 	 	 	 	 	 
	Otter	 	 	 	 	 	 	 	 
	Tail	 	 	 	 	 	 	 	 
	Number	 	Quantity	 	Description	 	Original Cost	 	Adjusted Cost
	31967

	 	4 Each
	 	Car Dumper — screw drive dampers
	 	(*)
	 	(*)
	31968

	 	1 Lot
	 	Car Dumper — C.E. controls
	 	(*)
	 	(*)
	31969

	 	4 Each
	 	Car Dumper — fans and motors
	 	(*)
	 	(*)
	31970

	 	1 Lot
	 	Car Dumper — CO2 system
	 	(*)
	 	(*)
	31971

	 	1 Lot
	 	Car Dumper — electrical
	 	(*)
	 	(*)
	31972

	 	1 Lot
	 	Car Dumper — ductwork
	 	(*)
	 	(*)
	31988

	 	71 Ton
	 	Rotary car dumper hopper
	 	(*)
	 	(*)
	31991

	 	1 Each
	 	Galigher coal sampler
	 	(*)
	 	(*)
	32008

	 	43,818 SF
	 	Car Dumper — forms
	 	(*)
	 	(*)
	32009

	 	3,151 SF
	 	Fuel System Forms — train positioner bldg.
	 	(*)
	 	(*)
	32010

	 	19,104 SF
	 	Fuel System Forms — Conv. No. 2
	 	(*)
	 	(*)
	32016

	 	420 Ton
	 	Car Dumper — rebar
	 	(*)
	 	(*)
	32017

	 	69 Ton
	 	Train Positioner building — rebar
	 	(*)
	 	(*)
	32018

	 	95 Ton
	 	Fuel System Rebar, Conv. No. 2
	 	(*)
	 	(*)
	32024

	 	25,873 Lbs
	 	Car Dumper — embeds
	 	(*)
	 	(*)
	32025

	 	9,013 Lbs
	 	Train Positioner Building — embeds
	 	(*)
	 	(*)
	32026

	 	8,322 Lbs
	 	Fuel System Embeds — Conv. No. 2
	 	(*)
	 	(*)
	32032

	 	5154 CY
	 	Car Dumper — concrete
	 	(*)
	 	(*)
	32033

	 	1800 CY
	 	Train Positioner — concrete
	 	(*)
	 	(*)
	32034

	 	1,662 CY
	 	Fuel System Concrete, Conv. No. 2
	 	(*)
	 	(*)
	32038

	 	59 Ton
	 	Car Dumper — steel
	 	(*)
	 	(*)
	32047

	 	45,500 CY
	 	Car Dumper — excavation
	 	(*)
	 	(*)
	32048

	 	2,000 CY
	 	Train Positioner — excavation
	 	(*)
	 	(*)
	32049

	 	24,900 CY
	 	Fuel System Excavation — Conv. No. 2
	 	(*)
	 	(*)
	32055

	 	35,700 CY
	 	Car Dumper — backfill
	 	(*)
	 	(*)
	32056

	 	1,600 CY
	 	Train Positioner — backfill
	 	(*)
	 	(*)
	32057

	 	25,000 CY
	 	Fuel System Backfill — Conv. No. 2
	 	(*)
	 	(*)
	32059

	 	1 Lot
	 	Car Dumper — drains
	 	(*)
	 	(*)
	32069

	 	59 Ton
	 	Car Dumper — structural steel
	 	(*)
	 	(*)
	32070

	 	81 Ton
	 	Train Positioner building - structural

steel
	 	(*)
	 	(*)
	32071

	 	20 Ton
	 	Car Dumper — misc. iron and steel
	 	(*)
	 	(*)

 

 

	 	 	 
	Joint Facilities Agreement

	 	Page 59 
	Big Stone II Power Plant

	 	June 30, 2005
	 

	 	 	 	 	 	 	 	 	 
	Otter	 	 	 	 	 	 	 	 
	Tail	 	 	 	 	 	 	 	 
	Number	 	Quantity	 	Description	 	Original Cost	 	Adjusted Cost
	32072

	 	9 Ton
	 	Train Positioner Building — misc. iron and
steel
	 	(*)
	 	(*)
	32073

	 	14,000 SF
	 	Car Dumper — exterior siding
	 	(*)
	 	(*)
	32074

	 	6 Each
	 	Car Dumper — doors
	 	(*)
	 	(*)
	32075

	 	300 SF
	 	Car Dumper — windows
	 	(*)
	 	(*)
	32076

	 	14,900 SF
	 	Train Positioner — exterior siding
	 	(*)
	 	(*)
	32077

	 	3 Each
	 	Train Positioner — doors
	 	(*)
	 	(*)
	32078

	 	900 SF
	 	Train Positioner — blockwall insulation
	 	(*)
	 	(*)
	32083

	 	8,900 SF
	 	Conveyor No. 2 — exterior siding
	 	(*)
	 	(*)
	32084

	 	1 Each
	 	Conveyor No. 2 — doors
	 	(*)
	 	(*)
	32088

	 	668,000 CY
	 	Plant Access Railroad — earthwork C-L,
FSC-26
	 	(*)
	 	(*)
	32089

	 	25,182 LF
	 	Plant Access Railroad — trackage C-3,
FSC-42, 44 & 63
	 	(*)
	 	(*)
	32090

	 	1 Lot
	 	Track Detection Equipment, FSC-64
	 	(*)
	 	(*)
	32091

	 	1 Each
	 	Track switch heater
	 	(*)
	 	(*)
	36989

	 	1 Lot
	 	Mtce. platform under electrical cable
junction
	 	(*)
	 	(*)
	37016

	 	1 Each
	 	Car Dumper — dust collection hood
	 	(*)
	 	(*)
	37025

	 	1 Lot
	 	Car Dumper — dust collector
	 	(*)
	 	(*)
	37536

	 	1 Lot
	 	Tachometer loss circuit for train

positioner haulage controller
	 	(*)
	 	(*)
	48822

	 	2 Each
	 	Rail flange lubricators
	 	(*)
	 	(*)
	52299

	 	1 Each
	 	Motor, 30 HP, 1800 RPPM. #1 & #2 conveyor
area
	 	(*)
	 	(*)
	52300

	 	1 Each
	 	Foundation for blower and motor. #1 & #2
Conveyor Area
	 	(*)
	 	(*)
	52301

	 	1 Each
	 	Rotary Airlock, with 1 HP gear motor drive.
#1 & #2 conveyor area
	 	(*)
	 	(*)
	52302

	 	1 Lot
	 	Piping with hangers and accessories. #1 &
#2 conveyor area
	 	(*)
	 	(*)
	52303

	 	1 Each
	 	Cyclone dust collector, Fuller/Draco 1DC12
Mark V. #1 & #2 conveyor area
	 	(*)
	 	(*)
	52304

	 	2 Each
	 	Trickle valve, 7" #1 & #2 conveyor area
	 	(*)
	 	(*)
	52305

	 	1 Each
	 	Relay room AC
	 	(*)
	 	(*)

 

 

	 	 	 
	Joint Facilities Agreement

	 	Page 60
	Big Stone II Power Plant

	 	June 30, 2005
	 

	 	 	 	 	 	 	 	 	 
	Otter	 	 	 	 	 	 	 	 
	Tail	 	 	 	 	 	 	 	 
	Number	 	Quantity	 	Description	 	Original Cost	 	Adjusted Cost
	52306

	 	18 Each
	 	Dumper dust collector building - translucent corrugated panels
	 	(*)
	 	(*)
	65122

	 	1 Each
	 	Wheel clamp system for dumper
	 	(*)
	 	(*)
	67313

	 	1 Each
	 	Dumper positioner brake
	 	(*)
	 	(*)
	67314

	 	1 Each
	 	Positioner SCR drive
	 	(*)
	 	(*)
	67315

	 	1 Each
	 	Positioner arm SCR drives
	 	(*)
	 	(*)
	67316

	 	3 Each
	 	Dumper car clamp assemblies
	 	(*)
	 	(*)
	67317

	 	2 Each
	 	Dumper variable speed drives
	 	(*)
	 	(*)
	67318

	 	1 Each
	 	Dumper car clamp hydraulic unit
	 	(*)
	 	(*)
	67319

	 	2 Each
	 	Dumper hydraulic pumps
	 	(*)
	 	(*)
	67320

	 	1 Each
	 	Dumper hydraulic building
	 	(*)
	 	(*)
	67321

	 	4 Each
	 	Dumper trunnion wheels
	 	(*)
	 	(*)
	67322

	 	1 Each
	 	Dumper control computer
	 	(*)
	 	(*)
	67323

	 	1 Each
	 	Dumper PLC
	 	(*)
	 	(*)
	67324

	 	2 Each
	 	Dumper gearboxes
	 	(*)
	 	(*)
	67325

	 	2 Each
	 	Dumper drive motors
	 	(*)
	 	(*)
	67326

	 	1 Each
	 	Dumper drive brakes
	 	(*)
	 	(*)
	67327

	 	1 Each
	 	Dumper stairway to pit
	 	(*)
	 	(*)
	67328

	 	1 Lot
	 	Dumper exit bridge section
	 	(*)
	 	(*)
	67329

	 	1 Each
	 	Dumper plate and girders
	 	(*)
	 	(*)
	67330

	 	1 Each
	 	Dumper entrance door
	 	(*)
	 	(*)
	70747

	 	1 Each
	 	Positioner drive isolation transformer
	 	(*)
	 	(*)
	32710

	 	1 Each
	 	Car Dumper — motor control center
	 	(*)
	 	(*)
	32723

	 	1 Each
	 	Car Dumper dust collection — motor control
center
	 	(*)
	 	(*)
	 

	 	 	 	     TOTAL:
	 	(*)
	 	(*)

 

 

	 	 	 
	Joint Facilities Agreement

	 	Page 61
	Big Stone II Power Plant

	 	June 30, 2005
	 

SCHEDULE 10.01(A)

Option to Purchase Contract

OPTION TO PURCHASE CONTRACT

     THIS OPTION TO PURCHASE CONTRACT (this “Option Contract”) is made this 30th day of June, 2005,
by and between Montana-Dakota Utilities Co., a Division of MDU Resources Group, Inc., a Delaware
corporation f/k/a Montana-Dakota Utilities Co., of Bismarck, North Dakota (“Montana-Dakota”),
Northwestern Corporation, a Delaware corporation doing business as NorthWestern Energy, of Sioux
Falls, South Dakota (“NorthWestern”) and Otter Tail Corporation, a Minnesota corporation, of Fergus
Falls, Minnesota (“Otter Tail,” and together with Montana-Dakota and NorthWestern, “Sellers”), and
Otter Tail, in its capacity as administrative agent for itself and the other Persons who are, from
time to time, the BSP II Owners described in the JFA described below (in such capacity, “Buyer”).
Sellers and Buyer are sometimes referred to as the “Parties” and Sellers (collectively) and Buyer
are each a “Party.”

     WHEREAS, Sellers are the owners, as tenants in common, of those certain tracts of real
property located in Grant County, South Dakota legally described on Exhibit A attached
hereto (the “BSP II Plant Site” and, together with such improvements and appurtenances thereto, the
“Optioned Premises”); and

     WHEREAS, Sellers have entered into that certain Big Stone I and Big Stone II 2005 Joint
Facilities Agreement of even date hereof (the “JFA”) with the BSP II Owners described therein (the
“BSP II Owners”) for the purpose of planning the development of the BSP II Plant Site and the
cooperative use of certain joint facilities located on the BSP I Plant Site and the BSP II Plant
Site; and

     WHEREAS, in connection with the purposes of the JFA, Sellers have agreed to grant Buyer, as
administrative agent for the BSP II Owners, an option to purchase the Optioned Premises, pursuant
to the terms and conditions set forth herein.

     NOW, THEREFORE, in consideration of the mutual covenants set forth below and for other good
and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the
Parties agree as follows:

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

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

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

 

 

	 	 	 
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	 	June 30, 2005
	 

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

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

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

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

 

 

	 	 	 
	Option to Purchase Contract

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	Big Stone II Power Plant

	 	June 30, 2005
	 

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

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

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

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

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

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

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

 

 

	 	 	 
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	 	June 30, 2005
	 

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

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

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

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

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

 

 

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

	 	 	 	 	 
	 	 	SELLERS:
	 
	 	 	 	 
	Montana-Dakota:	 	 MONTANA-DAKOTA UTILITIES CO., a Division of MDU Resources Group, Inc., a Delaware corporation formerly known as Montana-Dakota Utilities Co.
	 
	 	 	 	 
	 

	 	By:
	 	 
	 

	 	 	 	 
	 

	 	Name:
	 	Bruce T. Imsdahl
	 

	 	Its:
	 	President and Chief Executive Officer
	 
	 	 	 	 
	NorthWestern:	 	NORTHWESTERN CORPORATION, a Delaware corporation doing business as NorthWestern Energy
	 
	 	 	 	 
	 

	 	By:
	 	 
	 

	 	 	 	 
	 

	 	Name:
	 	Michael J. Hanson
	 

	 	Its:
	 	President and Chief Executive Officer
	 
	 	 	 	 
	Otter Tail:	 	OTTER TAIL CORPORATION, a Minnesota corporation
	 
	 	 	 	 
	 

	 	By:
	 	 
	 

	 	 	 	 
	 

	 	Name:
	 	Charles S. MacFarlane
	 

	 	Its:
	 	President
	 
	 	 	 	 
	 	 	BUYER:
	 
	 	 	 	 
	 	 	OTTER TAIL CORPORATION, a Minnesota corporation, as administrative agent for itself and the other Persons who are, from time to time, the BSP II Owners described in the JFA
	 
	 	 	 	 
	 

	 	By:
	 	 
	 

	 	 	 	 
	 

	 	Name:
	 	Charles S. MacFarlane
	 

	 	Its:
	 	President

 

 

	 	 	 
	Option to Purchase Contract

	 	Page 66 
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	 	June 30, 2005
	 

EXHIBIT A

Legal Description of Optioned Premises

Tract A in the E 1/2 of Section 11, Township 121 North — Range 47 West of the 5th P.M.,
Grant County, South Dakota

[cooling tower blowdown pond]

Tract B in the SE 1/4 of Section 11, Township 121 North — Range 47 West of the 5th P.M., Grant
County, South Dakota

[cooling tower]

Tract C in the E 1/2 of Section 11 and W 1/2 of Section 12, Township 121 North — Range 47 West of
the 5th P.M., Grant County, South Dakota

[coal silos]

Tract D in the E 1/2 of Section 11 and the W 1/2 of Section 12 — Township 121 North — Range 47 West
of the 5th P.M., Grant County, South Dakota

[dead coal storage]

Tract E in the NE 1/4 of Section 11, Township 121 North — Range 47 West of the 5th P.M., Grant
County, South Dakota

[new yard shop]

Tract F in the NW 1/4 of Section 12, Township 121 North — Range 47 West of the 5th P.M., Grant
County, South Dakota

[BSP II cooling water makeup]

Tract G in the W 1/2 of Section 12, Township 121 North — Range 47 West of the 5th P.M., Grant
County, South Dakota

[BSP II coal transfer house]

Tract H in the SW 1/4 of Section 12, Township 121 North — Range 47 West of the 5th P.M., Grant
County, South Dakota

[cold lime softener]

Tract I in the SW 1/4 of Section 12 and SE 1/4 of Section 11, Township 121 North — Range 47 West of
the 5th P.M., Grant County, South Dakota

[BSP II’s power block]

Tract M in the SE 1/4 of Section 12, Township 121 North — Range 47 West of the 5th P.M., Grant
County, South Dakota

[brine concentrator addition]

 

 

	 	 	 
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	 	Page 67 
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Tract O in the SE 1/4 of Section 11, , Township 121 North — Range 47 West of the 5th P.M., Grant
County, South Dakota

[scrubber waste storage]

 

 

EXHIBIT B

Non-Permitted Encumbrances

Big Stone Plant Agreement for Sharing Ownership of Generating Plant dated as of January 7, 1970, as
amended by:

Supplemental Agreement No. 1 to Big Stone Plant Agreement for Sharing Ownership of Generating
Plant dated as of July 1, 1983

Supplemental Agreement No. 2 to Big Stone Plant Agreement for Sharing Ownership of Generating
Plant dated as of March 1, 1985

Supplemental Agreement No. 3 to Big Stone Plant Agreement for Sharing Ownership of Generating
Plant dated March 31, 1986

Supplemental Agreement No. 4 to Big Stone Plant Agreement for Sharing Ownership of Generating
Plant dated April 24, 2003, recorded July 7, 2003 in Misc. Record 227, Page 998.

Easement Agreement dated February 1, 1974 in favor of Grant County, South Dakota, recorded February
6, 1974 in Misc. Record 159, page 169.

Memorandum of Option to Lease Land dated October 3, 2002, recorded October 10, 2002 in Misc. Record
227, Page 480

All mortgage indentures affecting the Optioned Premises.

All matters placed of record after May 10, 2005.

 

 

	 	 	 
	Joint Facilities Agreement

	 	Page 69
	Big Stone II Power Plant

	 	June 30, 2005
	 

SCHEDULE 10.01(B)

Memorandum of Option to Purchase Contract

MEMORANDUM OF OPTION TO PURCHASE CONTRACT

This instrument memorializes the fact that Montana-Dakota Utilities Co., a Division of MDU
Resources Group, Inc., a Delaware corporation f/k/a Montana-Dakota Utilities Co., of Bismarck,
North Dakota (“Montana-Dakota”), Northwestern Corporation, a Delaware corporation doing business as
NorthWestern Energy, of Sioux Falls, South Dakota (“NorthWestern”) and Otter Tail Corporation, a
Minnesota corporation, of Fergus Falls, Minnesota (“Otter Tail,” and together with Montana-Dakota
and NorthWestern, “Sellers”), and Otter Tail, in its capacity as administrative agent for itself
and the other Persons who are, from time to time, the BSP II Owners described in the Option to
Purchase Contract described below (in such capacity, “Buyer”), have entered into that certain
Option to Purchase Contract dated June 30, 2005 (the “Option Contract”) concerning the real
property in Grant County, South Dakota described in Exhibit A attached hereto (the “Optioned
Premises”).

Under the terms of the Option Contract, which is in full force and effect, Buyer has the exclusive
option to purchase the Optioned Premises from Sellers for the price specified therein. The Sellers
shall also provide easements for access to the Optioned Premises pursuant to the terms of the
Option Contract. The Option expires no later than (*) although the closing of the
purchase of the Option Contract may occur up to ninety (90) days after such date.

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

[The remainder of this page is intentionally left blank.]

 

 

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

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

	 	 	 	 	 	 	 
	 	 	SELLERS:	 	 
	 
	 	 	 	 	 	 
	Montana-Dakota:	 	MONTANA-DAKOTA UTILITIES CO., a Division of MDU Resources Group, Inc., a Delaware corporation formerly known as Montana-Dakota Utilities Co.
	 
	 	 	 	 	 	 
	 

	 	By:
	 	  	 	 
	 

	 	 	 	 	 	 
	 	 	Name: Bruce T. Imsdahl
	 	 	Its: President and Chief Executive Officer

	 	 	 	 	 
	STATE OF South Dakota
	 	 	 	 
	 

	 	}
	 	ss.
	COUNTY OF Grant
	 	 	 	 

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

In witness whereof I hereunto set my hand and official seal.

	 	 	 	 	 
	 	 	 
	 	
 
 	 
	 	Notary Public 	 
	 	 	 

 

 

			
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	 	Page 71
	Big Stone II Power Plant
	 	June 30, 2005
	 
	 	 

	 	 	 	 	 

	 	 	 	 	 	 	 
	NorthWestern:	 	NORTHWESTERN CORPORATION, a Delaware corporation doing business as NorthWestern Energy
	 
	 	 	 	 	 	 
	 

	 	By:
	 	 	 	 
	 	 	 	 	 
	 	 	Name: Michael J. Hanson
	 	 	Its: President and Chief Executive Officer

	 	 	 	 	 
	STATE OF SOUTH DAKOTA
	 	 	 	 
	 

	 	}
	 	ss.
	COUNTY OF MINNEHAHA
	 	 	 	 

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

In witness whereof I hereunto set my hand and official seal.

	 	 	 	 	 
	 	 	 
	 	 
 	 
	 	Notary Public 	 
	 	 	 

 

 

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

	 	 	 	 	 

	 	 	 	 	 	 	 
	Otter Tail:	 	OTTER TAIL CORPORATION, a Minnesota corporation
	 
	 	 	 	 	 	 
	 

	 	By:
	 	 	 	 
	 	 	 	 	 
	 	 	Name: Charles S. MacFarlane
	 	 	Its: President

	 	 	 	 	 
	STATE OF MINNESOTA
	 	 	 	 
	 

	 	}
	 	ss.
	COUNTY OF HENNEPIN
	 	 	 	 

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

In witness whereof I hereunto set my hand and official seal.

	 	 	 	 	 
	 	 	 
	 	 
 	 
	 	Notary Public 	 
	 	 	 

 

 

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

	 	 	 	 	 

	 	 	 	 	 	 	 
	 	 	BUYER:
	 
	 	 	 	 	 	 
	 	 	OTTER TAIL CORPORATION, a Minnesota corporation, as administrative agent for itself and the other Persons who are, from time to time, the BSP II Owners described in the Option to Purchase Contract
	 
	 	 	 	 	 	 
	 

	 	By:
	 	   	 	 
	 

	 	 	 	 	 	 
	 	 	Name: Charles S. MacFarlane
	 	 	Its: President

	 	 	 	 	 
	STATE OF MINNESOTA
	 	 	 	 
	 

	 	}
	 	ss.
	COUNTY OF HENNEPIN
	 	 	 	 

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

In witness whereof I hereunto set my hand and official seal.

	 	 	 	 	 
	 	 	 
	 	 
 	 
	 	Notary Public 	 
	 	 	 

 

 

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

	 	 	 	 	 

This Instrument Drafted By:

Leonard, Street and Deinard P.A. (RLS)

150 South Fifth Street, Suite 2300

Minneapolis, MN 55402

 

 

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

EXHIBIT A

TO

MEMORANDUM OF OPTION TO PURCHASE CONTRACT

Tract A in the E 1/2 of Section 11, Township 121 North — Range 47 West of the 5th P.M.,
Grant County, South Dakota

Tract B in the SE 1/4 of Section 11, Township 121 North — Range 47 West of the 5th P.M., Grant
County, South Dakota

Tract C in the E 1/2 of Section 11 and W 1/2 of Section 12, Township 121 North — Range 47 West of
the 5th P.M., Grant County, South Dakota

Tract D in the E 1/2 of Section 11 and the W 1/2 of Section 12 — Township 121 North — Range 47 West
of the 5th P.M., Grant County, South Dakota

Tract E in the NE 1/4 of Section 11, Township 121 North — Range 47 West of the 5th P.M., Grant
County, South Dakota

Tract F in the NW 1/4 of Section 12, Township 121 North — Range 47 West of the 5th P.M., Grant
County, South Dakota

Tract G in the W 1/2 of Section 12, Township 121 North — Range 47 West of the 5th P.M., Grant
County, South Dakota

Tract H in the SW 1/4 of Section 12, Township 121 North — Range 47 West of the 5th P.M., Grant
County, South Dakota

Tract I in the SW 1/4 of Section 12 and SE 1/4 of Section 11, Township 121 North — Range 47 West of
the 5th P.M., Grant County, South Dakota

Tract M in the SE 1/4 of Section 12, Township 121 North — Range 47 West of the 5th P.M., Grant
County, South Dakota

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

 

 

	 	 	 
	Joint Facilities Agreement

	 	Page 76
	Big Stone II Power Plant

	 	June 30, 2005
	 

SCHEDULE 10.02(A)

Blanket Easement Agreement

(space above reserved for recording information)

BLANKET EASEMENT AGREEMENT

     THIS BLANKET EASEMENT AGREEMENT (this “Agreement”) is made and entered into as of the 30th day
of June, 2005, by and among Otter Tail Corporation, a Minnesota corporation, doing business as
Otter Tail Power Company (“Otter Tail”), NorthWestern Corporation, a Delaware corporation, doing
business as NorthWestern Energy (“NorthWestern”), and Montana-Dakota Utilities Co., a Division of
MDU Resources Group, Inc., a Delaware corporation formerly known as Montana-Dakota Utilities Co.
(“Montana-Dakota”), and Central Minnesota Municipal Power Agency, an agency incorporated under
Minnesota law (“CMMPA”), Great River Energy, a Minnesota cooperative (“GRE”), Heartland Consumers
Power District, a consumers power district formed and organized under the South Dakota Consumers
Power District Law, Chapter 49-35 of the South Dakota Codified Laws (“Heartland”), Southern
Minnesota Municipal Power Agency, a Minnesota municipal corporation and political subdivision
(“SMMPA”), and Western Minnesota Municipal Power Agency, a Minnesota municipal corporation and
political subdivision (“WMMPA”). Otter Tail, NorthWestern, and Montana-Dakota, together with such
other Persons that from time to time may be Owners of BSP I (as such term is defined below) are
collectively referred to herein as the “BSP I Owners.” CMMPA, GRE, Heartland, SMMPA, WMMPA,
Montana-Dakota, and Otter Tail, together with such other Persons that from time to time may become
Owners of BSP II (as such term is defined below), are collectively referred to herein as the “BSP
II Owners.”

WITNESSETH

     A. The BSP I Owners, as tenants in common, own an undivided interest in one hundred percent
(100%) of the existing 450 MW coal-fired electric generating plant located in Grant County, South
Dakota, known as the Big Stone Plant (“BSP I”) and in one hundred percent (100%) of the real
property legally described on Exhibit A (the “Project Premises”). The Project Premises are
primarily held by the BSP I Owners for the purpose of the operation of BSP I.

     B. The BSP II Owners plan to jointly develop, own and operate a new, approximately 600 MW
coal-fired electric generating plant to be known as the Big Stone II Power Plant (“BSP II”) to be
located on property adjacent to BSP I.

 

 

	 	 	 
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     C. The BSP I Owners and BSP II Owners have entered into a Big Stone I and Big Stone II 2005
Joint Facilities Agreement dated of even date hereof (the “Joint Facilities Agreement”) regarding
the joint use of certain facilities by the BSP I Owners and BSP II Owners in the operation of BSP I
and BSP II; and

     D. In connection with the development of BSP II, the BSP I Owners and Otter Tail, as agent for
the BSP II Owners, have entered into that certain Option to Purchase Contract dated of even date
hereof (the “Option Contract”) which grants an option to the BSP II Owners to purchase that portion
of the Project Premises legally described on Exhibit B (the “BSP II Plant Site”). BSP II
and the BSP II Joint Facilities are to be constructed upon the BSP II Plant Site. The remaining
portion of the Project Premises (upon which BSP I and the BSP I Joint Facilities are constructed)
is referred to herein as the “BSP I Plant Site.”

     E. Under the Joint Facilities Agreement, the BSP I and BSP II Owners will develop and operate
their respective Plant Sites and Joint Facilities in conjunction with each other as integral parts
of a single complex, but not a planned or common interest development community, and to effectuate
the common use and operation of their respective Plant Sites and Joint Facilities, the BSP I and
BSP II Owners desire to enter into this Agreement;

     NOW, THEREFORE, in consideration of the premises, the BSP I and BSP II Owners agree as
follows:

ARTICLE I — DEFINITIONS

     The terms used herein, unless otherwise specifically defined herein, will have the same
meanings as set forth in the Joint Facilities Agreement.

ARTICLE II -EASEMENTS FOR CONSTRUCTION

     2.1 Pre-Construction and Construction Easements

     (A) The BSP I Owners hereby grant the BSP II Owners and their invitees a temporary,
nonexclusive easement over and across the Project Premises to access the proposed BSP II Plant Site
for purposes of investigating, accumulating data, testing and designing BSP II and associated
facilities including, but not limited to, BSP II Joint Facilities, BSP II exclusive facilities,
utility lines, and access roads, subject to the terms and conditions of Section 10.03 of the Joint
Facilities Agreement.

     (B) The BSP I Owners hereby grant a temporary, nonexclusive easement to the BSP II Owners,
their contractors, subcontractors, architects, employees and invitees across the area legally
described in Exhibit C for the purposes of lay down areas, construction and material
storage, work areas, contractor parking, temporary offices and temporary roadways in connection
with the construction of BSP II and the BSP II Joint Facilities (the “Construction Easement”), subject to the terms and conditions of Section 10.03 of the Joint Facilities Agreement.

 

 

	 	 	 
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ARTICLE III — CONSTRUCTION INDEMNIFICATION REQUIREMENTS,

RESTRICTIONS; AND FACILITY EASEMENTS

     3.1 Indemnification Requirements

     The BSP II Owners covenant that during the activities conducted pursuant to Article II and
their use of the temporary easement rights thereunder, the BSP II Owners shall indemnify the BSP I
Owners as provided in Section 10.04 of the Joint Facilities Agreement.

     3.2 Joint and Exclusive Facilities

     (A) Any BSP II Joint Facilities and exclusive facilities shall be constructed as shown on the
Site Plan attached as Exhibit D hereto.

     (B) Any BSP II utility lines that are placed underground shall be at depths designated by BSP
II consultants and subject to approval by the BSP I Engineering and Operating Committee.

     3.3 Location of Facilities

     Any BSP II Joint Facilities and exclusive facilities shall only be located as designated on
the Site Plan. While it is acknowledged and agreed that the BSP II Owners have no obligation to
commence construction of any Joint Facility or exclusive facility, the BSP II Owners agree that
once construction of a Joint Facility or exclusive facility has commenced, such activity will be
completed within a reasonable time.

     3.4 Liens

     If any mechanic’s lien is recorded against BSP I or the BSP I Plant Site as a result of
services performed or materials furnished for the use of the BSP II Owners, the BSP II Owners agree
to cause such lien to be discharged within fifteen (15) days after the entry of a final judgment
(after all appeals) for the foreclosure of such mechanic’s lien. Notwithstanding the foregoing,
upon request of the BSP I Owners, the BSP II Owners agree to promptly cause such lien to be
released and discharged of record, either by paying the indebtedness which gave rise to such
mechanic’s lien or by posting bond or other security as required by law to obtain such release and
discharge. Nothing herein shall prevent the BSP II Owners from contesting the validity thereof in
any manner they choose so long as such contest is pursued with reasonable diligence. If such
contest is determined adversely (allowing for appeal to the highest appellate court), the BSP II
Owners shall promptly pay in full the required amount, together with interest, penalties, costs, or
other charges necessary to release such mechanic’s lien of record. The BSP II Owners agree to
defend, protect, indemnify and hold harmless the BSP I Owners, BSP I, and the BSP I Plant Site from and against all claims and demands, including any action or proceeding
brought thereon, and all Losses arising out of or resulting from such mechanic’s lien.

 

 

	 	 	 
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     3.5 Facility Easement

     As a condition to, and in conjunction with the process of, the exercise of the Option, the BSP
I Owners shall grant to the BSP II Owners a nonexclusive easement (the “Facility Easement”) in
designated specific areas for purposes of the installation, operation and maintenance of (a)
necessary utility lines serving the BSP II Plant Site and (b) other facilities reasonably necessary
for the operation of BSP II and the BSP II Joint Facilities (including but not limited to water
lines, steam lines, pipe lines, conveyors, roadways and similar facilities). Concurrently with
their acquisition of the BSP II Plant Site, the BSP I Owners shall grant the Facility Easement
pursuant to a written agreement to be recorded along with the Warranty Deed to the BSP II Plant
Site. The Groups shall negotiate, in good faith (through their respective Engineering and
Operating Committees) the specific terms and location of the Facility Easement. The BSP II Owners
shall pay the reasonable expenses of the BSP I Owners that directly relate to the grant of the
Facility Easement.

ARTICLE IV -POST-CONSTRUCTION EASEMENTS

     4.1 Post-Construction Easements

     Following the construction of BSP II, the BSP II Joint Facilities, and BSP II exclusive
facilities and during the term of the Joint Facilities Agreement, the BSP I Owners and the BSP II
Owners shall grant and convey to the other, their employees and invitees, in common with others
entitled to the same use, a non-exclusive cross-easement over and across each Group’s Plant Site in
order to facilitate the operation and maintenance of each Group’s Joint Facilities and exclusive
facilities in accordance with the Joint Facilities Agreement. A Group that benefits from any such
cross-easement shall pay the reasonable expenses of the other (i.e., the granting) Group directly
related to the grant of such cross-easement by such granting Group.

     4.2 Ingress, Egress and Parking

     During the term of the Joint Facilities Agreement, each Group hereby grants and conveys to the
other Group for its use and for the use of its employees and invitees, in common with others
entitled to use the same, a non-exclusive easement for the passage and parking of vehicles over and
across the parking and driveway areas of each Group’s Plant Site, as the same may from time to time
be constructed and maintained for such use, and for the passage and accommodation of pedestrians
over and across the parking, roadways, driveways and sidewalk areas of the Group’s Plant Site, as
the same may from time to time be constructed and maintained for such use. The easements established pursuant to Section 4.1 and this Section
4.2 shall be appurtenant to and for the benefit of each Group’s Plant Site and shall be binding on,
enforceable against, and burden each Group’s Plant Site for the Term of this Agreement. Such
easement rights shall be subject to the following reservations as well as the other applicable
provisions contained in this Agreement:

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

 

 

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

     4.3 Additional Instruments.

     Pursuant to the terms of the Joint Facilities Agreement, the Owners shall enter into an
instrument that designates more specific locations of the property that will be subject to the
terms of the easements granted herein. Upon such designation, the Owners shall release all other
portions of the Project Premises from the terms and conditions of this Agreement. In addition,
each Owner shall, at the request of any other Owner, execute such additional instruments as may be
reasonably requested in order to memorialize the particular terms (e.g., location, conditions for
use, etc.) of any easement granted pursuant to this Article IV. All such instruments shall be in a
form appropriate for recording.

ARTICLE V — OTHER CONSTRUCTION AND MAINTENANCE ACTIVITIES

     If, following initial construction of BSP II and the BSP II Joint Facilities and other
associated facilities, it becomes necessary for either Group to construct, maintain or reconstruct
any of its Joint Facilities, exclusive facilities, or new facilities or improvements, or if the
specified easements provided to the BSP II Owners hereunder are found to be inaccurate or not
sufficient for its facilities during initial construction, the Engineering and Operating Committees of each Group shall meet and amended easements shall, in good faith, be negotiated that will enable the Group doing the construction, maintenance or reconstruction to complete its needed work. In no event shall a Group be required to grant an amended easement if it will materially impair
the operation of its Plant, Joint Facilities, exclusive facilities or improvements on its
respective Plant Site.

ARTICLE VI — ENVIRONMENTAL INDEMNIFICATION

     The BSP II Owners shall indemnify, defend, and hold harmless the BSP I Owners for
environmental conditions and operational activities hereunder as provided in Section 10.06 of the
Joint Facilities Agreement.

 

 

	 	 	 
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ARTICLE VII — TERM

     The term of this Agreement shall be perpetual; provided that this Agreement shall
automatically terminate and be of no further force and effect and no Owner shall have any further
obligation to another Owner hereunder, if the BSP II Financial Closing, as contemplated under the
BSP II Participation Agreement, does not occur on or before (*). Upon the
determination of the location of the Facilities Easement, the designation of the Defined Easement
Areas, and the execution of the Designated Easement Agreement, all as contemplated by Sections 3.5
and 4.3 of this Agreement and Section 10.02(b) of the Joint Facilities Agreement, the parties shall
release such other areas of the BSP I Plant Site and the BSP II Plant Site from the terms and
conditions of this Agreement, whereupon this Agreement shall have no further force or effect with
respect to such released areas of the BSP I Plant Site and the BSP II Plant Site.

ARTICLE VIII -MISCELLANEOUS

     8.1 Default

     (A) The failure by a Group to observe or perform any of the covenants, conditions or
obligations of this Agreement, within sixty (60) days after the issuance of a notice by the other
Group (the “Non-Defaulting Group”) specifying the nature of the default claimed, shall constitute a
material default (a “Default”) and breach of this Agreement by the non-performing Group (the
“Defaulting Group”).

     (B) Notwithstanding Section 8.1(A), the intentional refusal by a member of a Group to allow
the other Group access to and use of a Joint Facility as required under the Joint Facilities
Agreement shall constitute an immediate Default not requiring a cure period and, notwithstanding
anything to the contrary the Defaulting Group shall be liable to the Non-Defaulting Group for all
damages (including but not limited to loss of profits, lost of business, and consequential damages)
that the Non-Defaulting Group incurs as a result of such Default following notice to the Defaulting
Group of such Default.

     (C) Subject to the express limitations contained in Article XII of the Joint Facilities
Agreement and Section 8.1(B) of this Agreement, a Non-Defaulting Group may avail itself of any
remedies available to it, either in law or at equity, including, without limitation, specific
performance, injunctive relief, and damages for breach of contract; provided, however, that in no
event shall any Group be liable to the other Group for loss of profits, loss of business, indirect,
incidental, consequential, special, punitive, or exemplary damages of any kind.

     8.2 Estoppel Certificate

     Each Owner agrees that upon written request (which shall not be more frequent than one (1)
time during any calendar year) of any other Owner or Operator, it will issue within thirty (30)
days after receipt of such request to such Owner, or its prospective mortgagee or successor, an
estoppel certificate stating to the best of the issuer’s knowledge as of such date:

 

 

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

     8.3 Limited Warranty of Title

     Each of the BSP I Owners represents and warrants to the BSP II Owners that: (a) as of the
date hereof, there are no liens or encumbrances against the Project Premises other than easements,
liens and encumbrances of record; and that (b) such Owner has not permitted or suffered any
easements, liens or encumbrances to be placed of record against the Project Premises since May 10,
2005.

     8.4 Notices

     All notices, demands and requests required or permitted to be given under this Agreement shall
be given in the manner set forth in the Joint Facilities Agreement.

     8.5 Ownership; Transfers.

     Each Owner shall be liable for the performance of all covenants, obligations and undertakings
that accrue while it has an Ownership Share in a Plant Site. Any Owner may assign its rights under
this Agreement at any time in connection with a pledge or the granting of a security interest in,
or assigning as collateral, all or any portion of the Owner’s interest in the Project.

     8.6 Binding Effect

     The terms of this Agreement and all easements granted hereunder shall constitute covenants
running with the land and shall bind the Plant Sites described herein and inure to the benefit of
and be binding upon each Owner.

     8.7 Construction and Interpretation

     (A) This Agreement, the Exhibits hereto, and the Joint Facilities Agreement contain all the
representations and the entire agreement between the Owners with respect to the subject matter
hereof. Any prior negotiations, correspondence, memoranda or agreements are superseded in total by
this Agreement, the Exhibits attached hereto and the Joint Facilities Agreement.

     (B) This Agreement has been fully negotiated at arms length between the signatories hereto,
and after advice by counsel and other Representatives chosen by such Owners, and such Owners are
fully informed with respect thereto; no such Owner shall be deemed the scrivener of this Agreement;
and, based on the foregoing, the provisions of this Agreement and the Exhibits

 

 

	 	 	 
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hereto shall be
construed as a whole according to their common meaning and not strictly for or against any Owner.

     (C) Invalidation of any of the provisions contained in this Agreement, or of the application
thereof to any Person by judgment or court order, shall in no way affect any of the other
provisions hereof or the application thereof to any other Person and the same shall remain in full
force and effect.

     (D) This Agreement may be executed in several counterparts, each of which shall be deemed an
original. The signatures to this Agreement may be executed and notarized on separate pages, and
when attached to this Agreement shall constitute one (1) complete document.

     8.8 Negation of Partnership

     None of the terms or provisions of this Agreement shall be deemed to create a partnership
between or among the Groups in their respective businesses or otherwise. Each Group shall be
considered a separate owner, and no Group shall have the right to act as an agent for the other
Group, unless expressly authorized to do so herein or by separate written instrument signed by the
Owners in the Group to be charged.

     8.9 Mitigation of Damages

     In all situations arising out of this Agreement, each Group (and the Operator, if any) shall
attempt to avoid and mitigate the damages resulting from the conduct of the other Group. Each
Owner shall take all reasonable measures to effectuate the provisions of this Agreement.

     8.10 Agreement Shall Continue Notwithstanding Breach

     It is expressly agreed that no breach of this Agreement shall (i) entitle any Owner to cancel,
rescind, or otherwise terminate this Agreement, or (ii) defeat or render invalid the lien of any
mortgage or trust deed made in good faith and for value as to any part of the Project Premises.
However, such limitation shall not affect in any manner any other rights or remedies which any
Group or Owner may have hereunder by reason of any such breach.

     8.11 Grant Shall Not Interfere With Use of BSP I

     Notwithstanding anything to the contrary contained in this Agreement, no grant by the BSP I
Owners contained herein, nor the exercise of any right by any BSP II Owner pursuant to, by reason
of, or in connection with a grant hereunder or pursuant hereto, nor any easement granted hereunder
or pursuant hereto, shall individually or in the aggregate, materially impair the use of the
Project Premises by any of the BSP I Owners for the purpose for which such BSP I Owner holds its
interest in BSP I and/or the Project Premises.

     8.12 Time

     Time is of the essence of this Agreement.

 

 

	 	 	 
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     8.13 No Waiver

     The failure of either Group to insist upon strict performance of any of the terms, covenants
or conditions hereof shall not be deemed a waiver of any rights or remedies which that Group may
have hereunder, at law or in equity, and shall not be deemed a waiver of any subsequent breach or
default in any of such terms, covenants or conditions. No waiver by any Group of any default under
this Agreement shall be effective or binding on such Group unless made in writing by such Group and
no such waiver shall be implied from any omission by any Group to take action in respect to such
default. No express written waiver of any default shall affect any other default or cover any
other period of time other than any default and/or period of time specified in such express waiver.
One (1) or more written waivers of any default under any provision of this Agreement shall not be
deemed to be a waiver of any subsequent default in the performance of the same provision or any
other term or provision contained in this Agreement.

     8.14 Governing Law

     This Agreement shall be governed by the laws of the state of South Dakota.

     8.15 Counterparts

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

[Remainder of page intentionally left blank. Signature pages follow.]

 

 

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

	 	 	 	 	 
	 	 	OTTER TAIL:
	 
	 	 	 	 
	 	 	OTTER TAIL CORPORATION, a Minnesota

corporation
	 
	 	 	 	 
	 

	 	By:
	 	 
	 

	 	 	 	 
	 	 	Name: Charles S. MacFarlane
	 	 	Its: President

	 	 	 	 	 
	STATE OF MINNESOTA
	 	 	 	 
	 	 	}
	 	ss.	 
	COUNTY OF HENNEPIN

	 	 	 

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

In witness whereof I hereunto set my hand and official seal.

	 	 	 	 	 
	 	 	 
	 	 
 	 
	 	Notary Public 	 
	 	 	 

 

 

	 	 	 	 	 

	 	 	 
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	 	 	NORTHWESTERN:
	 
	 	 	 	 
	 	 	NORTHWESTERN CORPORATION, a Delaware

corporation doing business as NorthWestern

Energy
	 
	 	 	 	 
	 

	 	By:
	 	 
	 

	 	 	 	 
	 	 	Name: Michael J. Hanson
	 	 	Its: President and Chief Executive Officer

	 	 	 	 	 
	STATE OF SOUTH DAKOTA
	 	 	 	 
	 	 	}
	 	ss.
	COUNTY OF MINNEHAHA

	 	 	 	 

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

In witness whereof I hereunto set my hand and official seal.

	 	 	 	 	 
	 	 	 
	 	 
 	 
	 	Notary Public 	 
	 	 	 

 

 

	 	 	 	 	 

	 	 	 
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	 	 	MONTANA-DAKOTA:
	 
	 	 	 	 
	 	 	MONTANA-DAKOTA UTILITIES CO., a Division of
MDU Resources Group, Inc., a Delaware
corporation
	 
	 	 	 	 
	 

	 	By:
	 	 
	 

	 	 	 	 
	 	 	Name: Bruce T. Imsdahl
	 	 	Its: President and Chief Executive Officer

	 	 	 	 	 
	STATE OF South Dakota
	 	 	 	 
	 	 	}
	 	ss.
	COUNTY OF Grant

	 	 	 	 

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

In witness whereof I hereunto set my hand and official seal.

	 	 	 	 	 
	 	 	 
	 	 
 	 
	 	Notary Public 	 
	 	 	 

 

 

	 	 	 	 	 

	 	 	 
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	 	 	CMMPA:
	 
	 	 	 	 
	 	 	CENTRAL MINNESOTA MUNICIPAL POWER AGENCY, an

agency incorporated under Minnesota law
	 
	 	 	 	 
	 

	 	By:
	 	 
	 

	 	 	 	 
	 	 	Name: Paul Leland
	 	 	Its: President

	 	 	 	 	 
	STATE OF MINNESOTA
	 	 	 	 
	 	 	}
	 	ss.
	COUNTY OF FARIBAULT

	 	 	 	 

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

In witness whereof I hereunto set my hand and official seal.

	 	 	 	 	 
	 	 	 
	 	 
 	 
	 	Notary Public 	 
	 	 	 

 

 

	 	 	 	 	 

	 	 	 
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	 	 	GRE:
	 
	 	 	 	 
	 	 	GREAT RIVER ENERGY, a Minnesota cooperative
	 
	 	 	 	 
	 

	 	By:
	 	 
	 

	 	 	 	 
	 	 	Name: David Saggau
	 	 	Its: President and Chief Executive Officer

	 	 	 	 	 
	STATE OF MINNESOTA
	 	 	 	 
	 	 	}
	 	ss.
	COUNTY OF HENNEPIN

	 	 	 	 

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

In witness whereof I hereunto set my hand and official seal.

	 	 	 	 	 
	 	 	 
	 	 
 	 
	 	Notary Public 	 
	 	 	 

 

 

	 	 	 	 	 

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

	 	By:
	 	 
	 

	 	 	 	 
	 	 	Name: Michael McDowell
	 	 	Its: General Manager

	 	 	 	 	 
	STATE OF MINNESOTA
	 	 	 	 
	 	 	}
	 	ss.
	COUNTY OF HENNEPIN

	 	 	 	 

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

In witness whereof I hereunto set my hand and official seal.

	 	 	 	 	 
	 	 	 
	 	 
 	 
	 	Notary Public 	 
	 	 	 

 

 

	 	 	 	 	 

	 	 	 
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	 	 	SMMPA:
	 
	 	 	 	 
	 	 	SOUTHERN MINNESOTA MUNICIPAL POWER AGENCY, a
Minnesota municipal corporation and political
subdivision
	 
	 	 	 	 
	 

	 	By:
	 	 
	 

	 	 	 	 
	 	 	Name: Raymond A. Hayward
	 	 	Its: Executive Director and CEO

	 	 	 	 	 
	STATE OF MINNESOTA
	 	 	 	 
	 	 	}
	 	ss.
	COUNTY OF OLMSTED

	 	 	 	 

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

In witness whereof I hereunto set my hand and official seal.

	 	 	 	 	 
	 	 	 
	 	 
 	 
	 	Notary Public 	 
	 	 	 

 

 

	 	 	 	 	 

	 	 	 
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	 	 	WMMPA:
	 
	 	 	 	 
	 	 	WESTERN MINNESOTA MUNICIPAL POWER AGENCY, a
Minnesota municipal corporation and political
subdivision
	 
	 	 	 	 
	 

	 	By:
	 	 
	 

	 	 	 	 
	 	 	Name: Donald E. Habicht
	 	 	Its: President

	 	 	 	 	 
	STATE OF MINNESOTA
	 	 	 	 
	 	}
	 	ss.
	COUNTY OF NOBLES

	 	 	 	 

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

In witness whereof I hereunto set my hand and official seal.

	 	 	 	 	 
	 	 	 
	 	 
 	 
	 	Notary Public 	 
	 	 	 

 

 

	 	 	 	 	 

	 	 	 
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This document drafted by:

Leonard, Street and Deinard P.A. (RLS)

150 South Fifth Street, Suite 2300

Minneapolis, MN 55402

612.335.1500

 

 

	 	 	 
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EXHIBIT A

Legal Description of Project Premises

In Section 11, Township 121 North, Range 45 West:

The East Half (E1/2), except the Northwest Quarter of the Northeast Quarter (NW1/4NE1/4) thereof,
and except Parcel B in the Southeast Quarter (SE1/4), of Section 11, Township 121 North, Range 47
West of the 5th P.M., Grant County, South Dakota.

In Section 12, Township 121 North, Range 45 West:

All of Section 12, except Parcel A in the Southwest Quarter (SW1/4), Township 121 North, Range 47
West of the 5th P.M., Grant County, South Dakota.

In Section 13, Township 121 North, Range 45 West*:

The North One-Half (N1/2) of Section 13, Township 121 North, Range 47 West of the 5th P.M., Grant
County, South Dakota, except that part lying South of Whetstone Creek.

In Section 14, Township 121 North, Range 45 West*:

The East Half of the Northeast Quarter (E1/2 NE1/4) of Section 14, Township 121 North of Range 47
West of the Fifth P.M.

In Section 5, Township 121 North, Range 46 West:

Outlot 68-A, except the East 225 feet thereof; and Outlot B, Big Stone City, Grant County, South
Dakota.

In Section 7, Township 121 North, Range 46 West:

All of Section 7, Township 121 North, Range 46 West of the 5th P.M., Grant County, South
Dakota, except approximately 6 acres in the northeast corner of the SE1/4 thereof deed to the Big
Stone Cemetery Association by deed recorded in Deed Record 126, Page 544, and except Lots H-4 and
H-5 in SE1/4, and except Lots H-2, H-3, and H-4 in N1/2NE/14, and except Lots H-2 and H-3 in
S1/2NE1/4.

In Section 8, Township 121 North, Range 46 West:

The South 150 Feet of Government Lot 1, except Lots H-2 and H-3; and the North 150 Feet of the
South 300 Feet of Government Lot 1, except the West 700 Feet and except platted Lake Street right
of way; and the North 150 Feet except Lots H-2 and H-3 of the Southwest Quarter of the Northwest
Quarter (SW1/4 NW1/4); and all of Outlot 67 in the Northeast Corner of SW1/4

 

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

 

 

	 	 	 
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NW1/4; all in Section 8, Township 121 North of Range 46 West of the Fifth P.M., now in the City of
Big Stone, Grant County, South Dakota.

In Section 18, Township 121 North, Range 46 West:

Parcel 1: The Southeast Quarter of the Southwest Quarter (SE1/4SW1/4), except Burlington
Northern Santa Fe railroad right of way; and the West Half of the Southeast Quarter (W1/2SE1/4)
lying northerly of the present right-of-way of Chicago, Milwaukee, St. Paul and Pacific Railway
Company as now located; and that part of Outlot 47 (which is also described as the NE1/4SE1/4,
except Outlot 48), and including the abandoned right-of-way of the Chicago, Milwaukee, St. Paul and
Pacifica Railroad Company, all in Section 18, Township 121 North, Range 46 West of the
5th P.M., Grant County, South Dakota.

Parcel 2: The South Half of the Northwest Quarter (S1/2NW1/4), except the East 66 feet of
the North 40 rods of the Southeast Quarter of the Northwest Quarter (SE1/4NW1/4) for road purposes,
and except the East 140 feet of the South 403 feet of the North 2351 feet of the Southeast Quarter
of the Northwest Quarter (SE1/4NW1/4) deeded to St. Charles Catholic Church of Big Stone City at
Deed Record 109, Page 359; and the North Half of the Southwest Quarter (N1/2SW1/4) except railroad
right-of-way, and except Hay-s Outlot located in the Northwest Quarter of the Southwest Quarter
(NW1/4SW1/4) and the Southwest Quarter of the Northwest Quarter (SW1/4NW1/4), and except a metes
and bounds tract of land described as follows: commencing at the southwest corner of the Northwest
Quarter of the Southwest Quarter (NW1/4SW1/4), thence North 45 rods, thence East 16 rods, thence
South 45 rods, thence West 16 rods to the place of beginning (now known as Lots 1, 2, and 3, Replat
of Lot C in NW1/4SW1/4 of 18-121-46), all in Section 18, Township 121 North, Range 46 West of the
5th P.M., Grant County, South Dakota.

Parcel 3: The North Half of the Northwest Quarter (N1/2NW1/4), except the East 66 feet of
the Northeast Quarter of the Northwest Quarter (NE1/4NW1/4) deed for road purposes at Deed Record
58, Page 561 in Section 18, Township 121 North, Range 46 West of the 5th P.M., Grant
County, South Dakota.

Parcel 4: The West 1613 feet of that part of the Northeast Quarter (NE1/4) lying South of
the highway (vacated portion and unvacated portion) known as the Yellowstone Trail, passing in an
easterly direction through said quarter section, except the West 500 feet of the South 403 feet of
the North 2351 feet of the Southwest Quarter of the Northeast Quarter (SW1/4NE1/4) deeded to St.
Charles Catholic Church in Deed Record 109, Page 359, and excepting that part previously deeded for
cemetery purposes to St. Charles catholic Church of Big Stone City, recorded in volume 6, Page 230,
but including the abandoned right-of-way of the Chicago, Milwaukee, St. Paul and Pacific Railroad
Co., all in Section 18, Township 121 North, Range 46 West of the 5th P.M., Grant County,
South Dakota.

Parcel 5: The Northeast Quarter (NE1/4) lying North of vacated and unvacated portions of
highway known as the Yellowstone Trail, except the Cheese Company Outlot sold on Contract for Deed,
in Section 18, Township 121 North, Range 46 West of the 5th P.M., Grant County, South
Dakota.

 

 

	 	 	 
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EXHIBIT B

Legal Description of BSP II Plant Site

Tract A in the E 1/2 of Section 11, Township 121 North — Range 47 West of the 5th P.M.,
Grant County, South Dakota

Tract B in the SE 1/4 of Section 11, Township 121 North — Range 47 West of the 5th P.M., Grant
County, South Dakota

Tract C in the E 1/2 of Section 11 and W 1/2 of Section 12, Township 121 North — Range 47 West of
the 5th P.M., Grant County, South Dakota

Tract D in the E 1/2 of Section 11 and the W 1/2 of Section 12 — Township 121 North — Range 47 West
of the 5th P.M., Grant County, South Dakota

Tract E in the NE 1/4 of Section 11, Township 121 North — Range 47 West of the 5th P.M., Grant
County, South Dakota

Tract F in the NW 1/4 of Section 12, Township 121 North — Range 47 West of the 5th P.M., Grant
County, South Dakota

Tract G in the W 1/2 of Section 12, Township 121 North — Range 47 West of the 5th P.M., Grant
County, South Dakota

Tract H in the SW 1/4 of Section 12, Township 121 North — Range 47 West of the 5th P.M., Grant
County, South Dakota

Tract I in the SW 1/4 of Section 12 and SE 1/4 of Section 11, Township 121 North — Range 47 West of
the 5th P.M., Grant County, South Dakota

Tract M in the SE 1/4 of Section 12, Township 121 North — Range 47 West of the 5th P.M., Grant
County, South Dakota

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

 

 

	 	 	 
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EXHIBIT C

Construction Easement Area

Tracts J and L in the SW 1/4 of Section 12 — Township 121 North — Range 47 West of the 5th P.M.,
Grant County, South Dakota

Tract N in the NW 1/4 of Section 13, Township 121 North — Range 47 West of the 5th P.M., Grant
County, South Dakota

 

 

	 	 	 
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EXHIBIT D

Site Plan

 

 

	 	 	 
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SCHEDULE 10.02(C)

Form of Release

PARTIAL RELEASE

[_-R-_]

INDENTURE DATED AS OF DECEMBER 15, 2003

By and Between

MDU RESOURCES GROUP, INC.

AND

THE BANK OF NEW YORK, TRUSTEE

     KNOW ALL MEN BY THESE PRESENTS THAT:

     WHEREAS, MDU Resources Group, Inc., a Delaware corporation, has heretofore made, executed,
acknowledged and delivered to The Bank of New York, of New York, New York, as Trustee, an Indenture
dated as of December 15, 2003 (hereinafter called the “Indenture”); and

     WHEREAS, the easements, licenses and other rights and interests hereinafter described, now or
formerly owned by MDU Resources Group, Inc., are or may be subject to the lien of the Indenture;
and

     WHEREAS, said Indenture was filed and recorded as a real estate mortgage and/or filed as
chattel mortgage or security interest in the [office of the Secretary of State of Delaware] [the
office of the register of deeds of Grant County, South Dakota], and said Indenture was filed in the
office of the Secretary of State of South Dakota], as follows:

[LIST RECORDING INFORMATION]

and

     WHEREAS, Section 1808 of said Indenture provides that MDU Resources Group, Inc. may obtain the
release of and the Trustee shall release from the lien of the Indenture any part of the mortgaged
properties upon compliance with the requirements of the Indenture; and

     WHEREAS, it has been certified to the Trustee that no Event of Default has occurred and is
continuing; and

     WHEREAS, said MDU Resources Group, Inc. has requested the release of the easements, licenses
and other rights and interests hereinafter described from the lien of said Indenture and has
furnished to the Trustee the documents necessary to authorize the Trustee to grant such release;

     NOW, THEREFORE, The Bank of New York, in consideration of the premises and the recitals
herein, does by these presents release and forever discharge from the lien of the above-described
Indenture the easements, licenses and other rights and interests affecting property situated in the
County of Grant, State of South Dakota, described as follows:

 

 

	 	 	 
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All of the easements, licenses and other rights and interests
granted, transferred, or conveyed by MDU Resources Group, Inc. to
Otter Tail Power Company, Montana-Dakota Utilities Co., a Division
of MDU Resources Group, Inc., a Delaware corporation, Central
Minnesota Municipal Power Agency, an agency incorporated under
Minnesota law, Great River Energy, a Minnesota cooperative,
Heartland Consumers Power District, a consumers power district
formed and organized under the South Dakota Consumers Power
District Law, Chapter 49-35 of the South Dakota Codified Laws,
Southern Minnesota Municipal Power Agency, a Minnesota municipal
corporation and political subdivision, and Western Minnesota
Municipal Power Agency, a Minnesota municipal corporation and
political subdivision, as described in the Blanket Easement
Agreement dated as of June 30, 2005 and recorded in the register
of deeds of Grant County, South Dakota [insert relevant recording
information], as [amended and/or restated] in that certain
[Designated Easement Agreement] attached hereto as Exhibit A.

     PROVIDED, HOWEVER, that except as to the easements, licenses and other rights and interests
hereby specifically released, said Indenture shall remain in full force and effect, and nothing
herein contained shall operate to release the lien thereof.

     The preambles and recitals contained in this instrument are made solely upon the
representations of said MDU Resources Group, Inc., and The Bank of New York assumes no
responsibilities therefor. This instrument is executed by The Bank of New York without covenant or
warranty on its part, express or implied, and without recourse against it in any event.

     IN WITNESS, WHEREOF, on this ___day of ___, 20___, The Bank of New York has caused this
instrument to be executed by its proper officers thereunto duly authorized and its corporate seal
to be hereto duly affixed.

	 	 	 	 	 
	 	 	THE BANK OF NEW YORK
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 

	 	Its:	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	AND	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 

	 	Its:	 	 
	 

	 	 	 	 

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

	 	 	 
	 	 	 
	 
	 	 
	 	 	 
	 

	 	(SEAL)

 

 

	 	 	 
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	STATE OF NEW YORK

	 	 	)	 	 	 
	 

	 	ss)
	 	 
	COUNTY OF NEW YORK

	 	 	)	 	 	 

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

	 	 	 
	 

	 	 
	 

	 	Notary Public, State of New York

My commission expires                     

THIS DOCUMENT WAS PREPARED BY:

[Drafter’s name, address and telephone]

 

 

	 	 	 
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SCHEDULE 11.02

Insurance Policies

Mandatory

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

Optional

Pollution (BSP II Owners only)

Professional Liability

Business Interruption, Extra Expense and Delay in Start Up

Replacement Power

Earthquake and Flood Insurance

 

(*) Confidential information has been omitted and filed separately with the Commission pursuant to
Rule 24b-2.exv4w1

 

EXHIBIT 4.1

SUBSCRIPTION FOR SHARES

	 	 	 
	TO:
	 	Apollo Gold Corporation (the “Corporation” or “Apollo”)

5655 S. Yosemite Street, Suite 200

Greenwood Village, Colorado, U.S.A., 80111-3220

The undersigned (the “Subscriber”) hereby
irrevocably subscribes for and agrees to purchase from
the Corporation the number of common shares (the “Shares”) of the Corporation set forth below, for
the aggregate consideration set forth below, representing a subscription price of Cdn$0.40 per
Share. The Subscriber agrees to be bound by the terms and conditions set forth in the attached
Schedule “A”–“Terms and Conditions of Subscription for Shares”, the attached Schedule
“B” –
Representation Letter, and the attached Schedule “C” – Registration Rights Agreement (the
“Registration Rights Agreement”), including, without limitation, the representations, warranties
and covenants set forth in the applicable schedules attached hereto.

JIPANGU INC.         
                     
                     
  

(Name of Subscriber – please print)

	 	 	 
	By:
	 	/s/ Tamisuke Matsufuji
	 
	 	 
	 
	 	Authorized Signature
	 
	 	 
	Per:
	 	President and CEO
	 
	 	 
	 
	 	(Official Capacity or Title — please print)

Please print name of individual whose signature appears above if different than
the name of the subscriber printed above.

Tamisuke Matsufuji       
                    
                    
        

3-6-9- Kita-Shinagawa

Shinagawa-ku

Tokyo 140-0001, Japan                
                    
              

(Subscriber’s Address)

	 	 	 
	 
	(Telephone Number)
	 	(E-mail Address)

 

(Social Insurance Number)

 

Register
the Shares as set forth below:

 
 

Name

 

Account reference, if applicable

 
 

 
 

Address

 

Number of Shares: 10,000,000     
                     
         

Aggregate Consideration: Cdn$4,000,000    
                 

Number of Common Shares currently held by the Subscriber (excluding the
Shares subscribed for hereunder)

 

 

 

 

 

 

Deliver the Shares as set forth below:

 

 

Name

 

Account reference, if applicable

 

 

 

Address

 

Telephone Number

 

Attention

i

 

Confirmation and Acceptance.

Apollo hereby accepts the subscription as set forth above on the terms and conditions contained in
this Agreement.

DATED as of the 1st day of June, 2005.

	 	 	 	 	 
	 	APOLLO GOLD CORPORATION

 	 
	 	Per:     /s/ R. D. Russell
 	 
	 	Authorized Signing Officer 	 
	 	 	 

ii

 

	 	 	 	 	 

SCHEDULE “A”

TERMS AND CONDITIONS OF SUBSCRIPTION FOR THE SHARES

	1.0	 	INTERPRETATION
	 
	1.1	 	In this Agreement, unless the context otherwise requires:

	 	(a)	 	“Agreement” means this subscription agreement to be entered into between Apollo
and the Subscriber, and includes all schedules and appendices attached hereto, in each
case as they may be amended or supplemented from time to time;
	 
	 	(b)	 	“AMEX” means the American Stock Exchange;
	 
	 	(c)	 	“Apollo” means Apollo Gold Corporation;
	 
	 	(d)	 	“Applicable Securities Laws” means, in respect of each and every offer and sale
of the Shares, the securities legislation and exchange rules having application thereto
and the rules, policies, notices and orders issued by applicable securities regulatory
authorities having application thereto;
	 
	 	(e)	 	“Business Day” means any day except Saturday, Sunday or a statutory holiday in
Toronto, Ontario or Denver, Colorado;
	 
	 	(f)	 	“Closing” means the closing of the purchase of the Shares by the Subscriber;
	 
	 	(g)	 	“Closing Date” means June 3, 2005, and/or such other date or dates as Apollo
and the Subscriber may mutually agree upon in writing;
	 
	 	(h)	 	“Closing Time” means 10:00 a.m. (Toronto time) on the applicable Closing Date
or such other time as Apollo and the Subscriber may mutually agree upon in writing;
	 
	 	(i)	 	“Common Share” means a common share in the share capital of Apollo;
	 
	 	(j)	 	“Dollar” or “$” means the lawful currency of Canada, unless otherwise
specifically indicated;
	 
	 	(k)	 	“Exemptions” means the exemptions from prospectus and registration requirements
under Applicable Securities Laws;
	 
	 	(l)	 	“Non-US Offering Jurisdictions” means the Offering Jurisdictions other than the
United States;
	 
	 	(m)	 	“Offering” means the Private Placement;
	 
	 	(n)	 	“Offering Jurisdictions” means all jurisdictions in which the Shares are
offered;
	 
	 	(o)	 	“Private Placement” means the offering by Apollo for sale of the Shares in the
Non-US Offering Jurisdictions on a private placement basis relying on one or more
Exemptions;
	 
	 	(p)	 	“Registration Rights Agreement” means the Registration Rights Agreement
attached hereto as Schedule “C”;
	 
	 	(q)	 	“Registration Statement” means the registration statement that Apollo agrees to
file with the SEC pursuant to the Registration Rights Agreement to register the Shares
for resale pursuant to the terms of the Registration Rights Agreement;

A-1

 

	 	(r)	 	“SEC” means the United States Securities and Exchange Commission;
	 
	 	(s)	 	“Shares” means the 10,000,000 Common Shares subscribed for hereunder;
	 
	 	(t)	 	“Subscription Price” means the aggregate subscription price paid by each
Subscriber for the Shares;
	 
	 	(u)	 	“Subsidiaries” means, collectively, the subsidiaries of the Corporation;
	 
	 	(v)	 	“TSX” means the Toronto Stock Exchange; and
	 
	 	(w)	 	“U.S. Securities Act” means the United States Securities Act of 1933, as
amended.

	1.2	 	Time is of the essence of this Agreement.
	 
	1.3	 	This Agreement is to be read with all changes in gender or number as required by the context.
	 
	1.4	 	The headings in this Agreement are for convenience of reference only and do not affect the
interpretation of this Agreement.
	 
	1.5	 	All monetary amounts specified in this Agreement are in the lawful currency of the United
States of America, unless otherwise specified.
	 
	1.6	 	This Agreement is governed by, subject to and interpreted in accordance with the laws
prevailing in the Province of Ontario and the federal laws of Canada applicable therein, and the
courts of the Province of Ontario will have the exclusive jurisdiction over any dispute arising in
connection with this Agreement.
	 
	2.0	 	SUBSCRIPTION FOR THE SHARES
	 
	2.1	 	The Subscriber hereby confirms its irrevocable subscription for and offer to purchase from
Apollo that number of Shares as set out on page (i) of this Agreement, on and subject to the
terms and conditions set out in this Agreement.
	 
	3.0	 	DESCRIPTION OF THE SHARES, ETC.
	 
	3.1	 	The Shares will be issued and registered in the name of the Subscriber or its nominee as per
the instructions on page (i) of this Agreement.
	 
	3.2	 	Apollo will use its commercially reasonable best efforts to obtain the conditional listing of
the Shares on the TSX and to apply for additional listing on the AMEX.
	 
	3.3	 	Apollo will file the Registration Statement with the SEC as contemplated in the Registration
Rights Agreement.
	 
	4.0	 	REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE CORPORATION
	 
	4.1	 	The Corporation represents, warrants, covenants and acknowledges, as applicable, to and with
the Subscriber, as at the date hereof and as at the Closing Time:

	 	(a)	 	the Corporation and each Subsidiary has been duly organized and is validly
existing and in good standing under the laws of its jurisdiction of organization and
has all requisite power and authority necessary to, and is qualified to, carry on its
business as now conducted, and to own or lease its properties and assets in all
jurisdictions in which it currently carries on business and/or owns or leases its
properties and assets; and the Corporation has all required corporate power and
authority to create, issue and sell the Shares, to enter into this Agreement and to
carry out the provisions of such agreement;

A-2

 

	 	(b)	 	the authorized capital of the Corporation consists of an unlimited number of
Common Shares of which, as of May 27, 2005, 96,206,451 Common Shares are issued and
outstanding as fully paid and non-assessable shares in the capital of the Corporation;
	 
	 	(c)	 	all information which has been prepared by the Corporation relating to the
Corporation and the Subsidiaries and their business, property and liabilities and
either publicly disclosed or provided to the Subscriber, including all financial,
marketing and operational information provided to the Subscriber is, as of the date of
such information and when such information is considered as a whole, true and correct
in all material respects, and no fact or facts have been omitted therefrom which would
make such information materially misleading;
	 
	 	(d)	 	the execution and delivery of this Agreement and the performance of the
transactions contemplated hereunder does not and will not:

	 	(i)	 	require the consent, approval, authorization, registration or
qualification of or with any governmental authority, stock exchange, securities
regulatory authority or other third party, except: (i) such as have been
obtained; or (ii) such as may be required under the applicable by-laws,
policies, regulations and prescribed forms of the TSX and the AMEX;
	 
	 	(ii)	 	result in a breach of or default under, nor create a state of
facts which, after notice or lapse of time or both, would result in a breach of
or default under, nor conflict with:

	 	(A)	 	any of the terms, conditions or provisions of
the constating documents or resolutions of the shareholders, directors
or any committee of directors of the Corporation or any Subsidiary or
any material indenture, agreement or instrument to which the
Corporation or any Subsidiary is a party or by which it or they are
contractually bound; or
	 
	 	(B)	 	any statute, rule, regulation or law applicable
to the Corporation or the Subsidiaries including, without limitation,
the Applicable Securities Laws of the Offering Jurisdictions, or any
judgment, order or decree of any governmental body, agency or court
having jurisdiction over the Corporation or the Subsidiaries; or
	 
	 	(C)	 	any material mortgage, note, indenture,
contract, agreement (written or oral), instrument, lease or other
document to which the Corporation or any Subsidiary is a party or by
which the Corporation or any Subsidiary or a material portion of the
assets of the Corporation or any Subsidiary are bound, or any judgment,
decree, order, statute, rule or regulation applicable to any of them;

	 	(e)	 	at Closing, the Corporation will have filed all documents, taken all
proceedings and obtained all regulatory consents necessary as a precondition to the
sale of the Shares;
	 
	 	(f)	 	this Agreement shall be, by the Closing Time, duly authorized, executed and
delivered by the Corporation and the obligations of the Corporation hereunder shall be
legal, valid and binding obligations of the Corporation, enforceable in accordance with
their terms (except as the enforceability thereof may be limited by (i) bankruptcy,
insolvency, moratorium or similar laws affecting creditors’ rights generally, (ii)
general equitable principles or (iii) limitations under applicable law in respect of
rights of indemnity, contribution and waiver of contribution);
	 
	 	(g)	 	the Common Shares are quoted for trading on AMEX and the TSX;
	 
	 	(h)	 	no order ceasing, halting or suspending trading in securities of the
Corporation nor prohibiting the sale of such securities has been issued to and is
outstanding against the Corporation or its directors, officers or promoters, and, to
the best of the Corporation knowledge, no investigations or proceedings for such
purposes are pending or threatened;

A-3

 

	 	(i)	 	neither the Corporation nor any subsidiary thereof will have taken any action
which would be reasonably expected to result in the delisting or suspension of
quotation of the Common Shares on or from the AMEX or the Exchange and the Corporation
will have complied, in all material respects, with the rules and regulations of
eligibility on AMEX and the Exchange;
	 
	 	(j)	 	the Corporation is a “reporting issuer” under section 12 of the Securities
Exchange Act of 1934, as amended (the “1934 Act”) and is not in default of any of the
requirements of the 1934 Act; and
	 
	 	(k)	 	none of the information provided by the Corporation to the Subscriber in
connection with the subscription for the Shares is material information that has not
been publicly disclosed.

	4.2	 	The Corporation hereby covenants to and with the Subscriber that:

	 	(a)	 	the Corporation will use all reasonable efforts to maintain its status as a
reporting issuer not in default in each of the Offering Jurisdictions in which it is a
reporting issuer or equivalent for a period of three-years from the Closing Date;
	 
	 	(b)	 	the Corporation will use all reasonable efforts to maintain the listing of the
Common Shares on the Exchange and AMEX to the date which is three-years following the
Closing Date;
	 
	 	(c)	 	the Corporation will use all reasonable efforts to file, as required, the
Registration Statement within the time period set forth in the Registration Rights
Agreement; and
	 
	 	(d)	 	the Corporation shall, as soon as practicable, use all reasonable efforts to
receive all necessary consents to the transactions contemplated herein.

	5.0	 	REPRESENTATIONS, WARRANTIES, COVENANTS AND ACKNOWLEDGEMENTS OF THE SUBSCRIBER
	 
	5.1	 	The Subscriber represents, warrants, covenants and acknowledges, as applicable, to and with
Apollo, on the Subscriber’s own behalf and on behalf of any disclosed principal for whom the
Subscriber is acting as agent (and acknowledges that Apollo and its counsel, are relying
thereon), as at the date hereof and as at the Closing Time:

	 	(a)	 	the Subscriber understands that any funds invested are available to and will be
paid to Apollo in accordance with the provisions of this Agreement and need not be
refunded to the Subscriber;
	 
	 	(b)	 	the Shares are being offered for sale in an Offering Jurisdiction only on a
“private placement” basis and that the sale and delivery of the Shares is conditional
upon such sale being exempt from the requirements as to the filing of a prospectus
under the Applicable Securities Laws in such Offering Jurisdiction or upon the issuance
of such orders, consents or approvals as may be required to permit such sale without
the requirement of filing a prospectus or delivering an offering memorandum, that no
prospectus has been filed by Apollo with any of the applicable securities regulatory
authorities in connection with the issuance of the Shares in such Offering
Jurisdiction, and that:

	 	(i)	 	as a result, certain protections, rights and remedies provided
by the Applicable Securities Laws in such Offering Jurisdiction including
statutory rights of rescission or damages, will not be available to the
Subscriber;
	 
	 	(ii)	 	no securities commission or similar regulatory authority has
reviewed or passed on the merits of the Shares;
	 
	 	(iii)	 	there is no government or other insurance covering the Shares;

A-4

 

	 	(iv)	 	the Subscriber may not receive information that would otherwise
be required to be provided to the Subscriber under the Applicable Securities
Laws in such Offering Jurisdiction; and
	 
	 	(v)	 	Apollo is relieved from certain obligations that would
otherwise apply under the Applicable Securities Laws in such Offering
Jurisdiction;

	 	(c)	 	the Subscriber certifies that it is or, if the Subscriber is acting as agent
for a disclosed principal, such principal is, resident in the jurisdiction set out on
the first page of this Agreement under the heading “Subscriber Information” and
“Beneficial Subscriber Information”, as the case may be, which address is the residence
or place of business of the Subscriber or such disclosed principal, and that such
address was not obtained or used solely for the purpose of subscribing for the Shares;
	 
	 	(d)	 	the Subscriber is purchasing the Shares:

	 	(i)	 	as principal for its own account and not for the benefit of any
other person or is deemed under the Applicable Securities Laws to be purchasing
the Shares as principal, and in either case is purchasing the Shares for
investment only and not with a view to the resale or distribution of all or any
of the Shares; or
	 
	 	(ii)	 	as agent for a disclosed principal and is not deemed under the
Applicable Securities Laws to be purchasing the Shares as principal, and it is
duly authorized to enter into this Agreement and to execute and deliver all
documentation in connection with the purchase on behalf of such disclosed
principal, who is purchasing as principal for its own account and not for the
benefit of any other person and for investment only and not with a view to the
resale or distribution of all or any of the Shares;

	 	(e)	 	the Subscriber will file all forms and reports, together with the prescribed
fees, that may be required by Applicable Securities Laws or by any legislation or order
in force in its jurisdiction of residence or to which it may be subject, within the
time limits prescribed therein, in respect of this subscription, the purchase or any
subsequent disposition of the Shares;
	 
	 	(f)	 	no person has made to the Subscriber any written or oral representations:

	 	(i)	 	that any person will resell or repurchase any of the Shares;
	 
	 	(ii)	 	that any person will refund the purchase price of any of the
Shares; or
	 
	 	(iii)	 	as to the future price or value of any of the Shares;

	 	(g)	 	the Subscriber, and any beneficial purchaser for whom it is acting, is at arm’s
length (within the meaning of the Applicable Securities Laws) with Apollo, except as
disclosed in writing by the Subscriber to Apollo;
	 
	 	(h)	 	the Subscriber is not (other than if the Subscriber is an officer or director
of Apollo or any of its affiliates) and will not become a “control person” of Apollo by
virtue of the purchase of the Shares and does not intend to act in concert with any
other person to form a control group of Apollo;
	 
	 	(i)	 	this Subscription has not been solicited in any manner contrary to the
Applicable Securities Laws;
	 
	 	(j)	 	to the best of its knowledge, the Subscriber (other than if the Subscriber is a
director or officer of Apollo or any of its affiliates) has no knowledge of a “material
fact”, “material change”, or “material non-public information” (as those terms are
defined in or under the Applicable Securities Laws) in respect of the affairs of Apollo
that has not been generally disclosed to the public;

A-5

 

	 	(k)	 	Apollo will have the right to accept this subscription in whole or in part and
the acceptance of this subscription offer will be conditional upon the sale of the
Shares to the Subscriber in a Non-US Offering Jurisdiction being exempt from the
prospectus and registration requirements of the Applicable Securities Laws in such
Non-US Offering Jurisdiction;
	 
	 	(l)	 	the Subscriber has the legal capacity and competence to enter into and execute
this Agreement and to take all actions required pursuant hereto and, if an individual,
is of full age of majority, and if the Subscriber is a corporation, it is duly
incorporated and validly subsisting under the laws of its jurisdiction of
incorporation, and all necessary approvals by its directors, shareholders and others
have been given to authorize the execution of this Agreement on behalf of the
Subscriber;
	 
	 	(m)	 	the entering into of this Agreement and the transactions contemplated hereby
will not result in the violation of any of the terms and provisions of any law
applicable to, or the constating documents of, the Subscriber or of any agreement,
written or oral, to which the Subscriber may be a party or by which it is or may be
bound;
	 
	 	(n)	 	this Agreement has been duly executed and delivered by the Subscriber and
constitutes a legal, valid and binding obligation of the Subscriber enforceable against
the Subscriber;
	 
	 	(o)	 	in the case of a subscription by it for the Shares acting as agent for a
disclosed principal, it is duly authorized to execute and deliver this Agreement and
all other necessary documentation in connection with such subscription on behalf of
such principal and this Agreement has been duly authorized, executed and delivered by
or on behalf of, and constitutes a legal, valid and binding agreement of, such
principal;
	 
	 	(p)	 	if required by the Applicable Securities Laws, policy or order or by any
securities commission, stock exchange or other regulatory authority, the Subscriber
will execute, deliver, file and otherwise assist Apollo in filing such reports,
undertakings and other documents as may be required;
	 
	 	(q)	 	the Subscriber has not purchased the Shares as a result of any form of general
solicitation or general advertising, including advertisements, articles, notices or
other communication published in any newspaper, magazine or similar media or broadcast
over radio, television or internet or any seminar or meeting whose attendees have been
invited by general solicitation or general advertising;
	 
	 	(r)	 	the Subscriber and each beneficial purchaser for whom it is acting acknowledges
that investment in the Shares is speculative in nature and that there are risks
associated with the purchase of the Shares and the Subscriber and each beneficial
purchaser for whom it is acting has such knowledge, sophistication and experience in
business and financial matters as to be capable of evaluating the merits and risks of
its investment in the Shares, fully understands the speculative nature of the Shares
and is able to bear the economic risk of loss of its entire investment;
	 
	 	(s)	 	Apollo may be required by law or otherwise to disclose to regulatory
authorities the identity of the Subscriber and each beneficial purchaser for whom the
Subscriber may be acting;
	 
	 	(t)	 	the Subscriber has not received, nor has it requested, nor does it have any
need to receive, any offering memorandum or any other document from Apollo describing
the business and affairs of Apollo with respect to the offering and purchase of the
Shares;
	 
	 	(u)	 	this subscription is not enforceable by the Subscriber unless it has been
accepted by Apollo and the Subscriber waives any requirement on Apollo’s behalf to
immediately communicate its acceptance of this subscription to the Subscriber;
	 
	 	(v)	 	in connection with the Subscriber’s subscription, the Subscriber has not relied
upon Apollo for investment, legal or tax advice, and has in all cases sought or elected
not to seek the advice of the Subscriber’s own personal investment advisers, legal
counsel and tax advisers and the Subscriber is

A-6

 

	 	 	 	able, without impairing its financial condition, to hold the Shares for an
indefinite period of time and to bear the economic risk of, and withstand a complete
loss of, the investment and it can otherwise be reasonably assumed to have the
capacity to protect its own interest in connection with its investment;
	 
	 	(w)	 	it has relied solely upon publicly available information relating to Apollo and
not upon any verbal or written representation as to fact or otherwise made by or on
behalf of Apollo;
	 
	 	(x)	 	all costs and expenses incurred by the Subscriber (including any fees and
disbursements of any special counsel or other advisors retained by the Subscriber)
relating to the purchase of the Shares shall be borne by the Subscriber;
	 
	 	(y)	 	none of the funds the Subscriber is using to purchase the Shares is, to the
knowledge of the Subscriber, proceeds obtained or derived, directly or indirectly, as a
result of illegal activities;
	 
	 	(z)	 	it is aware that the Shares have not been and may not be registered under the
U.S. Securities Act and that the Shares may not be offered or sold in the United States
without registration under the U.S. Securities Act or compliance with requirements of
an exemption from registration;
	 
	 	(aa)	 	it is not a “U.S. Person” (as that term is defined by Regulation S under the
U.S. Securities Act, which definition includes, but is not limited to, an individual
resident in the United States, an estate or trust of which any executor or
administrator or trustee, respectively, is a U.S. Person and any partnership or company
organized or incorporated under the laws of the United States) and is not acquiring the
Shares for the account or benefit of a U.S. Person or a person in the United States;
	 
	 	(bb)	 	the Shares have not been offered to the Subscriber in the United States, and
the individuals making the order to purchase the Shares and executing and delivering
this Agreement on behalf of the Subscriber were not in the United States when the order
was placed and this Agreement was executed and delivered;
	 
	 	(cc)	 	it undertakes and agrees that it will not offer or sell the Shares in the
United States unless such securities are registered under the U.S. Securities Act and
the securities laws of all applicable states of the United States or an exemption from
such registration requirements is available, and further that it will not resell the
Shares except in accordance with the provisions of applicable securities legislation,
regulations, rules, policies and orders and stock exchange rules;
	 
	 	(dd)	 	it will not engage in hedging transactions with regard to the Shares unless
conducted in compliance with the U.S. Securities Act;
	 
	 	(ee)	 	it acknowledges that the Corporation will refuse to register any transfer of
any of the Shares not made in accordance with the provisions of Regulation S under the
U.S. Securities Act, pursuant to registration under the U.S. Securities Act, or
pursuant to an available exemption from registration under the U.S. Securities Act;
	 
	 	(ff)	 	it acknowledges that there are hold periods and resale restrictions on the
Shares as set out in Section 8.0 hereof.

	5.2	 	The Subscriber acknowledges and agrees that the foregoing representations and warranties are
made by the Subscriber with the intent that they may be relied upon by Apollo in determining
its eligibility as a purchaser of the Shares under Applicable Securities Laws and the
Subscriber hereby agrees to indemnify and hold harmless Apollo, its Affiliates and their
representatives, directors, officers, employees and underwriters from and against all losses,
liability, claims, costs, expenses and damages arising from, relating to, or connected with
Apollo’s reliance thereon in the event that such representations and warranties are untrue in
any material respect, such agreement regarding indemnification to survive the Closing and to
continue in full force and effect for the benefit of the Subscriber notwithstanding any
subsequent disposition by the Subscriber of the Shares. The Subscriber further agrees that by
accepting the Shares, the Subscriber shall be representing and warranting that

A-7

 

	 	 	the foregoing representations and warranties contained herein or in any document
furnished by the Subscriber to Apollo are true as at the Closing with the same force
and effect as if they had been made by the Subscriber as at the Closing and shall
survive the Closing and continue in full force and effect for the benefit of Apollo
notwithstanding any subsequent disposition by the Subscriber of the Shares. The
Subscriber undertakes to immediately notify Apollo at the address specified on page
(i) of this Agreement of any change in any statement or other information relating to
the Subscriber set forth herein which takes place prior to the Closing Time.

	6.0	 	IRREVOCABILITY OF SUBSCRIPTION
	 
	6.1	 	Subjection to Section 7.2, this subscription is irrevocable.
	 
	7.0	 	CLOSING
	 
	7.1	 	Subject to the receipt of all completed items in accordance with Section 7.4, the Closing
will take place at the place as agreed upon by the parties on the Closing Date.
	 
	7.2	 	If, prior to the Closing Time, the terms and conditions contained in this Agreement have been
complied with to the satisfaction of the parties, or waived by them, the Subscriber shall
deliver to Apollo the completed Agreement and payment of the Subscription Price for all of the
Shares subscribed for pursuant to the this Agreement against delivery by Apollo of a
certificate representing the Shares and such other documentation as may be required pursuant
to this Agreement. If, prior to the Closing, the terms and conditions contained in this
Agreement (other than delivery by Apollo to the Subscriber of a certificate representing the
Shares) have not been complied with to the satisfaction of the parties, or waived by them,
Apollo and the Subscriber will have no further obligations under this Agreement.
	 
	7.3	 	The Closing of the Offering is conditional upon the following:

	 	(a)	 	the issue and sale of the Shares in the Offering Jurisdictions being exempt
from the requirement to file a prospectus, registration statement or similar document
under the Applicable Securities Laws relating to the sale of the Shares, or Apollo
having received such orders, consents or approvals as may be required to permit such
sale without the requirement of filing a prospectus, registration statement or similar
document; and
	 
	 	(b)	 	Apollo has received all regulatory and third party approval of the Private
Placement, including the conditional approval of the TSX.

	7.4	 	The Subscriber acknowledges and agrees that the obligations of Apollo hereunder are
conditional on the accuracy of the representations and warranties of the Subscriber contained
in this Agreement as of the date of this Agreement, and as of the Closing Time as if made at
and as of the Closing Time, and the fulfillment of the following additional conditions as soon
as possible and in any event not later than the Closing Time:

	 	(a)	 	payment by the Subscriber of the Subscription Price by certified cheque or bank
draft (in accordance with the instructions set forth on the first page hereto) payable
to Apollo as per Apollo’s direction;
	 
	 	(b)	 	the Subscriber having properly completed, signed and delivered this Agreement;
	 
	 	(c)	 	the Subscriber having properly completed, signed and delivered the certificate
in the form set out in Schedule “B”;
	 
	 	(d)	 	the Subscriber having properly completed, signed and delivered the “Selling
Securityholder Notice and Questionnaire” attached as Annex A to the Registration Rights
Agreement attached hereto as Schedule “C”; and

A-8

 

	 	(e)	 	the Subscriber having properly completed, signed and delivered any further
documentation as required under Applicable Securities Laws or by any applicable stock
exchange or other regulatory authority and the Subscriber covenants and agrees to do so
upon request by Apollo.

	7.5	 	Apollo acknowledges and agrees that the obligations of the Subscriber hereunder are
conditional on the accuracy of the representations and warranties of Apollo contained in this
Agreement as of the date of such agreement, and as of the Closing Time as if made at and as of
the Closing Time, and the fulfillment of the following additional conditions:

	 	(a)	 	the covenants of Apollo have been performed, satisfied and complied with, where
applicable, as at the Closing Time;
	 
	 	(b)	 	Apollo has delivered to the Subscriber or its counsel the following items:

	 	(i)	 	an original copy of the certificate representing the Shares
purchased by the Subscriber registered in the name of the Subscriber or its
nominee;
	 
	 	(ii)	 	a copy of this Agreement duly executed by Apollo; and
	 
	 	(iii)	 	such other documents relating to the transactions contemplated
by this Agreement as the Subscriber or its counsel may reasonably request.

	8.0	 	HOLD PERIOD AND RESALE RESTRICTIONS
	 
	8.1	 	The Subscriber understands and hereby acknowledges that:

	 	(a)	 	the Shares issuable pursuant to the Private Placement will be subject to
certain resale restrictions imposed under Applicable Securities Laws and the rules of
regulatory bodies having jurisdiction including, without limiting the generality of the
foregoing, the requirement that the Shares issuable pursuant to the Private Placement
not be traded for a period of four months from the Closing Date as required under the
Applicable Securities Laws in Canada, the prohibition reflected in the legend set forth
in Section 8.1(e) below on trading through the TSX while the certificate bears a legend
pursuant to Sections 8.1(c) or (d), and the applicable restriction period under the
U.S. Securities Act, except as permitted by Applicable Securities Laws, and that the
Shares and all securities issued in exchange thereof are “restricted securities” as
defined under Rule 144 and may be resold only if:

	 	(i)	 	the sale is to Apollo;
	 
	 	(ii)	 	the sale is made outside the United States in a transaction
meeting the requirements of Rule 904 of Regulation S (or such successor rule or
regulation then in effect), if available, and in compliance with applicable
state securities laws;
	 
	 	(iii)	 	the sale is made pursuant to an exemption from the
registration requirements under the U.S. Securities Act provided by Rule 144
thereunder, if available, and in accordance with any applicable state
securities laws;
	 
	 	(iv)	 	the sale is a transaction that does not require registration
under the U.S. Securities Act or any applicable state securities laws, and it
has prior to such sale furnished to Apollo an opinion of counsel to that effect
reasonably satisfactory to Apollo; or
	 
	 	(v)	 	the sale is pursuant to an effective registration statement
under the U.S. Securities Act.

	 	(b)	 	while Apollo has agreed to file the Registration Statement (as described in the
Registration Rights Agreement) and cause it to be declared effective by the SEC, there
is no assurance that Apollo will be able to cause the Registration Statement to be
declared effective by the SEC, and if the Registration

A-9

 

	 	 	 	Statement is not declared effective by the SEC, the Shares may not be resold by the
Subscriber, except pursuant to an exemption contained under the Applicable
Securities Laws, which may not be available, and if the Registration Statement is
not declared effective, the Shares remain “restricted” securities under the U.S.
Securities Act and may only be sold pursuant to an effective registration statement
with respect to such securities, pursuant to Regulation S or other exemption from
the registration requirements of the U.S. Securities Act or, if such Registration
Statement is declared effective by the SEC, in the manner provided in the
Registration Statement for the resale of such Shares;
	 
	 	(c)	 	for the period under the U.S. Securities Act when the Shares are restricted
securities as defined in Rule 144 under the U.S. Securities Act, each certificate
representing such security shall bear the following legend:
	 
	 	 	 	THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF
1933, AS AMENDED (THE “SECURITIES ACT’’), AND ACCORDINGLY, MAY NOT BE OFFERED OR
SOLD EXCEPT AS SET FORTH IN THE FOLLOWING SENTENCE. BY ITS ACQUISITION HEREOF, THE
HOLDER (1) AGREES THAT IT WILL NOT RESELL OR OTHERWISE TRANSFER THE SECURITY
EVIDENCED HEREBY, EXCEPT (A) TO THE ISSUER; (B) TO PERSONS OTHER THAN U.S. PERSONS
OUTSIDE THE UNITED STATES IN COMPLIANCE WITH REGULATION S UNDER THE SECURITIES ACT;
(C) PURSUANT TO THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 ADOPTED UNDER
THE SECURITIES ACT OR ANOTHER AVAILABLE EXEMPTION UNDER THE SECURITIES ACT (IF
AVAILABLE); OR (D) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT, AND (2) AGREES THAT IT WILL, PRIOR TO ANY TRANSFER OF THIS SECURITY
PURSUANT TO SUBPARAGRAPH (B) OR (C) ABOVE, FURNISH TO THE ISSUER OR ISSUER’S COUNSEL
SUCH CERTIFICATIONS, LEGAL OPINIONS OR OTHER INFORMATION AS MAY BE REQUIRED BY THE
ISSUER TO CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT TO AN EXEMPTION FROM, OR
IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES
ACT. AS USED HEREIN, THE TERMS “UNITED STATES’’ AND
“U.S. PERSON’’ HAVE THE
MEANING GIVEN TO THEM BY REGULATION S UNDER THE SECURITIES ACT. IN ANY CASE, THE
HOLDER HEREOF WILL NOT, DIRECTLY OR INDIRECTLY, ENGAGE IN ANY HEDGING TRANSACTION
WITH REGARD TO THIS SECURITY, EXCEPT AS PERMITTED BY THE SECURITIES ACT.
	 
	 	(d)	 	certificates representing the Shares will bear a legend containing restrictions
in conformity with the U.S. Securities Act with respect to the resale of the securities
of the type set forth in clause 8.1(c) above, until the earlier of: (1) the Shares are
sold pursuant to an effective Registration Statement and the seller shall have provided
written confirmation to Apollo that the seller has complied with the prospectus
delivery requirements under the U.S. Securities Act; or (2) the holder of the
applicable security has furnished to Apollo an opinion of U.S. securities counsel
reasonably acceptable to Apollo that the securities represented by such certificates
are no longer “restricted securities” as defined in Rule 144 under the U.S. Securities
Act; and
	 
	 	(e)	 	In addition to the foregoing legends, the certificates representing the Shares,
if issued prior to such time as the restrictive legend set forth in clause 8.1(c) is no
longer required under applicable requirements of the U.S. Securities Act and all
restrictions are removed with respect to such securities pursuant to applicable state
securities laws, shall bear, in addition to any legend(s) required by MI 45-102 and the
U.S. Securities Act, the following legend:
	 
	 	 	 	“THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE LISTED ON THE TORONTO STOCK
EXCHANGE (“TSX”); HOWEVER, THE SAID SECURITIES CANNOT BE TRADED THROUGH THE
FACILITIES OF TSX SINCE THEY ARE NOT FREELY TRANSFERABLE, AND CONSEQUENTLY ANY
CERTIFICATE REPRESENTING SUCH SECURITIES IS NOT “GOOD DELIVERY” IN SETTLEMENT OF
TRANSACTIONS ON TSX.”

A-10

 

	8.2	 	The Subscriber also acknowledges that it has been advised to consult its own legal advisors
with respect to applicable resale restrictions and that it is solely responsible (and Apollo
is not in any manner responsible) for complying with such restrictions, including, without
limitation of the foregoing, as long as the Shares are restricted securities under the U.S.
Securities Act, such securities may only be resold (a) to Apollo, (b) pursuant to Regulation
S, (c) pursuant to another exemption from registration under the U.S. Securities Act or (d)
pursuant to a registration statement declared effective under the U.S. Securities Act; and
	 
	8.3	 	The Subscriber will not sell, assign or transfer any of the Shares except in accordance with
the provisions of Applicable Securities Laws and stock exchange rules, if applicable, in the
future.
	 
	9.0	 	MISCELLANEOUS
	 
	9.1	 	Subject to Section 6.0, the Subscriber, on its own behalf and, if applicable, on behalf of
others for whom it is contracting hereunder, agrees that this subscription for and offer to
purchase the Shares is made for valuable consideration and may not be withdrawn, cancelled,
terminated or revoked by the Subscriber, on its own behalf and, if applicable, on behalf of
others for whom it is contracting hereunder.
	 
	9.2	 	The Subscriber consents to the filing of such documents and any other documents as may be
required to be filed with any stock exchange or securities regulatory authority in connection
with the Offering.
	 
	9.3	 	This Agreement, which includes any interest granted or right arising under this Agreement,
may not be assigned or transferred.
	 
	9.4	 	Except as expressly provided in this Agreement and in the agreements, instruments and other
documents contemplated or provided for herein, this Agreement contains the entire agreement
between the parties with respect to the Shares and there are no other terms, conditions,
representations or warranties whether expressed, implied, oral or written, by statute, by
common law, by Apollo, or by anyone else.
	 
	9.5	 	The parties may amend this Agreement only in writing.
	 
	9.6	 	This Agreement enures to the benefit of and is binding upon the parties and, as the case may
be, their respective heirs, executors, administrators and, successors.
	 
	9.7	 	A party will give all notices or other written communications to the other party concerning
this Agreement by hand or by registered mail addressed to such other party’s respective
address which is noted on the cover page of this Agreement.
	 
	9.8	 	The parties hereto each covenant and agree to execute and deliver such further agreements,
documents and writings and provide such further assurances as may be required by the parties
to give effect to this Agreement and without limiting the generality of the foregoing to do
all acts and things, execute and deliver all documents, agreements and writings and provide
such assurances, undertakings, information and investment letters as may be required from time
to time by all regulatory or governmental bodies or stock exchanges having jurisdiction over
Apollo’s affairs or as may be required from time to time under the Applicable Securities Laws,
including without limitation to the TSX and the AMEX.
	 
	9.9	 	This Agreement may be executed in counterparts, each of which when delivered will be deemed
to be an original and all of which together will constitute one and the same document and
Apollo will be entitled to rely on delivery by facsimile machine of an executed copy of this
Agreement, and acceptance by Apollo of such facsimile copy will be equally effective to create
a valid and binding agreement between the Subscriber and Apollo as if Apollo had accepted the
Agreement originally executed by the Subscriber.
	 
	9.10	 	Each of the parties hereby acknowledges that it has consented and requested that all
documents evidencing or relating in any way to the Shares and this Agreement be drawn in the
English language only. Les parties reconnaissent par les présentes avoir consenti et demandé
que tous les documents faisant foi ou se rapportant de quelque manière aux bons de
sousciciption spéciaux et soient rédigés en anglais seulement.

A-11

 

SCHEDULE “B”

CERTIFICATE OF NON-CANADIAN SUBSCRIBERS

(OTHER THAN U.S. SUBSCRIBERS)

The Subscriber, on its own behalf and (if applicable) on behalf of others for whom it is
contracting hereunder, further represents, warrants and covenants to and with the Corporation (and
acknowledges that the Corporation is relying thereon) that it is, and (if applicable) any
beneficial purchaser for whom it is contracting hereunder is, a resident of, or otherwise subject
to, the securities legislation of a jurisdiction other than Canada or the United States, and:

	 	(a)	 	the Subscriber is, and (if applicable) any other purchaser for whom it is
contracting hereunder:

	 	(i)	 	is purchasing the Shares as principal for its, or (if
applicable) each such other purchaser’s, own account, and not for the benefit
of any other person; and
	 
	 	(ii)	 	shall deliver to the Corporation such further particulars of
any exemption from any prospectus or securities registration requirements
available to the Corporation, the Subscriber and any such other purchaser under
applicable securities laws of their jurisdiction of residence or to which the
Subscriber and any such other purchaser are otherwise subject to, as the
Corporation may reasonably request;

	 	(b)	 	the Subscriber, and (if applicable) any other purchaser for whom we are
contracting hereunder will not sell or otherwise dispose of any Shares, except in
accordance with applicable securities laws in Canada and the United States and in
accordance with the rules and regulations of the Toronto Stock Exchange and the
American Stock Exchange, and if the Subscriber, or (if applicable) such beneficial
purchaser sells or otherwise disposes of any Shares to a person other than a resident
of Canada or the United States, as the case may be, the Subscriber, and (if applicable)
such beneficial purchaser, will obtain from such purchaser representations, warranties
and covenants in the same form as provided in this Schedule “B” and shall comply with
such other requirements as the Corporation may reasonably require.

Dated at Toronto this 1st day of June, 2005.

	 	 	 	 	 
	 	JIPANGU INC.

 	 
	 	By:  	/s/ Tamisuke Matsufuji
 	 
	 	 	Signature 	 
	 
	 	 	President
and CEO 	 
	 	 	Title 	 

B-1

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