Exhibit 10-I-5
AGREEMENT AND CONSENT TO ASSIGNMENT OF THE
COYOTE PLANT COAL AGREEMENT
WHEREAS, Northern Municipal Power Agency, by and through its agent and
representative for the Coyote Coal Plant, Minnkota Power Cooperative, Inc.;
Montana-Dakota Utilities Co.; Northwestern Public Service Company; and Otter
Tail Power Company (collectively "Buyers") are parties to the Coyote Plant Coal
Agreement ("Agreement") between the Buyers and Knife River Corporation,
successor-in-interest to Knife River Coal Mining Company ("Knife River"), dated
January 1, 1978;
WHEREAS, Knife River has agreed to sell substantially all of the assets
related to its coal operations, including the Agreement, to Dakota Xxxxxxxxxxxx
Corporation ("Dakota"), formerly Xxxxxxxxxxxx-Knife River Acquisition Corp., and
to WCCO-KRC Acquisition Corp., subsidiaries of Xxxxxxxxxxxx Mining LLC ("WML"),
a limited liability company, wholly owned by Xxxxxxxxxxxx Coal Company
("Xxxxxxxxxxxx"), pursuant to an Asset Purchase Agreement dated September 27,
2000 between Knife River and Dakota;
WHEREAS, Section 14.8 of the Agreement provides that the Agreement may
not be assigned by Knife River, as Seller, without the consent of Buyers, which
consent shall not be unreasonably withheld, except that no consent is required
in the event of, among other things, transfer to a successor in interest, by
merger, consolidation, sale and transfer, or otherwise, acquiring all or
substantially all of the assets and business of Seller, specifically including
its coal leases;
WHEREAS, the Buyers have raised certain concerns regarding the effect
of assignment on the price of coal under the Agreement, which Dakota has agreed
to address;
NOW THEREFORE, in consideration of the mutual promises contained
herein, the Buyers, and Dakota hereby agree as follows:
1. Consent to Assignment
The Buyers, pursuant to Section 14.8 of the Agreement, consent to the
assignment of the Agreement, the Addendum, and all Amendments, with all existing
rights, duties and obligations, by Knife River to Dakota, effective upon the
closing of the sale and transfer by Knife River of substantially all the assets
related to its coal operations to Dakota pursuant to the Asset Purchase
Agreement dated September 27, 2000 between Knife River and Dakota.
2. Protection of the Buyers
Dakota covenants that the acquisition and financing costs associated
with the Asset Purchase Agreement dated September 27, 2000 between Dakota and
Knife River will not be used to increase the coal price under Section 7 of the
Agreement or to affect the calculation and invocation of Profit Limits Imposed
on Seller under Section 8 of the Agreement. This covenant includes the
following:
a. There shall be no increase in pension costs due to the transfer of
pension funds, assets or liabilities from Knife River to Dakota.
b. There shall be no increase in the business, plant and equipment
tax, permit, bond and insurance costs related to an increase in
asset book values (either as determined under Generally Accepted
Accounting Principles or tax regulations), as a result of the sale
of substantially all of the assets related to Knife River's coal
operations to Dakota.
c. There shall be no increase in the coal severance taxes and federal
reclamation fees, taxes or charges related to an increase in asset
book values (either as determined under Generally Accepted
Accounting Principles or tax regulations), as a result of the sale
of substantially all of the assets related to Knife River's coal
operations to Dakota.
d. There shall be no increase in special studies costs for any
special studies that may have been required to facilitate the sale
of substantially all of the assets related to Knife River's coal
operations to Dakota.
e. There shall be no increase in depreciation costs related to an
increase in asset book values, as a result of the sale of
substantially all of the assets related to Knife River's coal
operations to Dakota.
f. There shall be no increase in interest costs related to Dakota's
financing of its purchase of substantially all of the assets
related to Knife River's coal operations.
The omission of any cost factor related to an increase in asset book values set
forth in Sections 7 or 8 of the Agreement from this Section 2 of the "Agreement
and Consent to Assignment" is not intended to exclude from Dakota's covenant
increases in those cost factors attributable to Dakota's acquisition; provided,
however that the provisions of this Agreement relate only to the assets acquired
from Knife River and the costs of acquiring and financing Dakota's acquisition
of the Knife River assets. The parties hereto expressly acknowledge that, in all
other respects, prices shall be determined pursuant to the terms of the
Agreement.
NORTHERN MUNICIPAL POWER AGENCY, by
and through its agent and representative
for the Coyote Coal Plant, MINNKOTA POWER
COOPEATIVE, INC.
Date: 4/25/01 By: /s/ Xxxxx Xxxx
------------------------ ---------------------------------------
Name:
Title: President and CEO
MONTANA-DAKOTA UTILITIES CO., a division
of MDU Resources Group, Inc.
Date: 4/26/01 By: /s/ Xxxxx Xxxxxxx
------------------------ ---------------------------------------
Name: XXXXX XXXXXXX
Title: VICE PRESIDENT ENERGY SUPPLY
NORTHWESTERN PUBLIC SERVICE, a division of
NorthWestern Corporation
Date: By: /s/ Xxxxxxx X. Xxxxxx
------------------------ ---------------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: President & CEO
OTTER TAIL CORPORATION
Date: 5/16/01 By: /s/ Xxxx Xxxxxxx
------------------------ ---------------------------------------
Name: Xxxx Xxxxxxx
Title: Chief Operating Officer,
Energy Supply
DAKOTA XXXXXXXXXXXX CORPORATION
Date: 7/9/01 By: /s/ Xxxx X. X'Xxxxxxxx
------------------------ ---------------------------------------
Name: Xxxx X. X'Xxxxxxxx
Title: President
