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Exhibit 10
GUARANTEE AGREEMENT
GUARANTEE AGREEMENT (this "Agreement"), dated as of August 16, 2000, made
by and among Minnesota Power, Inc., a Minnesota corporation (the "Guarantor"),
CoBank, ACB not in its individual capacity but solely in its capacity as
Administrative Agent under the Credit Agreement (as hereinafter defined), and
ABN AMRO Bank N.V., as the sole Minnesota Power Bank as of the date hereof.
RECITALS
Split Rock Energy LLC (the "Company") has entered into a Credit Agreement
dated as of the date hereof with CoBank, ACB, as Administrative Agent, and the
other financial institutions from time to time party thereto (the "Credit
Agreement").
As of the date hereof, the Company is 50% owned by the Guarantor. The
Guarantor acknowledges that it is in its best interests for the Company to enter
into the Credit Agreement and obtain the credit provided thereunder. The
Minnesota Power Banks (but not the GRE Banks) have required as a condition
precedent to their entering into the Credit Agreement and extending credit from
time to time in accordance with the terms thereof that the Guarantor enter into
this Agreement unconditionally and irrevocably guarantying all Guaranteed
Obligations (as hereinafter defined) owing to the Minnesota Power Banks.
The Minnesota Power Banks are willing to enter into the Credit Agreement
and extend credit from time to time in accordance with the terms thereof,
subject to and in reliance upon, among other things, the terms and conditions of
this Agreement.
NOW. THEREFORE, in consideration of the foregoing, and for other good and
valuable consideration, receipt and adequacy of which is hereby acknowledged,
the parties hereto agree as follows:
Section 1. RECITALS. The recitals are hereby incorporated by this
reference.
Section 2. DEFINITIONS. All capitalized terms used in this Agreement
without definition shall have the meanings ascribed to them in the Credit
Agreement.
Section 3. INCORPORATION BY REFERENCE. Whenever any section or provision
of the Minnesota Power Credit Facility is incorporated herein by reference, such
section or provision shall for all purposes be deemed to be incorporated and set
forth herein in its entirety, mutatis mutandis, and the related defined terms,
cross-referenced sections, schedules and exhibits of the Minnesota Power Credit
Facility referred to in any such incorporated section or provision shall also be
deemed to be incorporated herein by reference in accordance with this Section 3,
provided that any reference in any section or provision incorporated herein by
reference to (i) "Agent", "Bank", or "Required Banks" shall be deemed to by a
reference to the Minnesota Power Banks under the Credit Agreement,(ii) the
"Company" shall be deemed to by a reference to the Guarantor, and (iii) "Loan
Documents" shall also include this Agreement. The sections and
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provisions of the Minnesota Power Credit Facility incorporated herein by
reference shall survive and be binding upon the Guarantor notwithstanding the
termination or expiration of the Minnesota Power Credit Facility and no waiver,
amendment, supplement or other modification to the Minnesota Power Credit
Facility made after the date of this Agreement shall have any affect on the
sections and provisions incorporated herein by reference unless consented to in
writing by each of the Minnesota Power Banks. To the extent that the Guarantor
is required to provide any notice, certificate or other information hereunder
and such notice, certificate or other information is provided to each of the
Minnesota Power Banks pursuant to the Minnesota Power Credit Facility within the
time and in proper form, if any, specified herein for the providing of such
information, than the Guarantor shall be deemed to have satisfied its obligation
hereunder to provide such notice, certificate or other information.
Section 4. GUARANTY. The Guarantor hereby absolutely, unconditionally and
irrevocably guarantees the full and prompt payment to the Minnesota Power Banks
(but not the GRE Banks) of any and all Obligations owing to the Minnesota Power
Banks (but not the GRE Banks) as and when due (whether by acceleration or
otherwise), howsoever evidenced, arising under or relating to the Credit
Documents, whether direct or indirect, absolute or contingent, joint or several,
or joint and several and howsoever owned, held or acquired; and the Guarantor
further agrees to pay all reasonable expenses, legal and/or otherwise (including
court costs and reasonable attorneys' fees), paid or incurred by the
Administrative Agent or the Minnesota Power Banks in endeavoring to collect such
Obligations, or any part thereof, and in enforcing this guaranty in any
litigation, bankruptcy or insolvency proceeding or otherwise (collectively, the
"Guaranteed Obligations").
Guarantor's guaranty is a continuing, absolute and unconditional guaranty,
and shall remain in full force and effect until written notice of its
discontinuance shall be actually received by the Administrative Agent, and also
until any and all of the Guaranteed Obligations created, existing or committed
to before receipt of such notice shall be fully paid. The liability of the
Guarantor hereunder shall in no way be affected or impaired by (and the
Administrative Agent or and Minnesota Power Banks are hereby expressly
authorized to make from time to time, without notice to anyone) any increase,
sale, pledge, surrender, compromise, settlement, release, renewal, extension,
indulgence, alteration, substitution, exchange, change in, modification or other
disposition of any of the Guaranteed Obligations, either express or implied, or
of any contract or contracts evidencing any thereof, or of any security or
Collateral therefor. The liability of the Guarantor hereunder shall also in no
way be affected or impaired by any acceptance by the Administrative Agent or any
Bank of any security for or other guarantors upon any of the Guaranteed
Obligations, or by any failure, neglect or omission on the part of the
Administrative Agent or any Bank to realize upon or protect any of the
Guaranteed Obligations, or any collateral or security or other guaranty
therefor, or to exercise any lien upon or right of appropriation of any moneys,
credits or property of the Company possessed by the Administrative Agent and/or
the Banks toward the liquidation of the Guaranteed Obligations, or by any
application of payments or credits thereon. The Administrative Agent and the
Banks shall have the exclusive right to determine how, when and what application
of payments and credits, if any, shall be made on the Guaranteed Obligations, or
any part thereof. Notwithstanding anything in any Credit Documents to the
contrary, in order to hold the Guarantor liable hereunder, there shall be no
obligation on
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the part of the Administrative Agent or the Banks, at any time, to resort for
payment to the Company or to any other guaranty (including the GRE Guaranty), or
to any other person or corporation, their properties or estate, or resort to any
collateral, security, property, Liens or other rights or remedies whatsoever and
the Administrative Agent and the Minnesota Power Banks (but not the GRE Banks)
shall have the right to enforce this guaranty irrespective of whether or not
other proceedings or steps are pending seeking resort to or realization upon or
from any of the foregoing.
All diligence in collection or protection, and all presentment, demand,
protest and/or notice, as to any and everyone, whether or not the Company or the
Guarantor or others, of dishonor and of default and of non-payment and of the
creation and existence of any and all of the Guaranteed Obligations, and of any
security and collateral therefor, and of the acceptance of this guaranty, and of
any and all extensions of credit and indulgence, are expressly waived.
Until payment of all Guaranteed Obligations has irrevocably been made, the
Guarantor hereby irrevocably waives any claim or other rights which it may now
or hereafter acquire against the Company that arise from the existence, payment,
performance or enforcement of the Guarantor's obligations hereunder, including,
without limitation, any right of subrogation, reimbursement, exoneration,
contribution, indemnification, or any right to participate in any claim or
remedy of the Administrative Agent and the Banks against the Company whether or
not such claim, remedy or right arises in equity, or under contract, statute or
common law, including, without limitation, the right to take or receive from the
Company directly or indirectly, in cash or other property or by set-off or in
any other manner, payment or security on account of such claim or other rights.
In the case of the dissolution, liquidation, or insolvency (howsoever
evidenced) of, or the institution of bankruptcy or receivership proceedings
against the Company or the Guarantor or an Event of Default occurs, all of the
Guaranteed Obligations then existing shall, at the option of the Administrative
Agent or the Minnesota Power Banks (or automatically, in the event of a
bankruptcy or receivership proceeding), immediately become due and accrued and
payable from the Guarantor. All dividends or other payments received from the
Company, or on account of the Company from whatsoever source, shall be taken and
applied as payment in gross, and this guaranty shall apply to and secure any
ultimate balance that shall remain owing to the Minnesota Power Banks.
The Minnesota Power Banks may sell, assign, or transfer all of the
Guaranteed Obligations, or any part thereof, or grant participations therein,
and in that event each and every immediate and successive assignee, transferee,
or holder of or participant in all or any part of the Guaranteed Obligations,
shall be a beneficiary of this guaranty, as fully as if such assignee,
transferee, holder or participant were herein by name specifically given such
rights, powers and benefits.
If any payment applied by the Administrative Agent or the Minnesota Power
Banks to the Guaranteed Obligations is thereafter set aside, recovered,
rescinded or required to be returned for any reason (including, without
limitation, the bankruptcy, insolvency or reorganization of the
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Company or any other obligor), the Guaranteed Obligations to which such payment
was applied shall for the purposes of this guaranty be deemed to have continued
in existence, notwithstanding such application, and this guaranty shall be
enforceable as to such of the Guaranteed Obligations as fully as if such
application had never been made.
All payments to be made by the Guarantor hereunder shall be made in the
same currency and funds in which the Guaranteed Obligations of the Company are
payable at the head office of the Administrative Agent at Denver, Colorado (or
at such other place for the account of the Administrative Agent as it may from
time to time specify to the Guarantor) in immediately available and freely
transferable funds at the place of payment, all such payments to be paid without
setoff, counterclaim or reduction and without deduction for, and free from, any
and all present or future taxes, levies, imposts, duties, fees, charges,
deductions, withholding or liabilities with respect thereto or any restrictions
or conditions of any nature. If the Guarantor is required by law to make any
deduction or withholding on account of any tax or other withholding or deduction
from any sum payable by the Guarantor hereunder, the Guarantor shall pay any
such tax or other withholding or deduction and shall pay such additional amount
necessary to ensure that, after making any payment, deduction or withholding,
the Administrative Agent and the Minnesota Power Banks shall receive and retain
(free of any liability in respect of any payment, deduction or withholding) a
net sum equal to what it would have received and so retained hereunder had no
such deduction, withholding or payment been required to have been made.
The Guarantor waives any and all of its defenses, claims and discharges
and those of the Company, or any other obligor, pertaining to the Guaranteed
Obligations or its obligations hereunder, except the defense of discharge by
payment in full. Without limiting the generality of the foregoing, the Guarantor
will not assert, plead or enforce against the Administrative Agent or any Bank
any defense of waiver, release, discharge in bankruptcy, statute of limitations,
res judicata, statute of frauds, anti-deficiency statute, fraud, incapacity,
minority, usury, illegality or unenforceability which may be available to the
Company or any other person liable in respect of any of the Guaranteed
Obligations, or any setoff available against the Administrative Agent or any
Banks to the Company or any such other person, whether or not on account of a
related transaction. The Guarantor agrees that the Guarantor shall be and remain
liable for any deficiency remaining after foreclosure of any mortgage or
security interest securing the Guaranteed Obligations, whether or not the
liability of the Company or any other obligor for such deficiency is discharged
pursuant to statute or judicial decision.
Without limiting the other rights of the Administrative Agent and the Minnesota
Power Banks and the obligations of the Guarantor hereunder, if an Event of
Default occurs under the Credit Agreement and the Administrative Agent and the
Banks are prohibited or stayed by law from accelerating or making demand on the
Guaranteed Obligations vis-a-vis the Company, the Administrative Agent and the
Minnesota Power Banks may, by written notice to the Guarantor, declare the full
amount of the Guaranteed Obligations to be immediately due and payable from the
Guarantor whether or not such Guaranteed Obligations has been declared to be or
has become immediately due and payable from the Company and without regard to
any constraints on or impediments to the ability of the Administrative Agent and
the Minnesota Power Banks to accelerate the maturity of such Guaranteed
Obligations.
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Section 5. REPRESENTATIONS AND WARRANTIES. The Guarantor represents and
warrants to the Administrative Agent and the Minnesota Power Banks that:
(a) The Guarantor (i) is a Minnesota corporation, duly organized
validly existing and in good standing under the law of the
jurisdiction of its formation, with full right, power and
authority to enter into this Agreement and to perform its
obligations hereunder and to consummate the transactions
contemplated hereby; (ii) is duly qualified to do business and
in good standing in each other jurisdiction where the character
of its properties or the nature of its activities makes such
qualification necessary, except where the failure to so qualify
or be authorized would not materially and adversely affect its
ability to perform its obligations hereunder, and (iii) has the
power to carry on its business as now being conducted and as
proposed to be conducted;
(b) The Guarantor has taken all necessary action to authorize the
transactions contemplated by this Agreement. This Agreement has
been duly executed and delivered by the Guarantor and
constitutes the legal, valid and binding obligation of the
Guarantor enforceable in accordance with its terms, except as
the enforceability thereof may be limited by (i) bankruptcy,
insolvency, reorganization or other similar laws affecting the
enforcement of creditors' rights generally and (ii) general
equitable principles regardless of whether the issue of
enforceability is considered in a proceeding in equity or at
law;
(c) Neither the execution and delivery of this Agreement nor the
the compliance with any of the terms and provisions hereof (i)
contravenes any laws applicable to the Guarantor or any of its
properties or other assets, (ii) conflicts with, breaches or
contravenes the provisions of the organizational documents of
the Guarantor or any contractual obligation of the Guarantor,
or (iii) results in the creation of a condition or event that
constitutes (or that, upon notice or lapse of time or both,
would constitute) an event of default under any contractual
obligation of the Guarantor;
(d) No governmental approvals are required to authorize, or are
required in connection with, the execution, delivery and
performance of this Agreement or the taking of any action by
the Guarantor hereby contemplated;
(e) There are no actions, suits or proceedings at law or in equity
now pending or, to the best of the Guarantor's knowledge,
threatened against or affecting the Guarantor or any of its
properties or rights which could materially and adversely
affect the right or ability of the Guarantor to fulfill its
obligations hereunder, or which question or challenge the
validity of this Agreement or any action taken or to be taken
by the Guarantor pursuant to this Agreement or in connection
with the transactions contemplated hereby; and
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(f) Section 5 of the Minnesota Power Credit Facility is hereby
incorporated by reference in its entirety, provided that as
incorporated herein by reference the reference to "December 31,
1997" in Section 5(d) of the Minnesota Power Credit Facility
shall be deemed herein to be a reference to December 31, 1999
and the reference to "September 30, 1997" in Section 5(d) of
the Minnesota Power Credit Facility shall be deemed herein to
be a reference to March 31, 2000.
Section 6. COVENANTS - GUARANTOR. So long as any obligation of the
Guarantor under this Agreement is outstanding, the Guarantor covenants and
agrees with the Banks and the Agent as follows:
(a) Guarantor shall preserve and maintain its legal existence
and form and all of its rights, privileges and franchises, if
any, necessary for the operation of its business and the
maintenance of its existence;
(b) Guarantor shall not change its form of organization or its
business or liquidate or dissolve itself (or suffer any
liquidation or dissolution) or transfer all or substantially
all of its assets;
(c) Guarantor shall continue to own, directly or indirectly, a
sufficient percentage of the voting membership interests of the
Company to prevent, when aggregated with percentage of the
voting membership interests of the Company owned, directly or
indirectly, by GRE, the occurrence of a Change of Control Event
(it being acknowledged and agreed by the Guarantor that no
change in its ownership of the Company (in compliance with this
clause (c) or otherwise) shall in any way affect its
obligations hereunder);
(d) Section 6 of the Minnesota Power Credit Facility is hereby
incorporated by reference in its entirety;
(e) Guarantor will maintain a system of accounting in accordance
accordance with GAAP and will furnish to the Banks and their
respective duly authorized representatives such information
respecting the business and financial condition of the
Guarantor as any Bank may reasonably request; and without any
request, the Guarantor will furnish each of the following to
each Bank:
(f) within 120 days after the end of each fiscal year of the
Guarantor (including, without limitation, 12/31/99), a copy of
the Guarantor's financial statements for such fiscal year,
including the balance sheet of the Guarantor for such year and
the related statements of income and statements of cash flow,
each as certified by independent public accountants of
recognized national standing selected by the Guarantor in
accordance
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with GAAP with such accountants' unqualified opinion to the
effect that the financial statements have been prepared in
accordance with GAAP and present fairly in all material
respects in accordance with GAAP the financial position of the
Guarantor as of the close of such fiscal year and the results
of its operations and cash flows for the fiscal year then ended
and that an examination of such accounts in connection with
such financial statements has been made in accordance with
generally accepted auditing standards and, accordingly, such
examination included such tests of the accounting records and
such other auditing procedures as were considered necessary in
the circumstances;
(g) within 60 days after the end of each of the first three
quarterly fiscal periods of the Guarantor, an unaudited balance
sheet of the Guarantor, and the related statements of income
and statements of cash flow, as of the close of such period,
all of the foregoing prepared by the in reasonable detail in
accordance with GAAP and certified by the Guarantor's chief
financial officer or corporate controller as fairly presenting
the financial condition as at the dates thereof and the results
of operations for the periods covered thereby; and
(h) promptly after the sending or filing thereof, copies of all
proxy statements, financial statements and reports the
Guarantor sends to its shareholders, and copies of all other
regular, periodic and special reports and all registration
statements the Guarantor files with the SEC or any successor
thereto, or with any national securities exchanges.
(i) Each financial statement furnished to the Banks pursuant to
subsection (f) or (g) of this Section 6 shall be accompanied by
a written certificate signed by the Guarantor's chief financial
officer or corporate controller to the effect that, to their
knowledge, (i) no Default or Event of Default has occurred
during the period covered by such statements or, if any such
Default or Event of Default has occurred during such period,
setting forth a description of such Default or Event of Default
and specifying the action, if any, taken by the Guarantor to
remedy the same, and (ii) the representations and warranties
contained in Section 5 hereof are true and correct in all
material respects as though made on the date of such
certificate (other than those made solely as of an earlier
date, which need only remain true as of such date), except as
otherwise described therein.
(j) The Guarantor will promptly (and in any event within three
Business Days after an officer of the Guarantor has knowledge
thereof) give notice to the Administrative Agent and each Bank:
(1) of the occurrence of any Default or Event of Default; and
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(2) any event or condition which could reasonably be expected
to have a Material Adverse Effect.
Section 7. EVENTS OF DEFAULT; REMEDIES. The events of default set forth in
Section 7(a) of the Minnesota Power Credit Facility are hereby incorporated by
reference in their entirety (including any applicable grace periods). If (i) any
representation or warranty made by the Guarantor hereunder (whether incorporated
by reference or expressly set forth herein) proves untrue in any material
respect when made, (ii) the Guarantor fails to comply with its agreements and
covenants contained herein (whether incorporated by reference or expressly set
forth herein), or (ii) an event of default contained herein (whether
incorporated by reference or expressly set forth herein) occurs, an "event of
default" shall be deemed to have occurred hereunder and the Administrative Agent
and/or the Minnesota Power Banks shall have the right to demand payment
hereunder, the proceeds of such demand to be applied against the Guaranteed
Obligations or, at the option of the Minnesota Power Banks, held as cash
collateral for the payment of the Guaranteed Obligations as and when due. Any
such cash collateral not applied previously applied to the payment of the
Guaranteed Obligations shall be returned to the Guarantor upon the termination
of this Agreement and the Credit Agreement and the satisfaction and irrevocable
payment in full of all Guaranteed Obligations.
No remedy herein conferred upon or reserved to the Administrative Agent and
the Minnesota Power Banks is intended to be exclusive or any other available
remedy or remedies, but each and every such remedy shall be cumulative and shall
be in addition to every other remedy given under this Agreement or now or
hereafter existing at law or in equity or by statute. In order to entitle the
Administrative Agent and/or the Minnesota Power Banks to exercise any remedy
reserved to it in this Agreement, it shall not be necessary to give any notice,
other than such notice as may be expressly required by this Agreement. No notice
to or demand on the Guarantor in any case shall entitle it to any other or
further notice or demand in the same or similar circumstances.
Section 8. NOTICES. Any notice or other communication hereunder shall be
given in the manner set forth in the Credit Agreement to the parties at the
addresses set forth therein (or, in the case of the Guarantor, as set forth
below):
If to Guarantor, at:
Minnesota Power, Inc.
30 West Superior Street
Duluth, Minnesota 55802
Attn: Corporate Treasurer
Facsimile: (218) 723-3912
Section 9. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon
the Guarantor and its successors and inure to the benefit of the Administrative
Agent and the Minnesota Power Banks and their respective successors and assigns.
This Agreement may not be assigned by the Guarantor.
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Section 10. AMENDMENT, ETC. No amendment or waiver of any provision of this
Agreement nor any consent to any departure by the Guarantor herefrom shall in
any event be effective unless the same shall be in writing and signed by the
Guarantor, the Administrative Agent and the Minnesota Power Banks, and then such
waiver or consent shall be effective only in the specific instance and for the
specific purpose for which given. No failure or delay on the part of the
Administrative Agent and the Minnesota Power Banks in exercising any right or
remedy hereunder shall operate as a waiver thereof nor shall any single or
partial exercise of any power or right preclude other or further exercise
thereof or the exercise of any other right or remedy.
Section 11. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York, and the parties
hereby submit to the jurisdiction of Federal and State courts located in the
City of New York.
Section 12. EXPENSES. The Guarantor will, upon demand, pay to the
Administrative Agent and the Minnesota Power Banks any and all reasonable
expenses, including attorneys' fees and expenses, which the Administrative Agent
and the Minnesota Power Banks may incur in connection with the exercise or
enforcement or any of the rights or interests of the Administrative Agent and
the Minnesota Power Banks with respect to the Guarantor hereunder.
Section 13. COUNTERPARTS. This Agreement may be executed by one or more of
the parties to this Agreement on any number of separate counterparts and all of
said counterparts taken together shall be deemed to constitute one and the same
instrument.
Section 14. SEVERABILITY. If any provision of this Agreement shall be held
or deemed to be or shall, in fact, be illegal, inoperative or unenforceable, the
same shall not affect any other provision or provisions herein contained or
render the same invalid, inoperative or unenforceable to any extent whatever.
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IN WITNESS WHEREOF, the parties hereto have each caused this Agreement to
be executed by the duly authorized officers as of the date first written above.
MINNESOTA POWER, INC.
By: /s/ David G. Gartzke
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Name: David G. Gartzke
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Its: Sr. Vice President - Finance
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and Chief Financial Officer
COBANK, ACB, as Administrative Agent and
not in its individual capacity
By: /s/ Teresa L. Fountain
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Name: Teresa L. Fountain
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Its: Assistant Corporate Secretary
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ABN AMRO BANK N.V., as the sole Minnesota
Power Bank as of the date hereof
By: /s/ David B. Bryant
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Name: DAVID B. BRYANT
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Its: SENIOR VICE PRESIDENT
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& MANAGING DIRECTOR
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