EXHIBIT 10-M
Confidential information has been omitted from this Exhibit and filed
separately with the Commission pursuant to a confidential treatment
request under Rule 24b-2.
THE BURLINGTON NORTHERN AND SANTA FE RAILWAY COMPANY
TRANSPORTATION AGREEMENT BNSF-C-12221
This Agreement made pursuant to 49 U.S.C. Section 10709 between THE
BURLINGTON NORTHERN AND SANTA FE RAILWAY COMPANY, (hereinafter referred to
as "BNSF"), and OTTER TAIL POWER COMPANY (hereinafter referred to as "OTP").
WHEREAS, OTP owns and operates a stream electric generating plant
described herein, known as the Hoot Lake Steam Plant (as defined
hereinafter); and BNSF is a common carrier by rail with railroad track
extending from coal mines in Wyoming and Montana to the vicinity of Hoot Lake
Steam Plant; and
WHEREAS, OTP desires BNSF to transport, and BNSF desires to transport
for OTP, pursuant to the terms of this Agreement, certain tonnage of coal in
Unit Trains to Hoot Lake Steam Plant;
NOW, THEREFORE, in consideration of the premises and the agreements and
conditions which hereinafter follow, the parties hereto agree as follows:
SECTION 1. DEFINITIONS
Actual Placement: When a Unit Train arrives at the Origin Mine's or
Destination's designated notification point (as described in the BNSF
timetable) and the Train crew has requested loading instructions or
unloading car placement instructions.
Adjusted Rate: The Base Rate specified in Section 4 herein, plus all
increases and decreases made pursuant to Section 5 herein, applicable in
determining the Effective Rate.
Base Rate: The rate as set forth in Section 4 of this Agreement, expressed
in United States dollars, cents per net Ton applicable to the transportation
of Coal from Mine Origin(s) to Destination.
Bunching Time, Train Bunching or Bunching: When a Unit Train arrives at or
attempts to arrive at Origin or Destination and another Unit Train (or Unit
Trains) occupies the Origin or Destination which prevents the Actual
Placement for loading or unloading of the Unit Train for a period of one
hour or more, not due to any cause attributable to BNSF (the "Bunched Unit
Train"). Bunching shall be accounted for by BNSF's computer train records
and BNSF's Coal Desk logs. Bunching time may or may not include time in
which a train is under Constructive Placement.
Coal: That mineral substance, untreated except for additives used to reduce
freezing or dusting problems and currently designated as STCC Code 11212 by
the Association of American Railroads.
Coal Cars or Cars: Open-top, bottom dump, coal railroad cars having a net
capacity of approximately 100 Tons per car, supplied by OTP, or temporarily
substituted by BNSF, suitable for use in Unit Train service between Origin
and Destination. Said Coal Cars must comply with the Field Manual of
Interchange Rules and Office Manual of the Interchange Rules adopted by the
Association of American Railroads ("AAR Interchange Rules") presently in
effect and as they may be changed hereafter from time to time. Said Coal
Cars must comply with any rules and regulations of the Federal Railroad
Administration applicable to such Coal Cars.
*
Declared Annual Volume: The total annual tonnage volume, equal to or above
the Minimum Annual Volume, declared by OTP by October 1 of the preceding
calendar year that OTP intends to tender for transport under the terms
specified herein in a given calendar year.
CONFIDENTIAL CONTRACT BNSF-C-12221
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Destination: Hoot Lake Steam Plant (hereafter referred to as "Hoot Lake")
located near Fergus Falls, MN.
Effective Rate: The annually Adjusted Rate specified in Section 4 and
Section 5 herein, or the Base Rate, whichever is greater, and applicable to
the transportation of Coal on the date the loaded Train is released to BNSF
for transport to Destination pursuant to this Agreement.
Free Time: The time allowed for a Unit Train to load or unload free of train
detention charges. Free Time may be extended under conditions described in
this Agreement.
Loading Facility: All equipment necessary for loading of Trains at Origins
including; rail track, raw Coal xxxxxx, crusher, storage/load-out silos, and
conveyor systems.
Minimum Annual Volume: * Tons of coal in each calendar year during the term
of this Agreement, subject to adjustment due to Force Majeure pursuant to
the terms of this Agreement).
Origin(s), Mine(s) or Mine Origin(s): The Coal Unit Train Loading Facilities
located at the mines identified in Subsection 3(A) of this Agreement.
Route of Movement: The BNSF rail route of loaded and empty Trains moving
pursuant to this Agreement from or to any Wyoming or Montana Mine Origins
specified in Subsection 3(A) through Huntley, MT, to or from Destination.
STB: The Surface Transportation Board or its successor agency or body having
the same or similar jurisdiction over rail common carriers operating in
interstate commerce.
Ton: A ton of 2,000 pounds avoirdupois.
Tender: An offer by OTP or its mine operator to BNSF of Coal loaded in a Unit
Train and ready for movement from one Origin to one Destination pursuant to
the terms of this Agreement.
Train or Unit Train or Train Set: A specialized train consisting of a
specified number of Coal Cars furnished as a unit for shipment from one
Origin to one Destination on one xxxx of lading at one time.
Unloading Facility: All equipment necessary for unloading of Trains at
Destination including: railroad track; dumper, including feeders and xxxxxx;
and dumper conveyors.
SECTION 2. EFFECTIVE DATE AND TERM
2(A) Effective Date of Agreement.
This Agreement is made pursuant to 49 U.S.C. Section l0709 and shall
be effective on the date last signed below.
2(B) Date of Transportation under Agreement.
The terms and conditions of this Agreement shall apply to all
shipments of Coal made on or after July 15, 1999, in OTP furnished
cars as described under the terms of this Agreement.
2(C) Term of Agreement.
The term of this Agreement shall commence on the Effective Date in
Subsection 2(A) above and shall expire at midnight MST on *.
SECTION 3. MOVEMENTS COVERED BY THE AGREEMENT
3(A) Covered Mines, Origins or Mine Origins.
BNSF will transport Coal to Destination from any of the Montana or
Wyoming Mine Origins specified in Section 4(A) herein; provided that
these Origins have adequate Loading Facilities and
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procedures as contemplated under this Agreement capable of
consistently loading at least 113 Coal Cars in continuous motion
in four (4) hours or less.
3(B) Exception to Route of Movement.
BNSF may use any available alternate route when operating conditions
exist which make use of the route identified herein inadvisable or
impractical; provided, however, that when using alternate routes,
BNSF shall use its best efforts to select the least circuitous
routing and to otherwise minimize delays to OTP and shall not operate
any Train on a route which goes outside the States of Wyoming,
Montana, North Dakota, and South Dakota without OTP's prior consent;
provided, however, that such consent shall not be unreasonably
withheld.
3(C) Movement of Empty Trains and Change of Origin.
BNSF will move empty Trains from Destination to one of the Origins as
part of the service included under the rates provided in Section 4.
OTP's notice of any change in Origin from the last loaded movement
must be given to BNSF prior to departure of empty Trains from Hoot
Lake. Notice may be given by telephone, or other means of direct
communication with BNSF's Coal Operating Department. BNSF will use
best efforts to accommodate OTP should it become necessary to change
the Origin in the empty return Route of Movement.
SECTION 4. TRANSPORTATION RATES
4(A) Base Rate.
OTP shall pay to BNSF the following Base Rates (expressed in US
dollars and cents per net ton) as of July 15, 1999, for the
transportation of Coal from Origins to Destination under this
Agreement, which rates shall be subject to adjustment beginning
January 1, 2000 in accordance with Section 5:
BASE RATES
MONTANA MINE ORIGINS
*
NORTHERN MINE ORIGINS
*
CENTRAL MINE ORIGINS
*
SECTION 5. ADJUSTMENT OF RATES
5(A) Periodic Adjustments.
Except as otherwise provided in this Agreement, the transportation
rate set forth in this Agreement (that is, the Base Rate set forth
in Section 4) shall be adjusted annually, upward or downward, by
an amount equal to * of the change in the Rail Cost Adjustment Factor
unadjusted for Railroad Productivity (RCAF-U) ("Adjustment Index")
as defined in Ex Parte 290 Sub No. 4 (and further described in
Subsection 5B) to produce the "Adjusted Rate."
Adjustments shall become effective annually on January 1 of each
calendar year, with the first adjustment to become effective on
January 1, 2000. BNSF shall notify OTP in writing of all
adjustments and furnish supporting calculations, prior to the
effective date of the adjustment, or, as soon thereafter as the
information necessary to calculate the adjustment is made by the
STB. The new Adjusted Rate (and subsequent Effective Rate) so
determined shall be effective retroactive to the applicable
adjustment date in question.
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5(B) Adjustment Percentage Change Application.
Commencing on January 1, 2000, the Annual Percentage Change shall be
equal to the *. The Annual Percentage Change (in decimal) will be
multiplied by * to produce the Adjustment Percentage Change (in
decimal). The previous annual Adjusted Rate is multiplied by the
Adjustment Percentage Change to produce the "Change Amount." The
previous Adjusted Rate plus the Change Amount will equal the new
quarter's Adjusted Rate. The Effective Rate shall be equal to the
Adjusted Rate if the Adjusted Rate is equal to or greater than the
Base Rate else the Effective Rate shall be equal to the Base Rate.
For example:
*
In no event shall the Effective Rate move below the Base Rate under
this Agreement; if the Adjustment Index produces Adjusted Rates that
are lower than the Base Rate, then the Effective Rate shall be equal
to the Base Rate. In subsequent years, the Adjusted Rates that are
below the Base Rate shall continue to be adjusted upward or
downward, as applicable, and shall not be used to determine the
Effective Rate until the level of the Adjustment Index produces
Adjusted Rates that are above the Base Rate.
5(C) Rounding.
All calculated numbers shall be rounded to the nearest sixth digit
after the decimal point (i.e. .000001499 = .000001). All final
adjustment computations shall be rounded to the nearest one cent
by going to the lower cent when computations result in a balance of
less than one-hag cent and to the next higher whole one cent when
computations result in a balance of one-half cent or more (i.e.
.044999 = $0.04 and .045000 = $0.05).
5(D) Elimination or Material Alteration of Index.
If the STB or any successor organizations cease to publish the RCAF-U
index required for the calculations outlined in this Section, or
materially alters the methodology by which the index is derived, the
parties shall mutually determine and agree upon the most appropriate
substitute index which most closely matches the economic structure of
the discontinued or altered index to be used for adjustments for the
remainder of the Agreement term immediately following such action.
If the parties do not come to an agreement as to the substitute index
by an adjustment date, the Effective Rate shall not be adjusted until
such time as the index is agreed to, at which time a retroactive
adjustment shall be made retroactive to said adjustment date. If the
parties do not reach agreement on the substitute index after 60 days
following an adjustment date, eighty percent (80%) of the United
States Gross Domestic Product - Implicit Price Deflator shall be the
substitute index. The parties agree that the RCAF index adjusted for
productivity (RCAF-A) (or other future RCAF indexes adjusted for
productivity in some manner) will not be used under this Subsection
5(D) as a substitute index.
SECTION 6. ENTIRE COMPENSATION
The rates and charges specified in this Agreement shall constitute the
entire compensation payable to BNSF for the rail transportation services
specified in this Agreement. BNSF shall not seek to collect from OTP,
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except as provided herein, any additional amounts in connection with such
specified services. The adjustment mechanism specified in Section 5 of this
Agreement shall constitute the sole means of adjusting the rates specified
in this Agreement during the term hereof. If OTP requests BNSF to perform
additional services, not specified in this Agreement or incorporated herein
by reference, charges for such services shall be established by separate
agreement.
SECTION 7. DESCRIPTION OF TRANSPORTATION
AND TONNAGE REQUIREMENTS
7(A) Transportation Services and Obligations of the Parties.
BNSF agrees to transport Coal subject to the terms of this Agreement.
The transportation services to be provided by BNSF pursuant to this
Agreement shall include all rail services and operations required for
movements in Trains of loaded Coal Cars from Origin to Destination
and the return movement in Trains of the empty Coal Cars to Origin,
both via Route of Movement. These services are described as follows:
(1) Transportation services including such switching and Car handling
at Origin and Destination as may be required for loading and
weighing at Origin and Unloading at Destination and, if requested
by OTP, reversing the Train within the Free Time period at
Destination.
(2) Transportation services required for rail movements in Trains
between Origin and Destination, including all marshaling of Cars,
line-haul transportation, switching for Coal Car maintenance
performed by BNSF, inspection of Coal Cars, storage of active
spare Cars on the Route of Movement and other customary
accessorial services required for efficient Train operations.
BNSF shall provide the necessary locomotives, cabooses (if
required), rear-end devices, materials, supplies and labor to
enable it to transport the Coal tonnage to be Tendered to it
pursuant to this Agreement.
7(B) Coal Cars.
OTP hereby agrees to supply at least one hundred and thirteen (113)
Coal Cars plus at least five spare Coal Cars suitable for interchange
under Interchange Rules adopted by the Association of American
Railroads for each Unit Train Tendered, for use by BNSF in accordance
with the terms of this Agreement in order to allow BNSF to transport
the Coal tonnage to be Tendered hereunder. Said Coal Cars shall be
provided at no cost to BNSF.
7(C) Minimum Annual Volume.
(1) Within each calendar year during the term of this Agreement
after year 1999, OTP agrees to Tender, in reasonably equal
monthly quantities, the Minimum Annual Volume of * Tons
of Coal, as adjusted pursuant to this Agreement, under the
conditions and in the manner specified herein, provided however,
in calendar year 1999, the Minimum Annual Volume will be equal
to * tons. OTP may Tender tonnage in excess of the Minimum
Annual Volume.
(2) Commencing in calendar year 2000, OTP shall provide to BNSF by
October 1 of each preceding year during the term of this
Agreement a written notice specifying the amount of Coal it
intends to Tender under this Agreement during the calendar year
("Declared Annual Volume"). The Declared Annual Volume shall
equal the Minimum Annual Volume plus any additional coal above
the Minimal Annual Volume. The Declared Annual Volume shall
indicate the amount of Coal OTP intends to ship during each
quarter of the year. The Declared Annual Volume shall be for
informational purposes only and is not binding.
(3) If in any calendar year during the term of this Agreement, OTP
does not Tender to BNSF the Minimum Annual Volume, OTP agrees to
pay BNSF as liquidated damages, agreed as reasonable and not as
a penalty, an amount equal to * of the applicable Effective Rate
as of the end of such calendar year times the difference between
the Minimum Annual Volume and the total tonnage Tendered by OTP
to BNSF during such calendar year.
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The Minimum Annual Volume shall be adjusted by Force Majeure
events as provided for in Section 14(C). OTP shall not reduce
the Minimum Annual Volume by shipping any or all of the
Minimum Annual Volume via another rail carrier and by paying
liquidated damages to BNSF to satisfy the Minimum Annual Volume
as adjusted pursuant to this Agreement, and in the event that
OTP does so, said percentage of the applicable Effective Rate
shall not be construed as an agreed upon measure of damages.
(4) Any Tons which are not actually moved, but for which charges are
paid pursuant to Subsection 11(J), will be considered as Tons
received in meeting the Minimum Annual Volume.
7(D) BNSF Service Commitment.
For the Minimum Annual Volume in Subsection 7(C) and Tendered for
shipment from the Mine Origins, BNSF agrees to provide a minimum of
* round trips per year (* trips in calendar year 1999), if OTP
unloads in * hours and Origin Mines load the train in * hours.
BNSF shall be granted relief from the * trips per year for the
following reasons:
(1). Train Bunching time and/or Constructive Placement time at the
Mine Origin.
(2). Train Bunching time and/or Constructive Placement time at
Destination if there is a train not ready for release at the
Destination preventing placement of the loaded train.
(3). Any two week period where the Long Unload Cycle is used by OTP.
(4). Delays caused by Force Majeure as defined in Section 14.
(5). Any delay caused by OTP, OTP's loading or unloading operator.
If the Deficit Tonnage is due to BNSF's failure to make the * round
trips yearly, and as a result thereof, OTP does not ship the Minimum
Annual Volume, BNSF shall take all reasonable steps, including the
addition of locomotives, rail owned Coal Cars and crews to transport
the Deficit Tonnage at a schedule consistent with the ability of the
Origin Mine operator to load and OTP to unload (including the ability
to store or consume) the Deficit Tonnage. The freight charges for
transporting such Deficit Tonnage shall be the Effective Rate
applicable in the calendar quarter that the Deficit Tonnage accrued.
*
BNSF will use best efforts to ship tonnage above Declared Annual
Volume but no liquidated damages will be due on Deficit Tonnage
above the Declared Annual Volume.
SECTION 8. FURNISHING OF SHIPMENTS;
CONFLICTING TERMS IN BILLS OF LADING.
OTP shall arrange for shipments of Coal to be furnished to BNSF on
a standard xxxx of lading in accordance with the Uniform Straight
Xxxx of Lading or other shipping documents approved by BNSF,
subject to the conditions of this Agreement. Each xxxx of lading
or shipping document shall contain a reference to the contract
number assigned to this Agreement, i.e., BNSF-C-12221. The rates
identified in this Agreement shall not appear on the xxxx of lading.
In the event there is a conflict between the terms of this Agreement,
the terms of a xxxx of lading or other shipping documents, the terms
of this Agreement shall govern and control.
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SECTION 9. WEIGHING
9(A) Weighing.
The parties agree that the weight of the Coal in the Coal Cars will
be determined at Origin by OTP's Origin Mine operator. BNSF shall
not be responsible for such weight determinations. The weights
ascertained by said operators shall be used for the assessment of
the freight charges hereunder pursuant to Subsection 11(J). Weighing
shall be performed on scales inspected semi-annually in accordance
with the then-current AAR Scale Handbook specifications for such
scales, and subject to supervision and verification by BNSF or BNSF's
agent.
9(B) Breakdown Of Scales.
If weights cannot be determined due to a breakdown of the scales at
Origin, the weight per Train to be used for the assessment of freight
charges hereunder shall be determined by averaging the per Car
weights on the ten (10) immediately preceding weighed shipments
(containing similar capacity Coal Cars) from the same Origin to
Destination, adjusted for any variance in the number of Cars per
shipment.
If scales are determined by a scale test to be in error in excess of
the AAR Scale Handbook tolerance of one percent (1.0%), said scales
shall be recalibrated to be within one percent. The weights used by
BNSF for purpose of assessing freight charges for Coal transported
pursuant to this Agreement during the period since the last preceding
inspection and calibration of such scales shall be used without any
resulting payments or refunds.
9(C) Gross Load Limit and Overloads.
If a loaded Coal Car is found by BNSF to weigh in excess of the
maximum gross load limit for Cars or weighs in excess of the maximum
gross weight on rail of 286,000 pounds, BNSF shall, if necessary,
switch said overloaded Coal Car and remove it from the Train.
BNSF retains the right to refuse to accept or transport overloaded
Cars. BNSF shall not be obligated to reduce the lading of such Cars,
which obligation is solely OTP's under this Agreement. After OTP,
at no expense to BNSF, causes any excess Coal to be removed from the
overloaded Coal Car, BNSF shall replace the Coal Car into the Train.
For such services in removing and replacing each such Coal Car, OTP
shall pay a switch charge to BNSF of *. If the excess Coal is
removed during the Free Time at Origin without removing the Coal Car
from a Train, there shall be no charge to OTP. BNSF reserves the
right to increase the maximum gross weight on rail above 286,000
pounds and will notify OTP in writing of any increases in the maximum
gross weight standard.
SECTION 10. LOADING AND UNLOADING
10(A) Loading.
*
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BNSF receives notice from OTP or its Origin Mine operator that the
Train is released for movement back to Destination. However, if two
or more Unit Trains are halted or delayed due to any cause
attributable to BNSF, OTP shall be allowed additional Free Time at
Origin until such time as the Bunched Unit Train is actually placed
for loading, whereupon the Free Time at Origin will commence.
10(B) Advance Notice of Unloading.
BNSF shall notify OTP's dumper building personnel at Destination of
the estimated time of arrival of each Train at least four (4) hours
prior to such estimated time of arrival at Destination. Normally,
BNSF will telephone OTP; however, in the future and when installed,
BNSF may make notification by electronic mail and/or BNSF installed
software with the approval of OTP.
10(C) Unloading.
*
10(D) Extended Unloading.
OTP shall have unlimited Free Time to unload each Unit Train upon
OTP's election to pay a release of power fee of * per train
("Extended Unloading"). The first three elections of Extended
Unloading in each calendar year shall be free and without charge to
OTP. OTP shall notify BNSF by fax or other electronic means of its
election of Extended Unloading at the time of its election. OTP
shall be responsible for the accounting of Extended Unloading charges
and OTP shall pay to BNSF said charges within 30 days (and without
BNSF billing) after the end of each calendar quarter.
10(E) Frozen Coal.
If it is determined by OTP that Coal is frozen in the Coal Cars, OTP
shall notify BNSF as soon as practical and OTP shall be granted as
much Free Time as necessary to unload the Unit Train.
10(F) Residual Coal.
As used in this Agreement, Residual Coal means Coal which remains in
a Coal Car after the completion of the unloading process at
Destination, including Coal which remains in a Coal Car after
OTP has attempted to loosen or thaw frozen Coal. OTP will be
responsible for the complete unloading of Coal Cars prior to
departure of an empty Train from Destination. If BNSF discovers
Residual Coal in any Coal Car in the Train after such Train has
departed Destination, and such Residual Coal results in an unsafe
condition (e.g., Residual Coal accumulated on one side or end of
Car causing the Coal Car to become unstable), BNSF may remove such
Coal Car from the Train at a charge to OTP of * per hour or fraction
thereof for the removal service, such charge to include the return
of such Coal Car to the Train after OTP has advised BNSF that such
Coal Car has been made safe for movement.
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SECTION 11. SUPPLY OF EQUIPMENT AND SERVICE; MAINTENANCE;
CAR DAMAGE AND DESTRUCTION; MINIMUM TRAIN SIZE
11(A) Applicable Rules.
The parties agree that each party hereto will assume separate
responsibilities for the Coal Cars as those responsibilities are
designated in the Field Manual of Interchange Rules and Office Manual
of the Interchange Rules adopted by the Association of American
Railroads ("AAR Interchange Rules") presently in effect and as they
may be changed hereafter from time to time. The parties further
agree to comply with any rules and regulations of the Federal
Railroad Administration applicable to such Coal Cars.
Notwithstanding any provision to the contrary, BNSF shall not be
liable for any loss of or damage to Coal or OTP's Coal Cars due to
defects in said Coal Cars or due to improper loading thereof, or to
defects in manufacture, design or workmanship.
11(B) Damage to Coal Cars.
If OTP furnished Coal Cars are damaged under circumstances in which
the AAR Interchange Rules make BNSF responsible for such damage, BNSF
will give OTP written notification of the damage and will provide the
Car initial and numbers. BNSF will repair or cause to be repaired
such damaged Coal Cars at its expense and shall transport such Coal
Cars for repairs and return them to Train service pursuant to the AAR
Interchange Rules. BNSF shall do so and will use its best efforts to
make such repairs in a timely fashion. While said Coal Cars are
being repaired, BNSF shall furnish suitable substitute Coal Cars for
use hereunder at no cost to OTP until said Coal Cars are repaired
and returned to service, PROVIDED, HOWEVER, that if, at OTP's
request, said Coal Cars are repaired at a shop of OTP's choosing,
BNSF shall furnish suitable substitute Coal Cars until damaged Coal
Cars are repaired and returned to service or until 365 days from the
date of damage, whichever event occurs first.
11(C) Destruction of Coal Cars.
In the event that Coal Cars are destroyed under circumstances in
which the AAR Interchange Rules make BNSF responsible for such
destruction, BNSF will give OTP written notification of such
destruction and provide the Coal Car initials and numbers of each
affected Coal Car. BNSF shall furnish suitable substitute Coal Cars,
for use hereunder at no cost to OTP for a period not to exceed
365 days following the date BNSF furnishes suitable substitute Coal
Cars or until the date replacement Coal Cars are in service.
Settlement to OTP for any such destroyed Coal Car shall be in
accordance with the applicable rule(s) of the Field Manual of the
AAR Interchange Rules in effect on the date of such destruction.
Such amounts so determined and undisputed will be paid to OTP within
thirty (30) days of BNSF's receipt of OTP's invoice therefor.
11(D) Substitute Coal Cars.
For the purpose of Subsections 11(B) and 11(C) "suitable substitute
Coal Cars" shall mean open top, bottom dump, Coal Cars of
approximately 100 Ton lading capacity which are compatible with
Hoot Lake's unload facility.
11(E) Removal and Replacement of Cars for Storage or Maintenance.
Upon request of OTP, BNSF will, on the return movement from
Destination to Origin, stop a Train at a OTP designated maintenance
facility at an intermediate point on the Route of Movement where
track is available to remove or replace Cars from such Train. OTP
shall pay BNSF a switching charge for removal and replacement of Coal
Cars in such Train of * per hour, or fraction thereof, to be
computed from the time the Train stops for removal or replacement of
individual Coal Cars until such time as the last Coal Car is removed
from the Train or until the last Coal Car is placed into the Train.
11(F) Removal and Replacement of Trains for Storage or Maintenance.
Upon request of OTP, BNSF will, on the return movement from
Destination to Origin, place an entire empty Train at a OTP
designated maintenance facility at an intermediate point on the Route
of Movement. Upon subsequent request of OTP, BNSF will remove the
entire Train from such maintenance facility and return it to service.
OTP will pay * in total to BNSF for its services in placing such
Train at such maintenance facility and removing such Train from
such maintenance
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facility and returning it to service. In addition, OTP shall pay BNSF
at the rate of * per hour required for such placement or removal,
with such charges to commence when the Train crew starts such
placement and ends when the Train is set for departure.
11(G) Switching to Connecting Rail Carrier.
If a Car maintenance facility selected by OTP is served by another
rail carrier which necessitates, at an intermediate point on the
Route of Movement, a switch movement of Coal Cars, or a switch
movement of a Train, to or from a connecting railroad, BNSF will
provide the necessary switching services. BNSF will be paid by OTP
in accordance with Subsection 11(E) for a switch movement of
Coal Cars, and in accordance with Subsection 12(B) for a switch
movement of Trains. Any switching or any other charges imposed by
the connecting railroad shall be paid by OTP.
11(H) Maintenance Facility Off Route of Movement
If a Car maintenance facility selected by OTP is located at a point
which is not on the Route of Movement, BNSF will be paid the
following line-haul charge, covering any movement on the BNSF system
not on the Route of Movement, in addition to the charges specified in
Subsections 11(E), 11(F) or 11(G), as appropriate:
Rates in Dollars Per
Car, Per Mile,
Minimum 75 Miles Number of Coal Cars
---------------------------------------------------
* 25 or Less
* 26 to 75
* More Than 75
The charges set out in Subsections 11(E), 11(F), 11(G) and 11(H)
shall not apply to the movement of Coal Cars damaged by BNSF to a
maintenance facility for repair.
11(I) Bad Order Switching.
No charges will be assessed by BNSF for switching occasioned by bad
ordering of Coal Cars by BNSF personnel, including both switching out
of bad ordered Coal Cars and/or switching in of spare Coal Cars in
substitution for bad ordered Coal Cars.
11(J) Minimum Train Size.
(1) Minimum Tender: Each Train furnished at Origin for loading shall
contain no less than 113 Cars ("Minimum Train Size"), except as
provided in this Section 11. The weight for determination of
freight charges shall be the greater of (1) the actual weight of
the lading of the Train as determined pursuant to Section 9; or
(2) 97 tons per Car times 113 Coal Cars in the Train (except as
provided in Section 11(J) herein).
(2) Damaged or Destroyed Cars Exception: If OTP is prevented from
furnishing at least 113 Coal Cars because its Coal Cars have
been damaged or destroyed by BNSF and BNSF is liable therefor,
and if BNSF is unable to furnish sufficient suitable substitute
Coal Cars pursuant to Subsections 11(B), 11(C) and 11(D),
Minimum Train Size shall be reduced to the number of
suitable Coal Cars OTP and BNSF together are able to provide;
however, the Minimum Train Size under this Subsection (J)(2)
shall be 75 Coal Cars.
(3) En Route Exception: In the event OTP is unable to furnish at
least 113 Coal Cars because certain Coal Cars are found en route
or at Origin to be unsuitable for loading, excluding open
doors which can be secured, the Minimum Train Size shall be
reduced by the number of Coal Cars found to be unsuitable for
loading; however, the Minimum Train Size under this Subsection
11(J)(3) shall be 100 Coal Cars.
(4) Insufficient BNSF Substitute Cars: If OTP's Coal Cars are
damaged or destroyed by BNSF and BNSF is unable to furnish
sufficient suitable substitute Coal Cars as provided for in
Subsections 11(B), 11(C), and 11(D) the Minimum Annual Volume
shall be reduced by 97 Tons
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for each Coal Car less than 113 in any Train shipment resulting
from BNSF's inability to furnish suitable substitute Coal Cars.
(5) Insufficient OTP Substitute Cars: If, due only to the unexcused
fault of OTP, sufficient Coal Cars are not available for loading
to meet the Minimum Train Size, BNSF will accept loaded Coal
Cars furnished for transportation and the Effective Rate shall
be assessed on actual Tons loaded plus 97 Tons per Coal Car for
each Car short of the Minimum Train Size. Such Tons which are
not actually moved but for which charges are paid pursuant to
this Subsection 11(J)(5) will be considered as Tons received in
meeting the Minimum Annual Volume and the Declared Quarterly
Volume. OTP will use reasonable efforts to maximize the tonnage
per Car and, BNSF and OTP will use reasonable efforts to
maximize the number of Cars in each train.
SECTION 12. HOLDING OF EMPTY TRAINS
12(A) Storage On the Route of Movement.
If storage track is available at a location on the Route of Movement
(for Train storage at Destination, see Section 10(D)), upon request
of OTP, BNSF will, on the return movement from Destination to
Origin, move an empty Train to such storage track and place the Train
there for storage. BNSF will be paid * in total (billable at
the time the Train is placed) for its services in placing and
removing such Train. In addition, OTP shall pay a storage charge of
* for each 24 hour period or fraction thereof that the Train is
stored on any such storage track owned by BNSF.
12(B) Switching to Connecting Carrier.
OTP shall pay * per Train for each switch to or from a connecting
carrier. In addition, OTP shall pay BNSF at the rate of
* per hour required for any such switching, with such charges
to commence when the Train crew starts such switching and shall end
when the last car is released to the connecting railroad by BNSF.
Any switching or other charges imposed by the connecting railroad
shall be paid by OTP. However, none of the charges in this
Subsection 12(B) shall apply if such switch is for the purpose of
continuing the movement of Unit Trains on the Route of Movement.
12(C) Storage Off Route of Movement.
If OTP's owned or leased storage track is located at a point which
is not on the Route of Movement, BNSF will move OTP's Trains to and
from such storage track and OTP shall pay the line haul charges
specified in Subsection 11(H) for any such movement on the BNSF
system in addition to the charges specified in Subsection 12(B) as
appropriate. If OTP elects to move consist sizes of * cars
or more from the state of Illinois to Wyoming Mines origins, or from
Wyoming Mines to the state of Illinois, a total charge of * per
car will be applicable and the charges specified in Subsection 11(H)
and Subsection 12(B) shall not apply.
SECTION 13. BILLING AND PAYMENT
All undisputed payments for transportation of Coal due hereunder shall be due
and payable on or within five (5) working days of the receipt of a written
or electronic statement of charge or charges, with the exception of
ancillary charges specified in Subsection 7(C) and 7(D) which shall be due
within 30 calendar days of receipt. OTP shall make all payments to BNSF
for transportation of Coal under this Agreement by wire transfer or by
electronic funds transfer. Other charges due to BNSF by OTP or OTP by
BNSF may be paid by mail.
OTP will audit freight bills and contact, if necessary, a BNSF Accounting
Department representative assigned to OTP's account, to make corrections or
adjustments to bills prior to the wire transfer. If corrections or
adjustments to freight bills cannot be agreed upon within said 5 day period,
OTP shall wire transfer the undisputed amounts billed, and the balance, if
any, will be transferred within 5 calendar days of the date the parties
agree as to the appropriate corrections or adjustments. When resolved, by
agreement, the balance owing, if any, shall be accompanied by interest at
10% per annum on the unpaid balance from the date the original xxxx was
partially unpaid to the date of the wire transfer of the agreed balance.
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If a party fails to make undisputed payments for Coal transportation on or
within 5 working days of receipt of written statements of charge or charges,
or fails to make undisputed payment for ancillary charges within 30 calendar
days of receipt, it agrees to pay a late charge to compensate the other
party for its administrative costs at a rate of two percent (2%) of any
amount due and unpaid, for each 30 day period or portion thereof, or at the
maximum rate permitted by law, if lower, commencing from the expiration of
said 10 working days or 30 calendar days, respectively, of receipt of
written statement of such freight charges or ancillary charges.
SECTION 14. FORCE MAJEURE
14(A) Defined.
The term "Force Majeure" as used herein shall mean any cause or
causes beyond the reasonable control of the party affected thereby
which, by exercise of due diligence, it shall be unable to overcome,
including, without limitation:
Acts of God; acts of the public enemy; blockades; strikes; lockouts;
labor disputes or other industrial disturbances; riots; disorders;
storms; landslides; floods; washouts; earthquake; lightning;
unusually large snow accumulation; civil disturbances; restraint,
acts or decisions by court or governmental or other public authority
directly affecting either party; boycotts; embargoes, including
embargoes pursuant to AAR service orders; war or acts of military
authorities; unavailability of diesel fuel for locomotives or
generator start-up; derailments; failure of mine operators to supply
coal (whether excused by reason of a Force Majeure condition under
OTP's coal purchase contract with such mine operator; or unexcused
and in violation of such contract); frozen coal; or fire or
explosion or mechanical breakdown or damage affecting BNSF's
facilities or equipment, availability of Coal Cars from
manufacturers, OTP's Hoot Lake Steam Plant or equipment or
facilities related thereto including the Unloading Facilities, or
affecting the mine(s) of OTP's coal supplier(s), or equipment or
facilities related thereto, including Loading Facilities (extending
for periods beyond one hour, including emergency outages of equipment
or facilities for the purpose of making repairs to avoid breakdown
thereof or damage thereto other than regularly scheduled repairs or
regular maintenance).
14(B) Effect Hereunder.
If because of Force Majeure, either party hereto is unable to carry
out its obligations under this Agreement, and if such party shall
promptly give to the other party written notice of such Force
Majeure, then the obligation of the party giving such notice shall
be suspended to the extent made necessary by such Force Majeure and
during its continuance. However, the party giving such notice
shall use its best efforts to eliminate such Force Majeure insofar
as possible with a minimum of delay, and thereupon promptly give
notice to the other party when the Force Majeure has terminated.
Nothing herein contained shall cause the party affected by an event
of Force Majeure to submit to what it believes to be an unfavorable
labor agreement, and it is agreed that any settlement of labor
strikes or differences with workmen shall be entirely within the
sole discretion of the affected party.
14(C) Effect on Minimum Annual Volume.
In the event shipments of Coal cannot be made due to Force Majeure,
as defined in this Section affecting either party, the Minimum
Annual Volume shall be reduced by 1/365th for each day during
which the event of Force Majeure continues. The above reductions
shall take into account the effects of partial and full disability
events. Any day in which two or more such events occur shall be
considered as one day. An event of Force Majeure shall last for a
continuous 24 hour period before the Minimum Annual Volume shall be
reduced. Force Majeure days shall not be carried over into
succeeding years for purposes of calculating compliance with the
Minimum Annual Volume.
SECTION 15. LIMITATIONS ON ACTIONS FOR COAL LOSS OR DAMAGE
15(A) Liability.
Standard common carrier liability pursuant to 49 U.S.C. Section 11706
shall apply to loss of or damage to the Coal being transported
pursuant to this Agreement. In the event of a conflict between said
terms and this Agreement, this Agreement shall govern.
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15(B) Claims.
Claims for loss of or damage to Coal en route must be made in writing
by OTP to BNSF within 9 months after receipt of BNSF's written
statement of charges for transporting such Coal. Suits must be filed
against BNSF within two years and one day from the day when notice in
writing from BNSF is received by OTP stating that BNSF has disallowed
OTP's claim or any part or parts thereof as specified in BNSF's
notice. If claims are not made and/or suits are not instituted
thereon in accordance with the foregoing provisions, BNSF shall not
be liable and such claims will not be paid. This Subsection 15(B)
shall not apply in the event of a material breach of this Agreement
by BNSF. This Subsection 15(B) shall only apply to loss of or damage
to Coal which occurs while such Coal is being transported by BNSF
between Origin and Destination.
SECTION 16. TERMINATION
If either party hereto shall default in any material obligation of this
Agreement which is not excused as Force Majeure as defined in Section 14,
and continues in such default for a period of sixty (60) days after written
notice thereof is given by the non-defaulting party to such other party of
the existence of such default, or, if more than sixty (60) days are required
to correct with reasonable diligence the default set forth in said notice
and such defaulting party shall fail within said sixty (60) day period to
commence the action necessary to correct such matters and thereafter
prosecute the same to completion with reasonable diligence, the non-
defaulting party may, at its option, and without prejudice to its other
rights and remedies hereunder, at law or in equity, terminate this Agreement
by written notice thereof to the party in default.
SECTION 17. ASSIGNMENT AND BINDING EFFECT
This Agreement shall bind and inure to the benefit of the parties and their
successors and assigns. Either party hereto may assign any receivable due
them under this Agreement, provided however, such assignment shall not
relieve the assignor of any of its rights or obligations under this
Agreement. With the exception of assignment of: (a) said receivables; or
(b) either party's right to assign to a successor where such assignment or
delegation occurs by way of sale or transfer of all or substantially all of
a party's assets by way of merger, consolidation, or combination; neither
party may assign this Agreement or any other rights or obligations hereunder
without the prior written consent of the other party; provided however, that
such written consent shall not be unreasonably withheld and that no
assignment shall be effective unless and until the assignee shall assume in
writing the obligation of the assignor.
SECTION. 18. ENTIRETY AND AMENDMENTS
This Agreement comprises the entire Agreement, and merges and supersedes all
prior oral and written understandings and representations between OTP and
BNSF concerning the subject matter hereof. All amendments of the terms of
this Agreement shall be in writing, signed by the parties hereto and shall
comply with any applicable laws and regulations.
SECTION 19. WAIVERS AND REMEDIES
The failure of either party hereto to insist in any one or more instances
upon strict performance of any of the obligations of the other party
pursuant to this Agreement or to take advantage of any of its rights
hereunder shall not be construed as a waiver of the performance of any such
obligation or the relinquishment of any such rights for the future, but the
same shall continue and remain in full force and effect.
Upon a material breach of this Agreement, all remedies provided by law or in
equity, including specific performance of this Agreement, shall be available
to the affected party.
SECTION 20. NOTICE
Any notice required or permitted hereunder, including an event of Force
Majeure, except for invoices and payments and as otherwise provided in this
Agreement, shall be made in writing and shall be deemed effective when
delivered personally to the party to whom directed, or upon the earlier of
actual receipt, or
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three days after deposit in the United States Mail, Registered or Certified
Mail, return receipt requested with postage prepaid and property addressed
to the following:
The Burlington Northern
and Santa Fe Railway Company Otter Tail Power Company
---------------------------- ------------------------
2650 Xxx Xxxx Drive 000 Xxxxx Xxxxxxx
Xxxx Xxxxx, XX 00000-0000 Xxxxxx Xxxxx, XX 00000
Attn: Coal Business Unit Attn: Hoot Lake Plant
These addresses may be changed by written notice to the other party.
SECTION 21. LIABILITY AND INDEMNIFICATION
21(A) BNSF Indemnity.
To the extent permitted by applicable law, BNSF shall protect,
indemnify and save harmless OTP, its officers, directors, employees,
agents and servants from and against all liabilities losses, claims,
demands, damages, penalties, causes of action, judgments, suits,
(including suits for personal injuries or death) including all
reasonable attorneys' fees, court costs and expenses incurred in
defense of any claim or suit, proximately caused by the negligent or
intentional conduct of BNSF or its employees, representatives or
agents and arising out of or in connection with its obligations
under this Agreement, and shall pay for any losses, claims, demands,
damages, penalties, judgments, suit of any nature rendered against
OTP or such person.
21(B) OTP Indemnity.
To the extent permitted by applicable law, OTP shall protect,
indemnify and save harmless BNSF, its officers, directors,
employees, agents and servants from and against all liabilities
losses, claims, demands, damages, penalties, causes of action,
judgments, suits, (including suits for personal injuries or death)
including all reasonable attorneys' fees, court costs and expenses
incurred in defense of any claim or suit, proximately caused by the
negligent or intentional conduct of OTP or its employees,
representatives or agents and arising out of or in connection with
its obligations under this Agreement, and shall pay for any losses,
claims, demands, damages, penalties, judgments, suit of any nature
rendered against BNSF or such person.
21(C) Joint Indemnity.
If any liability, loss, claim, damage, demand, penalty, cause of
action, judgment or suit arises from the joint negligence or
intentional conduct of BNSF and/or OTP and/or a third party, each
party's responsibility for its portion of the liability, loss,
claim, damage, penalty, cause of action, or suit shall be as
determined in accordance will applicable law.
SECTION 22. GOVERNING LAWS
For all purposes, this Agreement shall be deemed to be an Agreement made in
the state of Minnesota and governed by and construed according to the laws
of that state except that matters related to loss and damage to coal shall
be construed and interpreted consistent with relevant agency and court
decisions and U.S. statutes and regulations thereunder establishing or
determining rights and obligations of carriers providing interstate common
carriage by rail.
SECTION 23. CONFIDENTIALITY
Except when required by law, the parties shall not reveal the terms of this
Agreement to persons not employed by a party to this Agreement or its
affiliate and shall protect the confidentiality of the information developed
in connection with this Agreement; provided, however, that neither party
will be precluded from revealing such information in obtaining or attempting
to obtain financing or in filing reports and information
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with the Securities and Exchange Commission, or the appropriate governmental
or regulatory authorities, or making public information required thereby, or
when advised by legal counsel that such disclosure is required. When
required, the parties may also submit information to consultants and
contractors performing work related to this Agreement who agree in writing
to protect the confidentiality of such information.
SECTION 24. REPRESENTATIONS AND WARRANTIES
24(A) OTP represents and warrants to BNSF:
(1) It is a corporation duly organized, validly existing and in
good standing under the laws of the State of Minnesota.
(2) The execution and delivery by OTP of this Agreement and the
performance by OTP of its obligations are within its power and
authority and have been duly authorized.
(3) This Agreement is a legal, valid and binding obligation of OTP
enforceable against OTP in accordance with its terms.
24(B) BNSF represents and warrants to OTP:
(1) It is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware.
(2) The execution and delivery of this Agreement by BNSF and the
performance by BNSF of its obligations thereunder are within
its corporate powers, have been duly authorized by all
necessary corporate action, and do not and will not
contravene or conflict with any provision of law or of its
charter or by-laws.
(3) This Agreement is legal, valid and binding obligation of
BNSF enforceable against BNSF in accordance with its terms.
SECTION 25. HEADINGS NOT TO AFFECT CONSTRUCTION
The headings to the Sections, Subsection and paragraphs of this Agreement
are inserted for the convenience of reference only, and are neither to be
taken to be any part of the provisions hereof nor to control or affect the
meaning, construction or effect of the same.
IN WITNESS WHEREOF, the parties have executed this Agreement effective as of
the date last written below.
THE BURLINGTON NORTHERN
OTTER TAIL POWER COMPANY AND SANTA FE RAILWAY COMPANY
BY:/s/Xxxx Xxxxxxx BY: /s/Xxxxx X. Xxxxxxx
--------------------------------- -----------------------------
Chief Operating Officer,
TITLE: Energy Supply TITLE: VP Coal Marketing
---------------------------------- -----------------------------
DATE: July 16, 1999 DATE: 7-19-99
---------------------------------- -----------------------------
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(*) Confidential information has been omitted and filed separately with the
Commission pursuant to Rule 24b-2.
