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04-28-2010 HUCMRegular Meeting April 28, 2010 Members present: President Dwight Bordson; Vice President Robert Hantge; Secretary Craig Lenz; Commissioner Donald H. Walser; Commissioner Paul Nordin; Attorney Marc Sebora; General Manager Michael Kumm President Bordson called the meeting to order at 3:00 p.m. Agenda item #5: Discussion of and Approval of Purchase Power Agreement presented by Dave Berg was moved to agenda item #1; Agenda item #4: Closed Session for Labor Negotiations was moved to after division reports; and Agenda item #9: Approve the Sale of One -Half Acre of Mineral Rights in Oklahoma was tabled. Dave Berg, RW Beck, was welcomed to the meeting. Mr. Berg gave a presentation on the purchase power agreement with Missouri River Energy Services (MRES). This is HUC's base load contract of 15 megawatts from September 1, 2010 through December 31, 2012; and 25 megawatts from January 1, 2013 to the end of the contract term (December 2045). The interest of the City of Hutchinson was the central focus in negotiating this agreement and that was accomplished. MRES experienced an excellent working relationship with HUC in reaching the terms of this agreement and an allegiance was formed by the two partners. After further discussion a motion was made by Secretary Lenz, seconded by Commissioner Walser to approve the purchase power agreement. Motion was unanimously carried. (Agreement attached.) The minutes of the March 31, 2010 regular meeting and the minutes of the April 14, 2010 special meeting were reviewed. A motion was made by Commissioner Walser, seconded by Vice President Hantge to approve the minutes as written. Motion was unanimously carried. The March 2010 payables were discussed. A motion was made by Vice President Hantge, seconded by Commissioner Nordin to ratify the payment of bills in the amount of $4,545,300.00 (detailed listing in payables book). Motion was unanimously carried. GM Kumm presented the March 2010 financial statements /budget year -to -date. After discussion, a motion was made Vice President Hantge, seconded by Secretary Lenz to approve the financial statements /budget year -to -date. Motion was unanimously carried. GM Kumm presented the McLeod Cooperative Power Association territory agreement. We have met with MCPA, and agree with changes that were made. After discussion a motion was made by Vice President Hantge, seconded by Commissioner Nordin to approve the McLeod Cooperative Power Association territory agreement with the proposed changes. Motion was unanimously carried. (Agreement attached.) GM Kumm presented the site lease agreements. We have not had a chance to meet with City personnel and our staff to go over each item of this agreement. We have a meeting on Monday and could finish the negotiations in a short period of time. If we wait another month for approval, it will affect the schedule for the installation of the AMI equipment. We are asking for authorization for President Bordson and Vice President Hantge to execute the site lease agreements upon completion of on -going negotiations with the City of Hutchinson. A motion was made by Commissioner Walser, seconded by Secretary Lenz to approve the AMI antenna site lease agreements with the City of Hutchinson, upon completion of on -going negotiations. Motion was unanimously carried. The board asked to see the agreements when there're finished. Jan Sifferath presented the changes to employee's handbook, section: sick leave - exempt only (tabled from March 31, 2010 regular meeting). The Commission was concerned with the possible need for a medical certification for any /all employees who are absent from work for more than three consecutive days. Attorney Sebora said he did not feel this was necessary because we do not have a lot of employees and we have no problem with abuse. After discussion, a motion was made by Commissioner Walser, seconded by Vice President Hantge to approve the changes to the employee's handbook sick leave policy — exempt only — as presented at last month's Commission meeting. Motion was unanimously carried. (Before and after policies attached.) Division Reports: Electric — Steve Lancaster • Sending letters out letting customers know of up- coming meter change -out for AMI • The landscaping at plant 1 will be on the west and north sides this summer • RP3 logos will be placed on all HUC vehicles Gas — John Webster • Received letter from Lynn Township that they have no issues with installing natural gas on the west side of Highway 15 • Meeting with Hassan Valley Township to let them know we'll be installing natural gas on the east side of Highway 15. Business — Jan Sifferath • Meeting with labor attorney, stewards, and IBEW business representative the last week of May. • Received a new law which allows us to inform tenants if their landlord has not paid the utility bill, as a consequence threatening tenant with disconnection. Accounting — Jared Martig • Working with LOGIS on the new financial software • Made first payment to MRES for Big Stone 11 payback • Testing the security system in the new inventory building Legal Update Nothing to report A motion was made by Secretary Lenz, seconded by Vice President Hantge to close the meeting for labor negotiations. Motion was unanimously carried. The meeting closed at 4:38 p.m. A motion was made by Secretary Lenz, seconded by Commissioner Nordin to move from closed meeting back to open meeting. Motion was unanimously carried. The meeting reopened at 5:01 p.m. Unfinished Business Commissioner Nordin asked if there was any information from the committee working with the City on the general transfer formula. • We are still waiting for scheduling dates GM Kumm went over the agenda for the breakfast meeting scheduled for April 29, 2010 at 7:00 a.m. New Business None There being no further business, a motion was made by Secretary Lenz, seconded by Vice President Hantge to adjourn the meeting at 5:08 p.m. Motion was unanimously carried. ATTEST: Dwight Bordson, President Craig Lenz, Secretary Regular Meeting April 28, 2010 Members present: President Dwight Bordson; Vice President Robert Hantge; Secretary Craig Lenz; Commissioner Donald H. Walser; Commissioner Paul Nordin; Attorney Marc Sebora; General Manager Michael Kumm President Bordson called the meeting to order at 3:00 p.m. Agenda item #5: Discussion of and Approval of Purchase Power Agreement presented by Dave Berg was moved to agenda item #1; Agenda item #4: Closed Session for Labor Negotiations was moved to after division reports; and Agenda item #9: Approve the Sale of One -Half Acre of Mineral Rights in Oklahoma was tabled. Dave Berg, RW Beck, was welcomed to the meeting. Mr. Berg gave a presentation on the purchase power agreement with Missouri River Energy Services (MRES). This is HUC's base load contract of 15 megawatts from September 1, 2010 through December 31, 2012; and 25 megawatts from January 1, 2013 to the end of the contract term (December 2045). The interest of the City of Hutchinson was the central focus in negotiating this agreement and that was accomplished. MRES experienced an excellent working relationship with HUC in reaching the terms of this agreement and an allegiance was formed by the two partners. After further discussion a motion was made by Secretary Lenz, seconded by Commissioner Walser to approve the purchase power agreement. Motion was unanimously carried. (Agreement attached.) The minutes of the March 31, 2010 regular meeting and the minutes of the April 14, 2010 special meeting were reviewed. A motion was made by Commissioner Walser, seconded by Vice President Hantge to approve the minutes as written. Motion was unanimously carried. The March 2010 payables were discussed. A motion was made by Vice President Hantge, seconded by Commissioner Nordin to ratify the payment of bills in the amount of $4,545,300.00 (detailed listing in payables book). Motion was unanimously carried. GM Kumm presented the March 2010 financial statements /budget year -to -date. After discussion, a motion was made Vice President Hantge, seconded by Secretary Lenz to approve the financial statements /budget year -to -date. Motion was unanimously carried. GM Kumm presented the McLeod Cooperative Power Association territory agreement. We have met with MCPA, and agree with changes that were made. After discussion a motion was made by Vice President Hantge, seconded by Commissioner Nordin to approve the McLeod Cooperative Power Association territory agreement with the proposed changes. Motion was unanimously carried. (Agreement attached.) GM Kumm presented the site lease agreements. We have not had a chance to meet with City personnel and our staff to go over each item of this agreement. We have a meeting on Monday and could finish the negotiations in a short period of time. If we wait another month for approval, it will affect the schedule for the installation of the AMI equipment. We are asking for authorization for President Bordson and Vice President Hantge to execute the site lease agreements upon completion of on -going negotiations with the City of Hutchinson. A motion was made by Commissioner Walser, seconded by Secretary Lenz to approve the AMI antenna site lease agreements with the City of Hutchinson, upon completion of on -going negotiations. Motion was unanimously carried. The board asked to see the agreements when there're finished. Jan Sifferath presented the changes to employee's handbook, section: sick leave - exempt only (tabled from March 31, 2010 regular meeting). The Commission was concerned with the possible need for a medical certification for any /all employees who are absent from work for more than three consecutive days. Attorney Sebora said he did not feel this was necessary because we do not have a lot of employees and we have no problem with abuse. After discussion, a motion was made by Commissioner Walser, seconded by Vice President Hantge to approve the changes to the employee's handbook sick leave policy — exempt only — as presented at last month's Commission meeting. Motion was unanimously carried. (Before and after policies attached.) Division Reports: Electric — Steve Lancaster • Sending letters out letting customers know of up- coming meter change -out for AMI • The landscaping at plant 1 will be on the west and north sides this summer • RP3 logos will be placed on all HUC vehicles Gas — John Webster • Received letter from Lynn Township that they have no issues with installing natural gas on the west side of Highway 15 • Meeting with Hassan Valley Township to let them know we'll be installing natural gas on the east side of Highway 15. Business — Jan Sifferath • Meeting with labor attorney, stewards, and IBEW business representative the last week of May. • Received a new law which allows us to inform tenants if their landlord has not paid the utility bill, as a consequence threatening tenant with disconnection. Accounting — Jared Martig • Working with LOGIS on the new financial software • Made first payment to MRES for Big Stone 11 payback • Testing the security system in the new inventory building Legal Update Nothing to report A motion was made by Secretary Lenz, seconded by Vice President Hantge to close the meeting for labor negotiations. Motion was unanimously carried. The meeting closed at 4:38 p.m. A motion was made by Secretary Lenz, seconded by Commissioner Nordin to move from closed meeting back to open meeting. Motion was unanimously carried. The meeting reopened at 5:01 p.m. Unfinished Business Commissioner Nordin asked if there was any information from the committee working with the City on the general transfer formula. We are still waiting for scheduling dates GM Kumm went over the agenda for the breakfast meeting scheduled for April 29, 2010 at 7:00 a.m. New Business None There being no further business, a motion was made by Secretary Lenz, seconded by Vice President Hantge to adjourn the meeting at 5:08 p.m. Motion was unanimously carried. Cr g Lenz, Secretary ATTEST: DVvvighl Bo r son, President HUC POWER SALE AGREEMENT This Power Sale Agreement ( "Agreement ") is entered into on 2010, by and between Missouri Basin Municipal Power Agency, a body corporat d politic organized under Chapter 28E of the Code of Iowa, doing business as Missouri River Energy Services ( "MRES "), the Hutchinson Utilities Commission, a municipal corporation and political subdivision of the State of Minnesota ( "HUC "), and Western Minnesota Municipal Power Agency, a municipal corporation and political subdivision of the State of Minnesota ( "Western Minnesota "). MRES, HUC and Western Minnesota are individually referred to as "Party" and collectively as "Parties." Article 1. ESSENTIAL TERMS OF THE TRANSACTION 1.1 Seller: The Seller is MRES. 1.2 Buyer: The Buyer is HUC. 1.3 Contract Term: The Contract Term is from hour beginning 00:01, September 1, 2010 through hour ending 24:00 January 1, 2046. Upon expiration of the Contract Term, the Agreement shall remain in effect as permitted by law unless and until terminated by a Party upon not less than one year's written notice. 1.4 Commodity: The Commodity is must -take energy of the Contract Quantity specified below. MRES will provide HUC the same ancillary services associated with the Contract Quantity that it provides to members ( "Members ") under the Power Sale Agreement (S -1) ( "S -1 Agreement ") for delivery of power and energy to the Western Area Power Administration Integrated System outlet. 1.5 Contract Quantity: The Contract Quantity is 15 megawatts (MW) on a 100% load factor basis (15 megawatt-hours (MWh) per hour) from hour beginning 00:01 on September 1, 2010 through hour ending 24:00 on December 31, 2012 ( "Period I ") and increasing on hour beginning 00:01 on January 1, 2013 to 25 MW on a 100% load factor basis (25 MWh per hour) continuing through the end of the Contract Term ( "Period II "). The Contract Quantity includes both demand and energy components. 1.6 Financial Firmness: MRES will provide the Contract Quantity from electric energy available in the Midwest Independent Transmission System Operator ( "MISO ") energy market or from any of its generation resources. 1.7 Delivery Point: The Delivery Point shall be GRE.HUC, a node for delivery of energy by MISO that is designated under the MISO Transmission, Energy and Operating Reserve Markets Tariff ( "TEMT "), as currently in effect and as may be modified during the term of this Agreement, or any successor point of delivery if the MISO node concept ceases to exist during the Contract Term. 1.8 Energy Scheduling: All schedules for energy under this Agreement shall be governed by the TEMT. All schedules shall be made in the MISO energy market. A financial bilateral transaction will be submitted by MRES in the MISO Financial Scheduling System ( "finSched "). HUC will approve the finSched. HUC will continue its energy scheduling in the ordinary course. 1.9 Planning Resource Credits (PRC): MRES will each month make available to HUC Planning Resource Credits ( "PRCs ") (as defined in the TEMT) to meet HUC's Resource Adequacy Requirements ( "RAR ") in MISO to cover the Contract Quantity. MRES will also provide such additional PRC amounts as are required to cover losses and MISO Resource Planning Reserve Margin on the Contract Quantity as required to meet the RAR. HUC will apply the PRCs provided to meet the foregoing purposes. The PRCs shall either be locally deliverable or aggregately deliverable. The cost of the PRCs is included in the Charges. 1.10 Transmission: HUC will be responsible for all costs and making all arrangements required to deliver energy from the Delivery Point to its distribution system. During the Contract Term, HUC will pay the same Supplemental Power Delivery charge as other MRES Members under the S -1 Agreement. 1.10.1 HUC currently acquires and pays for transmission service for energy deliveries to the GRE.HUC node over the MISO system via a MISO transmission tariff. If the transmission tariff arrangements allowing HUC to receive energy via the MISO energy market cease to exist without a substitute with substantially similar or comparable terms and conditions for both the purchase and delivery of electric energy, MRES, Western Minnesota and HUC will develop and agree upon alternative arrangements for the delivery from sources determined by MRES to the Delivery Point of the Contract Quantity at no additional transmission service expense to MRES or Western Minnesota. 1.11 Renewable Energy Credits (REC): Each year, MRES will provide HUC with the same proportion of RECs to energy delivered as MRES provides to its Members located in Minnesota who are served under the S -1 Agreement in order to satisfy applicable state and/or federal renewable energy standards. The cost of RECs is included in the Charges _with no additional cost to HUC. As an example, in 2010, if MRES retired RECs to meet renewable energy standards equivalent to seven percent of Minnesota S -1 Members' energy purchases from MRES, HUC will receive RECs equal to seven percent of RUC's energy purchases from MRES under this Agreement. 1.12 The charges for the Commodity ( "Charges ") shall be as follows: 2 1.12.1 For calendar year 2010, the Charges for the Commodity shall be comprised of the following monthly charges: a. Demand charge: $12.45/kW -month b. Supplemental Power Delivery charge: $ 2.85/kW -month C. Energy charge: $.0265 per kWh d. Rate Adder: $.003 per kWh e. Supplemental Power Cost Adjustment $/kWh which is defined in the 2010 S -1 Agreement Schedule C. 1.12.2 Subsequent to 2010, the Charges for the Commodity shall be the applicable rates in Schedule C to the S -1 Agreement that are in effect from time to time or that are in any successor rate schedule to Schedule C plus the Rate Adder as defined below. The Charges for the Commodity shall be adjusted each time that the rates in Schedule C are adjusted. MRES shall, in the fall of 2010, provide to HUC a copy of the Schedule C that will be effective January 1, 2011, and MRES shall provide updated versions of Schedule C to HUC as soon as practicable after each rate adjustment. The Charges for the Commodity for each calendar year from 2011 through the end of the Contract Term, including any adjustments during a calendar year, shall be the following components of the charges included on Schedule C to the S -1 Agreement for each applicable calendar year plus the Rate Adder, to wit: a. Demand charge: $/kW -month charge which is the S -1 Agreement Schedule C Supplemental Power Demand charge, whether on an annual or seasonal basis. b. Supplemental Power Delivery charge: $/kW -month charge which is the S- 1 Agreement Schedule C Supplemental Power Delivery charge as adjusted for the IS factor, as defined in the S -1 Agreement Schedule C. c. Energy charge: $/kWh charge which is the S -1 Agreement Schedule C energy charge. d. Supplemental Power Cost Adjustment: $/kWh charge which is the S -1 Agreement Schedule C Supplemental Power Cost Adjustment charge. e. Rate Adder: The rate adder ( "Rate Adder ") is $.003 per kWh for all energy delivered through 8/31/2020. The Rate Adder shall automatically expire on 8/31/2020. 1. 12.3 The energy charge encompasses the energy portion of the locational marginal price ( "LMP ") at the GRE.HUC node but does not include the congestion and loss components of the LMP. 1. 12.4 To the extent that Schedule C to the S -1 Agreement is restructured so that the rate elements in the Schedule C effective on January 1, 2011 cease to exist or are changed, the Parties will discuss whether and how to revise the Charges under this Agreement to accord with the restructuring of Schedule C so that, except for the Rate Adder, HUC is treated comparably under this Agreement to MRES Members under the S -1 Agreement. 3 1. 12.5 MRES will calculate the MISO charges for regulation, spinning and supplemental services associated with the Contract Quantity under this Agreement and provide a credit to HUC on the monthly bill. 1.13 MISO Charges: MRES shall pay to MISO the MISO congestion and losses on the Contract Quantity and in exchange HUC shall pay the MISO MIA rate and losses as defined below. The MIA rate and losses shall be the same as the charges that all MRES Members serviced under the S -1 Agreement in the MISO footprint are assessed according to the MISO Market Implementation Agreement ( "MIA "): 1.13.1 For calendar year 2010, HUC shall pay MRES a rate to recover congestion costs associated with the Contract Quantity at the Delivery Point. The rate for 2010 is identified in Exhibit A. 1.13.2 For calendar year 2010, HUC Contract Quantity shall be adjusted according to the MISO Market Loss percentage as defined in Exhibit A. The loss rate for 2010 is identified in Exhibit A. HUC shall pay MRES for such losses according to the Charges for the Commodity identified above in this Agreement. 1.13.3 For each calendar year from 2011 through the end of the Contract Term, HUC rate and losses shall be the same as the MIA rate and losses. The MIA rate and losses are subject to change from time to time as determined by the Board of Directors of MRES and any changes to the MIA Exhibit B ("Rate for Market Service Charge Types ") and MIA Exhibit C ( "Loss Percentages ") will be provided to HUC as soon as practicable after each rate adjustment. Article 2. GENERAL TERMS AND CONDITIONS 2.1 Additional Rate Provisions: 2.1.1 Payments made under this Agreement shall be made as an operating expense from the revenues of the HUC electric utility system and from other funds thereof legally available therefore and shall be in addition to and not in substitution for any other payments whether on account of dues or otherwise owed by HUC to MRES. The obligation of HUC to make such payments for electric power and energy and furnished pursuant to this Agreement shall not be subject to any rights of setoff, recoupment or counterclaim which HUC shall otherwise have against MRES; provided, however, that nothing contained herein shall be construed to prevent or restrict HUC from asserting any rights which it may have against MRES under this Agreement or under any provision of law, including the institution of legal proceedings for specific performance or recovery of damages. 2.1.2 As soon as practicable after any revision of any of the charges or rates in Article 1, MRES shall cause written notice to be provided to HUC with the effective date thereof not less than thirty days after the date of the notice. rd 2.2 HUC Covenants: 2.2.1 HUC agrees to maintain rates for electric power and energy to its consumers which shall provide to HUC revenues sufficient to meet its obligations to MRES under this Agreement and to pay all other obligations payable from, or constituting a charge or lien on, such revenues. 2.2.2 HUC shall not contract to sell at wholesale any of the electric power and energy delivered to it hereunder to any of its customers for resale by those customers, unless such resale is specifically approved in writing by MRES and Western Minnesota which approval shall not unreasonably be withheld; provided, however, that if HUC's native load is less than the Contract Quantity, then HUC may sell that difference between its native load and the Contract Quantity into the MISO real -time or day -ahead market or their equivalent. 2.2.3 HUC shall not take any action to transfer either its distribution facilities or control over its electric distribution functions or take any other action having the same effect without (a) notifying MRES at least 90 days before formally committing to the action, and (b) taking such action strictly in conformance with the provisions of the Assignments section below. 2.2.4 HUC shall remain a Market Participant member, or its equivalent, of MISO throughout the duration of this Agreement. 2.3 Billing and Payment: 2.3.1 MRES shall bill HUC by the fifth working day of each month for electric power and energy, and MISO Charges furnished hereunder. Such bill shall be paid for at the office of MRES in Sioux Falls, South Dakota, or at such other location that MRES may designate, monthly, within fifteen days after the postmark of the bill, such bill to be provided to HUC monthly on a prompt and timely basis. If said fifteenth day is a Sunday or a legal holiday in the state in which HUC is located, the next following business day shall be the last day on which payment may be made without the addition of the delayed payment charge. A delayed payment charge of five percent may be imposed on the unpaid balance of any amount due and owing after the date when such amount is due. All payments shall be made by Automated Clearing House (ACH) as initiated by MRES. MRES may, whenever any amount due remains unpaid after the due date and after giving 15 days advance notice in writing of its intention to do so, discontinue service hereunder or take all steps available to it under applicable law to collect such amount and all subsequent payments which shall have become due or both. MRES may, whenever any amount due remains unpaid for 120 or more days after the due date and after giving 30 days' advance notice in writing of its intention to do so, terminate this Agreement. No such discontinuance or termination shall relieve HUC from liability for payment for the commodity or services furnished. 2.3.2 Upon request from HUC, MRES shall provide reasonable back -up information to support the monthly bill. In the event HUC desires to dispute all or any part of a bill, it shall nevertheless pay the full amount of the bill when due and, within 60 days from the date of the bill, notify MRES in writing of the grounds on which any charges in the bill are disputed and the amount in dispute. HUC will not 5 be entitled to any adjustment on account of any disputed charges which are not brought to the attention of MRES within the time and in the manner herein specified. 2.4 Uncontrollable Forces: Neither MRES nor HUC shall be considered to be in default in respect to any obligation (other than the obligation of HUC to pay for Contract Quantity) if prevented from fulfilling such obligations by reason of uncontrollable forces, the term uncontrollable forces being deemed for the purposes of this Agreement to mean any cause beyond the control of the Party affected, including but not limited to, failure of facilities, flood, earthquake, storm, lightning, fire, epidemic, pestilence, war, riot, civil disturbance, labor disturbance sabotage, and restraint by court or public authority, which by due diligence and foresight such Party could not reasonably have been expected to avoid. Either Party rendered unable to fulfill any obligation by reason of uncontrollable forces shall exercise due diligence to remove such inability with all reasonable dispatch 2.5 Assignments: All covenants and agreements contained in this Agreement shall inure to the benefit of the Parties and their respective successors and assigns; provided, however, that, except as provided below, no Party may transfer or assign its interests or rights under this Agreement except that: 2.5.1 A Parry may transfer or assign its interests or rights or the assignment of the security interest therein to any trustee or secured parry, as security for bonds or other indebtedness, present or future, and such trustee or secured party may, if so empowered, sell or otherwise realize upon such security in foreclosure or other suitable proceedings, possess or take control thereof or cause a receiver to be appointed with respect thereto and otherwise succeed to all interests and rights of the Party making the assignment; and 2.5.2 In the case of a proposed transfer either to any entity acquiring all or substantially all of the property of the Party making the transfer, or to any entity into which or with which the Party making the transfer may be merged or consolidated, the Party proposing the transfer shall give all other Parties written notice at least ninety (90) days prior to the date such transfer or assignment is scheduled to occur and must obtain the prior written consent of the other Parties hereto, which consent shall not be unreasonably withheld, it being understood that it would be reasonable for a Parry to withhold such consent if such transfer or assignment would (a) reduce the total amount of electric power or energy being sold hereunder; (b) be to a party with senior debt, if any, not rated in one of three highest whole rating categories by at least one nationally recognized bond rating agency; (c) adversely affect the value of this Agreement as security for the payment of bonds and interest thereon; or (d) affect (either alone or in conjunction with any other actions by any other municipality to which MRES sells power and energy under a long term arrangement such as the S -1 Agreement) the eligibility of interest on bonds of MRES or Western Minnesota (whether then outstanding or thereafter to be issued) for Federal tax - exempt status. In making the determination required by clause (d) above, MRES and Western Minnesota may rely upon an opinion of a nationally recognized bond counsel as to the effect of any such transfer or assignment on the Federal tax- exempt status of any bonds (whether then outstanding or thereafter to be issued), as that 9 status is governed by the Federal income tax laws, as amended from time to time, including but not limited to, Section 141 of the Internal Revenue Code of 1986, as amended, and the Treasury Regulations or any rulings promulgated there under or as affected by a decision of any court of competent jurisdiction (collectively, the "Tax Laws "). Within sixty (60) days after receipt of a notice from HUC requesting a transfer or assignment, MRES and Western Minnesota shall advise HUC as to whether, in the opinion of a nationally recognized bond counsel, the transfer or assignment would affect the eligibility of interest on bonds for Federal tax- exempt status as described in clause (d) above. In the event that allocations (including, but not limited to allocations relating to private use issues) are necessary under the Tax Laws to determine whether entering into any such transfer or assignment affects the eligibility of interest on bonds for Federal tax- exempt status as described in clause (d) above, MRES and Western Minnesota shall make such allocations, in their sole discretion, after receipt of an opinion of a nationally recognized bond counsel. 2.5.3 Notwithstanding anything in this Section to the contrary, HUC may transfer or assign this Agreement if it affects the eligibility of interest on bonds for Federal tax- exempt status as described in clause (d) if, but only if, the transferee enters into an agreement in form and substance satisfactory to MRES and Western Minnesota providing that the transferee will bear and pay any and all increased costs allocated to it resulting from the use by MRES or Western Minnesota of borrowed or other funds that are not derived from the proceeds of tax- exempt debt ( "Non -Tax Exempt Funds "). MRES and Western Minnesota, in their sole discretion, after receipt of an opinion of a nationally recognized bond counsel, shall allocate on a reasonable basis the increased costs associated with the use of such Non -Tax Exempt Funds to any such transferee and shall determine the terms and conditions upon which the transferee shall pay such increased costs. Any such agreement shall contain such other terms and provisions as MRES and Western Minnesota reasonably deem necessary in order to preserve the Federal tax- exempt status of any borrowed funds not intended by MRES or Western Minnesota to be issued as debt which is not excludable from gross income for Federal income tax purposes. 2.5.4 In connection with any such proposed transfer or assignment under this Section, various opinions are required to be delivered by a nationally recognized bond counsel. Such counsel or counsels shall be chosen by MRES and Western Minnesota and the cost of such counsel or counsels shall be borne by the Parry requesting the transfer or assignment. Any of the opinions required under this Section may be delivered in one or more opinions. 2.5.5 No assignment or transfer of this Agreement shall relieve the Parties of any obligation hereunder, unless specifically agreed to in writing by the Parties. 2.6 Amendment: Except as provided for expressly herein, neither this Agreement nor any terms hereof may be terminated, amended, supplemented, waived or modified except by an instrument in writing executed by all Parties. 2.7 Representations and Warranties: Each Party represents and warrants, as of the date of this Agreement, the following: 2.7.1 It is, as applicable, an agency, municipal corporation and political subdivision, duly organized validly existing and in good standing under the laws of 7 the State of its formation and authorized to conduct business in its state of organization and the States in which it does business; 2.7.2 It has the power and authority to enter into, execute and perform this Agreement; 2.7.3 There are no bankruptcy, insolvency, reorganization, or receiverships pending or being contemplated by it or, to its knowledge, threatened against it; and 2.7.4 To its knowledge, there are no actions, proceedings, judgments, or rulings, issued by or pending before any court or other governmental body, with applicable jurisdiction, that would materially adversely affect its ability to perform its obligations under this Agreement. 2.8 Opinion: Upon the execution and delivery of this Agreement, HUC shall furnish MRES with an opinion by an attorney or firm of attorneys qualified to practice in the State of Minnesota to the effect that: 2.8.1 HUC is a municipal corporation duly created and validly existing pursuant to the Constitution and statutes of the State of Minnesota; 2.8.2 HUC has full legal right and authority to enter into this Agreement and to carry out its obligations hereunder; and 2.8.3 HUC has approved this Agreement and its execution and delivery, and this Agreement has been duly executed by the appropriate officer of HUC and constitutes the legal, valid, and binding obligation of HUC enforceable in accordance with its terms. 2.9 Notices: Any notice, demand or request required or authorized by this Agreement shall be deemed properly given if mailed, postage prepaid, to MRES at its principal place of business at P.O. Box 88920, Sioux Falls, SD 57109 -8920, to HUC at 225 Michigan Street, SE, Hutchinson, Minnesota 55350 -1940 and to Western Minnesota at 25 NW 2nd Street, Suite 102, Ortonville, Minnesota 56278 -0357. The foregoing addresses may be changed at any time by similar notice. 2.10 Waivers: Any waiver at any time by any Party hereto of its rights with respect to a default or any other matter arising in connection with this Agreement shall not be deemed to be a waiver with respect to any subsequent default or matter. 2.11 Severability: In the event that any of the terms, covenants or conditions of this Agreement, or the application of any such term, covenant or condition, shall be held invalid as to any person or circumstance by any court having jurisdiction under the circumstances, the remainder of this Agreement, and the application of its terms, covenants or conditions to such persons or circumstances shall not be affected thereby. 2.12 Dispute Resolution: 2.12.1 The Parties shall attempt in good faith to resolve any dispute arising out of or relating to this Agreement through negotiation between representatives who have authority to resolve the matter. 2.12.2 Any Party may give written notice to the other Parties of any dispute not resolved in the normal course of business. Within fourteen (14) days following 8 delivery of the notice (or a date mutually agreed by the Parties), representatives of each Party with settlement authority shall meet in person at a mutually acceptable time and place and confer in good faith to resolve the dispute, and thereafter as often as they reasonably deem necessary to attempt to resolve the dispute. All reasonable requests for information made by a Party to another Party will be honored. 2.12.3 If a dispute has not been resolved within thirty (30) days of the original dispute notice, then the Parties shall submit their dispute to mediation. If the dispute is not resolved by mediation within 60 days after the submission to mediation, the Parties may invoke their legal remedies available at law. The mediation may be continued beyond the original 60 days by agreement of the Parties. 2.13 Governing law: This Agreement shall be governed by the laws of the state of Minnesota. The Parties have caused this Agreement to be executed as of the day, month and year first written above. MISSOURI BASIN MUNICIPAL POWER AGENCY d/b /a MISSOURI RIVER ENERGY SERVICES By Date: Harold Schiebout Chairman of the Board HUTCHINSON UTILITIES COMMISSION By: Q�� gaa, Name: ]�,,' k, F [30 Title: .CPti£ sj� ee' L- Date: ,,;, WESTERN MINNESOTA MUNICIPAL POWER AGENCY By: �Lt�t -c Date: a ! 3 a G! y Curt Punt President D HUC POWER SALE AGREEMENT EXHIBIT A HUC 2010 MISO CHARGES: CONGESTION AND LOSSES Section 1. DEFINITIONS 1.1 "MIA" shall mean the MISO Market Implementation Agreement. 1.2 "Power Sale Agreement" shall mean the HUC Power Sale Agreement (PSA) entered into among MRES, HUC and WMMPA. Section 2. SERVICES PROVIDED BY MRES In exchange for MRES paying for the MISO Market congestion and losses on the Contract Quantity at the GRE.HUC Node, MRES shall bill HUC for Congestion Charges and MISO Market Losses under the PSA according to the following method: 2.1 Congestion Charges: HUC shall pay MRES for congestion costs on the MRES energy portion of the Contract Quantity. The 2010 Congestion Charge is $0.0001 per kWh. In future years, this rate shall be equivalent to the rate for MISO market services as paid by any MRES Member under an S -1 Agreement that has executed an MIA and is located in the MISO footprint. 2.2 MISO Market Losses: HUC shall pay MRES for MISO Market Losses on MRES Contract Quantity by multiplying the MISO Market Loss percentage times the appropriate demand and energy quantities. For calendar year 2010, the MISO Market Losses are 3.3 %. The MISO Market Loss percent in subsequent years will be that charged pursuant to the MIA and will be the same percentage as paid by any MRES Member under an S -1 Agreement that has executed an MIA and is located in the MISO footprint. Section 3. BILLING AND PAYMENT The MISO Charges for HUC are subject to the terms and conditions specified in the PSA. ELECTRIC SERVICE TERRITORY AGREEMENT This agreement ( "Agreement "), made and entered into theL$ day of 2010 by and between the City of Hutchinson, a municipal corporation duly organized and existing under the laws of the State of Minnesota, by its Hutchinson Utilities Commission (the "City ") and McLeod Cooperative Power Association, a rural electric cooperative organized and existing under the laws of the State of Minnesota (the "Cooperative "), individually or collectively referred to as a "Party" or "Parties." WHEREAS, the laws of the State of Minnesota, namely Minnesota Statutes §§ 216B.37- 216B.47, provide the terms and conditions under which the City may extend retail electric service throughout the corporate limits of the City, as well as authorize and permit electric utilities to define and revise their electric service territories by their written consent and agreement; WHEREAS, from time to time the City may complete annexations of areas located within the electric service territory assigned to the Cooperative and the City seeks to provide exclusive electric service to such areas; WHEREAS, the Parties have negotiated a mutual settlement and wish to avoid litigation regarding compensation for such electric service territory matters; and WHEREAS, the Parties desire stability and reliability of service to the Parties' customers, as well as long -term planning for resources, power supply, and customer service; and WHEREAS, by entering this Agreement the Parties desire to continue the successful and cooperative relationship between the utilities, to conduct prudent utility planning and practices, to focus on areas of mutual interest, and to better serve and benefit the Parties' customers and the region in general. I NOW, THEREFORE in consideration of the premises and of the mutual covenants contained herein, the Parties agree as follows: Article I: Transfer of Electric Service Territory Rights 1.1 From time to time during the term of this Agreement, the City may (1) extend its corporate boundaries through annexation, consolidation, incorporation, merger, or other lawful addition (collectively "Annexation "), or (2) extend its assigned electric service territory within its existing corporate boundaries ( "Extension "). If the area that is the subject of the Annexation or Extension (the "Affected Area ") is located within the assigned electric service territory of the Cooperative, the date of transfer specified in Sections 1.2 and 1.3 below (collectively, the "Transfer Date ") shall govern. 1.2 The exclusive right and obligation to provide electric service to any Affected Area that is the subject of an Annexation shall transfer to the City effective on the date that the City sends written notice to the Cooperative that the City will serve the Affected Area after the Annexation has been completed. 1.3 The exclusive right and obligation to provide electric service to any Affected Area that is the subject of an Extension shall transfer to the City effective ninety (90) days after the date on which the City provides written notice of the Extension to the Cooperative, or on a date mutually agreed by the Parties. 1.4 To avoid duplication of facilities and to consider the impact on affected customers, the Parties may mutually agree in writing in particular circumstances to a service -by- exception or other arrangement other than the Transfer Date specified in Sections 1.2 and 1.3 above. OA Article II: Settlement Payments As settlement payment and in consideration of the covenants, releases and representations made by the Cooperative herein, City agrees to make the following payments to the Cooperative: 2.1 Facilities Costs. If the Cooperative has electric distribution facilities in the Affected Area, that will no longer be used and useful to the Cooperative upon transfer to the City, the City shall pay the original cost of such facilities, less depreciation through the Transfer Date, based on generally accepted accounting principles. Before installing new distribution facilities in areas likely to be transferred to the City under this Agreement, the Cooperative shall confer and cooperate with the City so that unnecessary duplication or removal of facilities may be avoided to the extent practicable. 2.2 Integration Expenses. If the City acquires Cooperative electric distribution facilities under Section 2.1, the City shall pay the Cooperative for reasonable, identifiable expenses to integrate the Cooperative's pre- existing distribution facilities into the Cooperative's remaining distribution system considering system reliability and continuity to remaining customers. 2.3 Loss -of- Revenue Payments. Subject to Sections 2.4, 2.5, and 2.6, the City shall annually pay the Cooperative an amount equal to the result of multiplying one- and one -half cents ($0.015) times each kilowatt hour of electric energy sold by the City to each third party to whom the City provides retail electric service in the Affected Areas and for the periods specified below: 3 (a) For third -party customers who were already receiving service from the Cooperative on the Transfer Date, the City's payment shall be for a period of ten (10) years commencing on the Transfer Date. (b) For third -party customers who begin receiving their initial service after the Transfer Date, the City's payment for the entire Affected Area shall be for a period of ten (10) years commencing on the date that the City first provides retail electric service to a point of service within the Affected Area with an annual electric usage of 6,000 kilowatt hours or greater, but excluding street lighting. 2.4 Municipal Development. Consistent with Sections 1.1, 1.2, and 1.3 and notwithstanding Section 2.3, for an Affected Area that the City owns or acquires at the City's cost or risk and develops by installing or replacing utility facilities or streets, the loss -of- revenue rate shall be one cent ($0.01) times each kilowatt hour of electric energy sold by the City to each third party customer to whom the City provides retail electric service for a period of ten (10) years, provided, however, that the City's payments shall be capped at a total lifetime of two hundred fifty thousand (250,000) kilowatt hours of usage per customer in that Affected Area. 2.5 Large Customer. Notwithstanding 2.3, the City shall pay loss -of- revenue pursuant to Section 2.3 for only the first fifteen million (15,000,000) kilowatt hours of usage by a customer per year. Thereafter, the City will pay 7.5 mills ($.0075) times each kilowatt-hour of energy sold to that customer that exceeds 15,000,000 kilowatt hours per year. This Section 2.5 does not apply to a large customer located in an Affected Area under Section 2.4. 4 2.6 Municipal Facilities. The loss -of- revenue payments under this Article 2 shall not apply to future facilities owned by the City for providing City services, including, but not limited to, streetlights. 2.7 Payment. The City shall make payments under Sections 2.1 and 2.2 within 60 days after receiving a statement from the Cooperative for such costs. The calculation of any other amount due under this Article 2 shall be made for the period concluding on December 31St of each year under consideration and payment of the annual amount so determined will be made by the City by February 15th of the following year. The City's sales shall be calculated on the basis of its meter readings, as made in the ordinary course of its utility business. With its annual payment, the City shall provide a written report to the Cooperative, certified as true and correct by the General Manager of the City, summarizing for each Affected Area, the kilowatt hours sold by the City and the basis for the calculation of the compensation due the Cooperative. The City shall also provide the Cooperative copies of such additional supporting data as the Cooperative may reasonably request, at the Cooperative's expense, including metering data that reflects kilowatt hours sold but, pursuant to Minn. Stat. § 13.685, may not contain any data that could identify any customer (e.g., by name, address, phone, or social security number). Except as provided in this Article 2, no other payments shall be due for the transfer of the Affected Areas under the terms of this Agreement. Any dispute concerning amounts due under this Article 2 shall be governed by Article 7 of this Agreement. 6 � Article 3: Filings 3.1 Promptly after the execution of this Agreement, the Cooperative consents and authorizes and the City agrees that City shall file the Agreement with the Minnesota Public Utilities Commission ( "MPUC ") 3.2 In the event of a transfer of any electric service rights pursuant to Article 1, the Cooperative consents and authorizes and the City agrees that City shall file the Parties' joint request, under Minn. Stat. § 2166.39, subd. 3, legally describing and depicting the Affected Area, that the MPUC modify the service territory boundary and recognize the service territory transfer. Notice and a copy thereof shall be provided by the City to the Cooperative not less than ten (10) days before filing with the MPUC. Unless required more often by law, the City may make such filings on an annual basis. If the service territory boundary modification procedure described in this Section 3.2 materially changes in the law, the Parties will follow the process provided by law. 3.3 If the MPUC or the Office of Energy Security raises any question or challenges any provision of this Agreement, a service territory transfer contemplated under this Agreement, or the due performance thereof, the Parties shall each, at their own expense, exercise any and all lawful efforts reasonable and necessary to respond to said questions and to assure the transfer of service territory. If for any reason the MPUC refuses to recognize any service territory transfer described in Article 1, the Cooperative shall return any payments made by the City pursuant to Article 2, upon demand by the City. 3.4 The Parties agree that Cooperative indebtedness to the Rural Utilities Services or any other Cooperative lender or party (collectively "RUS ") shall not prevent the Parties performing under this Agreement. To the extent that approval of RUS may 6 be necessary for completing the transfer of service rights under this Agreement, including release of any lien on physical facilities to be transferred to the City, the Cooperative shall promptly seek such approval, exercising all reasonable efforts and due diligence. To the extent that RUS delays, denies, or objects to the Parties performing under this Agreement, the Cooperative will use its best efforts to resolve any such issues, with the cooperation of the City. Article 4: Representations and Warranties 4.1 The City and the Cooperative hereby mutually represent and warrant, each to the other, as follows: (a) Each is duly organized and existing in good standing under the laws of the State of Minnesota and each has all requisite power and authority to own, lease and operate its electric service facilities; (b) Each has the power and authority to execute, deliver and carry out the terms and provisions of this Agreement and has taken all the necessary corporate action to authorize the execution, delivery and performance of this Agreement; and (c) This Agreement constitutes a valid and binding obligation of each Party enforceable in accordance with its terms. Article 5: Mutual Waiver and Release of Claims 5.1 The Parties do hereby each unconditionally release and waive any and all claims, known or unknown, which they may now have or have in the future arising from any action or omission of the Parties or any fact or circumstance first occurring prior to the date hereof, whether or not continuing in nature, which relate to or arise from the right of either Party to provide electric service to any particular third party, area, facility or site by reason of the electric service territory laws of the State of Minnesota, now or hereafter in effect, or any prior agreement of the parties, oral or written. Provided, however, the foregoing provisions of this Article 5 do not waive or release any claim either party may have for any breach of any covenants or any misrepresentations contained in this Agreement. 5.2 The City does hereby agree to indemnify and hold harmless the Cooperative from all costs and damages arising from each and every claim made by any third party against the Cooperative arising from or related to the transactions described or contemplated by this Agreement, including the reasonable costs and fees of legal counsel incurred in the defense thereof. 5.3 The Cooperative does hereby agree to indemnify and hold harmless the City from all costs and damages arising from each and every claim made by any third party against the City arising from or related to the transactions described or contemplated by this Agreement, including the reasonable costs and fees of legal counsel incurred in the defense thereof. Any facilities that the City acquires from the Cooperative under this Agreement, however, shall be acquired on an AS IS basis. Article 6: Term and Scope of Agreement 6.1 The initial term of this Agreement shall be a period of ten (10) years from the date that the Agreement has been signed by both of the Parties and thereafter shall automatically renew for additional two (2) year terms. Provided, however, that after the initial term has expired, either Party may provide advance written notice to the other Party of its intention to terminate ( "Notice "), with such termination effective six (6) months after the date of the Notice. 6.2 This Agreement (including exhibits hereto) constitutes the entire Agreement and, with respect to the specific subject matter hereof, supersedes all prior 8 agreements and understandings, oral and written, between the Parties hereto. In particular, the Parties acknowledge that they have entered a Settlement Agreement dated June 7, 1994 (the "Earlier Agreement'), and the Parties acknowledge and agree that this Agreement supersedes their Earlier Agreement. 6:3 This Agreement shall apply to and govern all Affected Areas that were the subject of an Annexation or Extension by the City from the termination date of the Earlier Agreement until the date that both Parties signed this Agreement, including the Affected Areas through April 1, 2010 described on Exhibit A; provided, however, that the Parties acknowledge and agree that for the developments described on Exhibit B, which the Parties have historically treated as if under the Earlier Agreement, the compensation terms and conditions of the Earlier Agreement shall continue to apply. 6.4 The Parties acknowledge that this Agreement is the result of arms length negotiations between the Parties, each taking into consideration the costs and risks of litigation otherwise required to resolve the matters addressed in this Agreement. This Agreement does not reflect the position of either Party as to the appropriate application of the law determining electric service territory rights or compensation in such matters. For any future electric service territory matters between the Parties not governed by this Agreement, the Agreement shall not act as precedent in the determination of compensation, if any be due. Article 7: Alternative Dispute Resolution 7.1 In the event that a dispute arises between the Parties as to the interpretation or performance of this Agreement, then upon written request of either Party, representatives with settlement authority for each Party shall meet in person and confer in good faith to resolve the dispute. If the Parties are unable to resolve the E dispute, they shall make every effort to settle the dispute through mediation or other alternative dispute resolution methods. If the Parties are unable to resolve the dispute through these methods, either Party may commence an action in the District Court for the county in which the service territory is located. The Transfer Date is not affected by any dispute or action to determine compensation. Article 8: General Terms and Conditions 8.1 Any notice permitted or required by this Agreement shall be made in writing by letter, electronic mail, personal service, facsimile, or other documentary form and shall be deemed given upon actual receipt by the Party to which such notice is given. 8.2 This Agreement will inure to the benefit of the Parties hereto and shall be binding on them and their respective legal representatives, successors and assigns. Provided, however, neither Party hereto may assign any of its rights herein to any person without the prior written consent of the other Party. 8.3 Each of the Parties acknowledges that the adjustment of electric service territory boundaries provided for herein is unique in that neither Party will have an adequate remedy at law if the other Party fails to perform any of its obligations hereunder. In such event, either Party shall have the right, in addition to any other rights it may have, to petition for and obtain specific performance of this Agreement in the District Court for the county in which the service territory is located. 8.4 This Agreement may be amended only in writing. 8.5 Headings are for convenience and are not a part of this Agreement. 10 8.6 This Agreement may be executed in counterpart copies by the Parties and each counterpart, when taken together with the other, shall be deemed one and the same executed Settlement Agreement. 8.7 By executing this Agreement, the Parties acknowledge that they: (a) enter into this Agreement knowingly, voluntarily and freely; (b) have had an opportunity to consult an attorney before signing this Agreement; and (c) have not relied upon any representation or statement not set forth herein. IN WITNESS WHEREOF, the Parties have caused this Agreement to be duly executed as of the date first above written. MCLEOD COOPERATIVE POWER ASSOCIATION By Its and By Its CITY OF HUTCHINSON ... I . and airman, Hutchinson Utilities Commission By ., ._ 7 Zo /� General Manager, Hutchinson Utilities Co mission 11 ELECTRIC SERVICE TERRITORY AGREEMENT EXHIBIT A AREAS SUBJECT TO 2010 AGREEMENT 12 m c >- 'o H m U W N O Q F- 0 W N N z. 0 N 3 w. Qa) °(D F. S310810 o N 1NV2K) X 0 CL 0 c 2Q 5� w FLgON S o FFE m 0 z O 0 w S cn y LU t- J 7T W LU w co W Imo— Q O O Q z O 0 w Q Q O w co i,. AM a � e H f � r` ,� ,� rtel•` ,ems .. 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EXEMPT HANDBOO Sick Leave Sick leave may be granted only for absence from duty because of personal illness, or, after completion of probationary period, for the illness of an immediate family member on the same terms the employee is able to use sick leave benefits for the employee's own illness, including appointments for necessary medical, dental or eye care, legal quarantine, or brief emergency situation (not to exceed one day) in the immediate family. Requests for sick leave consideration in case of other emergency situations may be brought to the Director. In addition, a maximum of five days sick leave may be allowed when necessary in the case of death in the immediate family. Effective January 1, 2004 sick leave shall be granted to all probationary and non - probationary employees. For full -time exempt employees, sick leave shall be granted according to the following schedule: 1. Sick leave shall accrue at eight hours per month, up to a maximum of 720 hours. After the accumulation of 720 hours, a payback of one -third of the amount over 720 hours will be made annually on or about February 1. No further payment will be made on termination of employment. 2. On retirement or upon death before retirement, a payback of one -third of the amount over 240 hours will be made. If the employee resigns or is dismissed, the above payment shall not be made. In case of death during employment, the unused sick leave shall be paid to his estate on the same ratio as above. 3. Any employee who is determined to be eligible for workers compensation benefits during absence from duty will receive such benefits in lieu of a portion of the sick leave benefit for the first 120 days of absence from duty. To be eligible for sick leave with pay, an employee shall report as soon as possible to the Director, Manager or Supervisor the reason for the absence and keep them informed of the condition. An employee may be required to submit a medical certificate for any sick leave, at the discretion of the Director, Manager or Supervisor. Using or claiming sick leave for a purpose not authorized in this section may be cause for disciplinary action. For the purpose of accumulating additional vacation or sick leave, an employee using earned vacation or sick leave is considered to be working. Employees, who are injured while engaged in after hours' employment of others or while self - employed, shall not be covered under the Utility's Sick Leave Policy outlined. SICK LEAVE (EXEMPT) 1. Sick leave shall be granted to all probationary and non - probationary employees at a rate of eight (8) hours per month. 2. Sick leave maybe granted for absence from duty because of personal illness, or, after completion of probationary period, for the illness of an immediate family member on the same terms the employee is able to use sick leave benefits for their own illness, including appointments for necessary medical, dental or eye care, legal quarantine, or brief emergency situation (not to exceed one day) in the immediate family. 3. Sick leave cannot be accumulated beyond 720 hours. After the accumulation of 720 hours, a payback of one -third of the amount over 720 hours will be made annually on or about February 1. 4. On retirement or upon death before retirement, a payback of one -third of the amount over 240 hours will be made. If the employee resigns or is dismissed, the above payment shall not be made. In case of death during employment, the unused sick leave will be paid to his /her estate on the same ratio as above. S. Requests for sick leave consideration in case of other emergency situations may be brought to the Director. 6. A maximum of five days sick leave may be allowed when necessary in the case of death in the immediate family. 7. If an employee becomes ill and must stay home from work, he /she shall notify their Director, Manager or Supervisor before their work day begins. 8. If an employee becomes ill during his /her regular workday, they shall notify their Director, Manager or Supervisor that it is necessary to leave due to illness. 9. Employees may be required to submit a medical certificate for any sick leave, at the discretion of the Director, Manager or Supervisor. 10. The use or claim of sick leave for a purpose not authorized may be cause for disciplinary action. 11. For the purpose of accumulating additional vacation or sick leave, an employee using earned vacation or sick leave is considered to be in a paid or working status. 12. Employees that are injured while engaged in after hours' employment of others or while self employed, shall not be covered under the Utility's Sick Leave Policy, or Worker's Compensation benefits. 13. An employee who is determined to be eligible for workers compensation benefits during absence from duty will receive such benefits pursuant to Section entitled "Worker's Compensation" in Exempt Employee Handbook. 14. The Employer shall comply with the Family and Medical Leave Act, the Minnesota Parental Leave Act and the Americans with Disabilities Act.