Execution Copy

AMENDED AND RESTATED GUARANTY

AMENDED AND RESTATED GUARANTY dated as of May 24, 2006 (this “Guaranty”), from
BLACK HILLS CORPORATION, a South Dakota corporation (the “Guarantor”), in favor
of WYGEN FUNDING, LIMITED PARTNERSHIP, a Delaware limited partnership (the
“Lessor”), and its successors and assigns.

WHEREAS, Guarantor has executed a Guaranty, dated as of July 20, 2001, as
amended by Amendment No. 1 to Guaranty dated as of June 18, 2002 and Amendment
No. 2 to Guaranty dated as of December 30, 2004 (as amended, the “Original
Guaranty”), which Original Guaranty was entered into in connection with that
certain Agreement for Lease and that certain Lease Agreement, each dated as of
July 20, 2001, and each executed by Lessor and Black Hills Wyoming, Inc. (f/k/a
Black Hills Generation, Inc.), a Wyoming corporation;

WHEREAS, Guarantor has entered into that certain Credit Agreement, dated as of
May 5, 2005, among the Guarantor, the financial institutions from time to time
party thereto, U.S. Bank, National Association and Union Bank of California,
N.A., as co-syndication agents, Bank of America, N.A. and Bank of Montreal dba
Harris Nesbitt, as co-documentation agents, and ABN AMRO Bank N.V., as
administrative agent; and

WHEREAS, pursuant to Section 5.2 of the Original Guaranty the Financial
Covenants contained in the Original Guaranty are to conform at all times to
those comparable Financial Covenants contained in any Guarantor Credit Agreement
which are more stringent than those Financial Covenants contained in the
Original Guaranty.

NOW, THEREFORE, in order to conform the Financial Covenants contained in the
Original Guaranty with those contained in the 2005 Credit Agreement, the
Guarantor and Lessor wish to amend and restate the Original Guaranty, and
Guarantor hereby agrees as follows:

 

SECTION 1

DEFINED TERMS

RULES OF CONSTRUCTION

1.1          Definitions. As used in this Guaranty, capitalized terms defined in
the preamble, Preliminary Statements and other Sections of this Guaranty shall
have the meanings set forth therein, terms defined in Exhibit A shall have the
meanings set forth therein, and capitalized terms used herein or in Exhibit A
but not otherwise defined herein or in Exhibit A shall, except as otherwise
provided in the Agreement for Lease or the Lease, have the meanings set forth in
the Lease, for any period on or after the Effective Date (as defined in the
Lease) or the Agreement for Lease, for any period prior thereto.

1.2          Accounting Terms. All accounting terms not specifically defined
herein shall be construed in accordance with generally accepted accounting
principles.

 

 

 

 

1.3          Use of Certain Terms. Unless the context of this Guaranty requires
otherwise, the plural includes the singular, the singular includes the plural,
and “including” has the inclusive meaning of “including without limitation”. The
words “hereof”, “herein”, “hereby”, “hereunder”, and other similar terms of this
Guaranty refer to this Guaranty as a whole and not exclusively to any particular
provision of this Guaranty. All pronouns and any variations thereof shall be
deemed to refer to masculine, feminine, or neuter, singular or plural, as the
identity of the Person or Persons may require.

1.4          Headings and References. Section and other headings are for
reference only, and shall not affect the interpretation or meaning of any
provision of this Guaranty. Unless otherwise provided, references to Articles,
Sections, Schedules, and Exhibits shall be deemed references to Articles,
Sections, Schedules, and Exhibits of this Guaranty. References to this Guaranty
and any other Operative Document include this Guaranty and the other Operative
Documents as the same may be modified, amended, restated or supplemented from
time to time pursuant to the provisions hereof or thereof. A reference to any
Law shall mean that Law as it may be amended, modified or supplemented from time
to time, and any successor Law. A reference to a Person includes the successors
and assigns of such Person, but such reference shall not increase, decrease or
otherwise modify in any way the provisions in this Guaranty governing the
assignment of rights and obligations under or the binding effect of any
provision of this Guaranty.

 

SECTION 2

GUARANTY

2.1          Guaranty. Subject to the terms and conditions in this Guaranty, the
Guarantor absolutely, unconditionally and irrevocably guarantees to the Lessor
and each Assignee that (i) all Payment Obligations will be promptly paid in full
as and when due in accordance with the terms thereof whether at the stated due
date, by acceleration or otherwise, and (ii) the Lessee will duly and punctually
perform, comply with, and observe all Covenant Obligations as and when required
in accordance with the terms thereof, in each case, without regard to whether
such Obligation is direct or indirect, absolute or contingent, now or hereafter
existing or owing, voluntary or involuntary, created or arising by contract,
operation of Law or otherwise or incurred or payable before or after
commencement of any proceedings by or against the Lessee under any Bankruptcy
Law.

If an event permitting the exercise of remedies under an Operative Document
shall at any time have occurred and be continuing and such exercise, or any
consequences thereof provided in such Operative Document, shall at such time be
prevented by reason of the pendency against the Lessee of a case or proceeding
under a bankruptcy or insolvency law, the Guarantor agrees that, solely for
purposes of this Guaranty and its obligations hereunder, the Obligations and all
other amounts payable under such Operative Document shall be deemed to have been
declared in default, with all attendant consequences as provided in such
Operative Document, as if such declaration of default and the consequences
thereof had been accomplished in accordance with the terms of such Operative
Document, and the Guarantor shall forthwith pay any amounts guaranteed hereunder
upon written demand by the Lessor or any Assignee.

 

 

 

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2.2          Guaranty Absolute. This Guaranty is an absolute, unlimited and
continuing guaranty of performance and payment (and not of collection) of the
Obligations. This Guaranty is in no way conditioned upon any attempt to collect
from the Lessee or upon any other event or contingency, and shall be binding
upon and enforceable against the Guarantor without regard to the validity or
enforceability of any Operative Document, or of any term thereof.

The obligations of the Guarantor set forth herein constitute the full recourse
obligations of the Guarantor enforceable against it to the full extent of all
its assets and properties, notwithstanding any provision in any Operative
Document limiting the liability of any Person, or any agreement by a collateral
agent under a Financing Arrangement to look for payment with respect thereto
solely to certain Property and other collateral as described in the Operative
Documents. Without limiting the foregoing, it is agreed and understood that
repeated and successive demands may be made and recoveries may be had hereunder
as and when, from time to time, the Lessee shall be in default with respect to
the Obligations under the terms of the Operative Documents and that
notwithstanding the recovery hereunder for or in respect of any given default
with respect to the Obligations by the Lessee under the Operative Documents,
this Guaranty shall remain in full force and effect and shall apply to each and
every subsequent default with respect to the Obligations.

2.3          Reinstatement. In case any Operative Document shall be terminated
as a result of the rejection thereof by any trustee, receiver or liquidating
agent of the Lessee or any of its properties in any Bankruptcy, insolvency,
reorganization, arrangement, composition, readjustment, liquidation, dissolution
or similar proceeding, the Guarantor’s obligations hereunder shall continue to
the same extent as if such agreement had not been so rejected. The Guarantor
agrees that this Guaranty shall continue to be effective or be reinstated, as
the case may be, if at any time payment to the Lessor of the Obligations or any
part thereof is rescinded or must otherwise be returned by the Lessor upon the
insolvency, Bankruptcy or reorganization of the Lessee, or otherwise, as though
such payment to the Lessor had not been made.

2.4          Enforcement. The Guarantor shall pay all reasonable costs, expenses
and damages incurred (including attorneys’ fees and disbursements) in connection
with the enforcement of the Obligations, to the extent that such costs, expenses
and damages are not paid by the Lessee, and in connection with the enforcement
of the obligations of the Guarantor under this Guaranty.

2.5          Guaranty Not Subject to Setoff, etc. The obligations of the
Guarantor hereunder shall not be subject to any counterclaim, setoff, deduction
or defense (other than payment, performance or affirmative discharge, release or
termination of this Guaranty by the Lessor and each Assignee (or any agent
representing such Assignee) in writing) based upon any claim the Guarantor or
the Lessee may have against the Lessor or any other Person or the Guarantor may
have against the Lessee and shall remain in full force and effect without regard
to, and shall not be released, discharged, reduced or in any way affected by any
circumstance or condition (whether or not the Guarantor shall have any knowledge
or notice thereof) whatsoever which might constitute a legal or equitable
discharge or defense including, but not limited to, (a) the amending, modifying,
supplementing or terminating (by operation of law or otherwise), expressly or
impliedly, of any Operative Document, or any other instrument applicable to the
Lessee or to the Obligations, or any part thereof; (b) any failure on the part
of the Lessee to

 

 

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perform or comply with any term of any Operative Document or any failure of any
other Person to perform or comply with any term of any Operative Document; (c)
any waiver, consent, change, extension, indulgence or other action or any action
or inaction under or in respect of any Operative Document or this Guaranty
(except for any written waiver or modification of the provisions of this
Guaranty signed by the parties hereto), whether or not the Lessor, the Lessee or
the Guarantor has notice or knowledge of any of the foregoing; (d) any
Bankruptcy, insolvency, reorganization, arrangement, readjustment, composition,
liquidation or similar proceeding with respect to the Guarantor, the Lessee, or
their respective properties or their creditors, or any action taken by any
trustee or receiver or by any court in any such proceeding; (e) any furnishing
or acceptance of additional security or any release of any security (and the
Guarantor authorizes the Lessor to furnish, accept or release said security);
(f) any limitation on the liability or Obligations of the Lessee under any
Operative Document (except as expressly set forth therein) or any termination
(by operation of law or otherwise), cancellation (by operation of law or
otherwise), frustration, invalidity or unenforceability, in whole or in part, of
any Operative Document, or any term thereof; (g) any lien, charge or encumbrance
on or affecting the Guarantor’s or the Lessee’s respective assets and
properties; (h) any act, omission or breach on the part of the Lessor or any
Assignee under any Operative Document, or any other agreement at any time
existing between the Lessor and the Lessee or any other Law, governmental
regulation or other agreement applicable to the Lessor or any Obligation; (i)
any claim as a result of any other dealings among the Lessor, any Assignee, the
Guarantor or the Lessee or any of them; (j) the assignment or transfer of this
Guaranty, any Operative Document (in accordance with and subject to the terms
thereof) or any other agreement or instrument referred to in any Operative
Document or applicable to the Lessee or the Obligations by the Lessor to any
other Person; (k) any change in the name of the Lessor, any Assignee, the Lessee
or any other Person referred to herein; (l) any subleasing or further subleasing
of the Project or any part thereof, or any redelivery, repossession, sale,
transfer or other disposition, surrender or destruction of the Project or any
part thereof; (m) the transfer, assignment, mortgaging or purported transfer,
assignment or mortgaging of all or any part of the interest of the Lessor, its
successors or assigns, or the Lessee in the Project; (n) any failure of title
with respect to the interest of the Lessor or the Lessee, or their respective
successors and assigns, in the Project; (o) any defect in the compliance with
specifications, condition, design, operation or fitness for use of, or any
damage to or loss or destruction of, or any interruption or cessation in the use
of or failure to complete the Project or any portion thereof by the Lessee or
any other Person for any reason whatsoever (including without limitation any
governmental prohibition or restriction, condemnation, requisition, seizure or
any other act on the part of any governmental or military authority, or any act
of God or of the public enemy, or any Event of Loss), and regardless of the
duration thereof (even though such duration would otherwise constitute a
frustration of the Lease), whether or not without fault on the part of the
Lessee or any other Person; (p) any merger or consolidation of the Lessee or the
Guarantor into or with any other Person or any sale, lease or transfer of any
other assets of the Lessee or the Guarantor to any other Person; or (q) any
change in the ownership of any shares of capital stock of the Guarantor or the
Lessee (including any such change which results in an Affiliate of the Guarantor
no longer owning capital stock of the Lessee); provided, however, that
notwithstanding the foregoing, this Guaranty shall not constitute a waiver or
release by the Lessee or the Guarantor of any claim of the Lessee or the
Guarantor which may be asserted against the Lessor or any other party in a
separate action or proceeding, or if required by applicable Law as a compulsory
counterclaim in such action.

 

 

 

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2.6          Waiver. The Guarantor unconditionally waives: (a) notice of any of
the matters referred to in Section 2 hereof (except as expressly provided
above); (b) all notices which may be required by Law or otherwise to preserve
any rights against the Guarantor hereunder, including, without limitation,
notice of the acceptance of this Guaranty by the Lessor or any Assignee, or the
creation, renewal, extension, modification or accrual of the Obligations or
notice of any other matters relating thereto, any presentment, demand, notice of
dishonor, protest or nonpayment of any damages or other amounts payable under
any Operative Document; (c) any requirement for the enforcement, assertion or
exercise of any right, remedy, power or privilege under or in respect of any
Operative Document, including, without limitation, diligence in collection or
protection of or realization upon the Obligations or any part thereof or any
collateral therefor; (d) any requirement of diligence; (e) any requirement to
mitigate the damages resulting from a default or project termination under any
Operative Document, except that this shall not relieve the Lessor of any such
obligation; (f) the occurrence of every other condition precedent to which the
Guarantor or the Lessee may otherwise be entitled, except as provided in any
Operative Document; and (g) the right to require the Lessor to proceed against
the Lessee or any other Person liable on the Obligations, to proceed against or
exhaust security held from the Lessee or any other Person, or to pursue any
other remedy in the Lessor’s power whatsoever, and the Guarantor waives the
right to have the Property of the Lessee first applied to the discharge of the
Obligations.

The Lessor may, at its election, exercise any right or remedy it might have
against the Lessee or any security held by the Lessor, including, without
limitation, the right to foreclose upon any such security by judicial or
nonjudicial sale, without affecting or impairing in any way the liability of the
Guarantor hereunder, except to the extent the Obligations have been indefeasibly
paid or satisfied, and the Guarantor waives any defense arising out of the
absence, impairment or loss of any right of reimbursement, contribution or
subrogation or any other right or remedy of the Guarantor against the Lessee or
any such security, whether resulting from such election by the Lessor or
otherwise. The Guarantor waives any defense arising by reason of any disability
or other defense of the Lessee (which may nevertheless be asserted in a separate
action or proceeding against the Lessor or any other party), or by reason of the
cessation from any cause whatsoever of the liability, either in whole or in
part, of the Lessee to the Lessor for the Obligations (other than as a result of
payment, performance or affirmative discharge, release or termination of this
Guaranty by the Lessor and each Assignee).

The Guarantor understands that the Lessor’s or any Assignee’s exercise of
certain rights and remedies contained in the Operative Documents may affect or
eliminate the Guarantor’s rights of subrogation against the Lessee and that the
Guarantor may therefore incur partially or totally nonreimbursable liability
hereunder; nevertheless, the Guarantor hereby authorizes and empowers the
Lessor, its successors, endorsees and/or assignees (including each Assignee), to
exercise in its or their sole discretion, any rights and remedies, or any
combination thereof, which may then be available, it being the purpose and
intent of the Guarantor that its obligations hereunder shall be absolute,
independent and unconditional under any and all circumstances.

The Guarantor assumes the responsibility for being and keeping informed of the
financial condition of the Lessee and of all other circumstances bearing upon
the risk of nonpayment of the Obligations and agrees that neither the Lessor nor
any Assignee shall have any duty to advise the Guarantor of information
regarding any condition or circumstance or any change in such

 

 

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condition or circumstance. The Guarantor acknowledges that the Lessor has not
made any representation to the Guarantor concerning the financial condition of
the Lessee.

 

SECTION 3

COVENANTS OF THE GUARANTOR

3.1          Affirmative Covenants. So long as the Agreement for Lease or the
Lease is in effect or the Lessee owes any amount thereunder which is guaranteed
by the Guarantor, the Guarantor will (unless the Lessor shall otherwise consent
in writing):

(a)         Compliance with Laws, Etc. Comply, and cause each of its
Subsidiaries to comply, in all material respects with all applicable Laws
(including environmental Laws).

(b)         Maintenance of Properties, Etc. Maintain and preserve, and cause
each of its Subsidiaries to maintain and preserve, all of its Properties which
are used or useful in the conduct of its business in good working order and
condition, ordinary wear and tear excepted; provided, however, that neither the
Guarantor nor any Subsidiary shall be required to maintain or preserve any
Property if (i) the Board of Directors of the Guarantor or such Subsidiary shall
determine that the maintenance or preservation thereof is no longer desirable in
the conduct of the business of the Guarantor or such Subsidiary, as the case may
be, (ii) that the loss thereof is not disadvantageous in any material respect to
the Guarantor, such Subsidiary or the Lessor or any Assignee, and (iii) that the
loss thereof would not materially impair the ability of the Guarantor to perform
its obligations under this Guaranty in a timely manner.

(c)          Payment of Taxes, Etc. Pay and discharge, and cause each of its
Subsidiaries to pay and discharge, before the same shall become delinquent, (i)
all taxes, assessments and governmental charges or levies imposed upon it or
upon its Property, and (ii) all lawful claims which, if unpaid, might by Law
become a lien upon its Property; provided, however, that neither the Guarantor
nor any Subsidiary shall be required to pay or discharge any such tax,
assessment, charge or claim which is being contested in good faith and by proper
proceedings and as to which appropriate reserves are being maintained.

(d)        Maintenance of Insurance. Maintain, and cause each of its
Subsidiaries to maintain, insurance with responsible and reputable insurance
companies or associations in such amounts and covering such risks as is usually
carried by companies engaged in similar businesses and owning similar properties
in the same general areas in which the Guarantor or such Subsidiary operates.

(e)         Preservation of Corporate Existence, Etc. Except as permitted under
Section 3.2(b) hereof, preserve and maintain, and cause each Material Subsidiary
to preserve and maintain, its corporate existence, rights (charter and
statutory) and franchises.

(f)           Visitation Rights. At any reasonable time and from time to time
(upon prior written notice, if no Event of Default has occurred and is
continuing), permit the Lessor, each Assignee or any agents or representatives
thereof to examine and make copies of and abstracts from the records and books
of account of, and visit the Properties of, the Guarantor and any of its

 

 

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Subsidiaries, and to discuss the affairs, finances and accounts of the Guarantor
and any of its Subsidiaries with any of their officers or directors and with
their independent certified public accountants. The Guarantor will pay all costs
and expenses incurred by the Lessor and Assignee and each of their respective
agents or representatives in connection with the exercise of rights under this
Section 3.1(f) during the existence of an Event of Default.

(g)          Keeping of Books. Keep, and cause each of its Subsidiaries to keep,
proper books of record and accounts, in which full and correct entries shall be
made of all financial transactions and the assets and business of the Guarantor
and each such Subsidiary in accordance with GAAP.

 

(h)

Reporting Requirements. Furnish to the Lessor and each Assignee:

(i)           within 60 days after the end of each of the first three quarterly
fiscal periods of the Guarantor, a consolidated unaudited balance sheet of the
Guarantor and its Subsidiaries, 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 Guarantor 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;

(ii)          within 120 days after the end of each fiscal year of the
Guarantor, a copy of the Guarantor’s financial statements for such fiscal year,
including the consolidated balance sheet of the Guarantor and its Subsidiaries
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 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 consolidated financial position of the
Guarantor and its Subsidiaries as of the close of such fiscal year and the
results of their 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; provided, that if the Guarantor delivers to the
Lessor and each Assignee its Annual Report on Form 10-K for the applicable
annual period, prepared in compliance with the requirements therefor and filed
with the SEC, it shall be deemed to satisfy the requirements of this clause (ii)
for such annual period;

(iii)         each set of financial statements delivered to the Lessor and each
Assignee pursuant to clause (i) or (ii) above shall be accompanied by (A) a
certificate of a Senior Financial Officer to the effect that no Event of
Default, Potential Default or Triggering Event has occurred and is continuing
(or, if any Event of Default, Potential Default or Triggering Event has occurred
and is continuing, describing the same in reasonable detail and describing the
action that the Guarantor has taken and proposes to take with respect thereto),
and (B) a Compliance Certificate showing the Guarantor’s compliance with the
covenants set forth in Sections 3.1(i), 3.1(j) and 3.2(c) hereof;

 

 

 

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(iv)         as soon as possible and in any event within 5 days after the
occurrence of each Event of Default, Potential Default and Triggering Event,
continuing on the date of such statement, a statement of a Senior Financial
Officer setting forth details of such Event of Default, Potential Default or
Triggering Event and the action which the Guarantor has taken and proposes to
take with respect thereto;

(v)          promptly, and in any event within 5 days upon their becoming
available, one copy of (A) each financial statement, report, notice or proxy
statement sent by the Guarantor or any Subsidiary of the Guarantor to public
securities holders generally, (B) any current reports on Form 8-K or other
material reports the Guarantor files with the SEC pursuant to the Securities
Exchange Act of 1934, and (C) each regular, periodic or current report and each
registration statement (without exhibits except as expressly requested by the
Lessor or such Assignee and other than registration statements on Form S-8 or
any successor form), and each final prospectus and all amendments thereto filed
by the Guarantor or any Subsidiary of the Guarantor with the SEC;

(vi)         promptly and in any event within 10 days after the Guarantor or any
ERISA Affiliate knows or has reason to know that any ERISA Event has occurred, a
statement of a Senior Financial Officer describing such ERISA Event and the
action, if any, which the Guarantor or such ERISA Affiliate proposes to take
with respect thereto;

(vii)       promptly and in any event within 2 days after receipt thereof by the
Guarantor or any ERISA Affiliate, copies of each notice from the PBGC stating
its intention to terminate any Plan or to have a trustee appointed to administer
any Plan;

(viii)      promptly and in any event within 5 days after receipt thereof by the
Guarantor or any ERISA Affiliate from the sponsor of a Multiemployer Plan, a
copy of each notice received by the Guarantor or any ERISA Affiliate concerning
(A) the imposition of Withdrawal Liability by a Multiemployer Plan, (B) the
reorganization or termination, within the meaning of Title IV of ERISA, of any
Multiemployer Plan or (C) the amount of liability incurred, or which may be
incurred, by the Guarantor or any ERISA Affiliate in connection with any event
described in clause (A) or (B) above;

(ix)        promptly after the commencement thereof, notice of all actions,
suits and proceedings before any court or governmental department, commission,
board, bureau, agency or instrumentality, domestic or foreign, affecting the
Guarantor or any Material Subsidiary which may materially adversely affect the
financial condition, results of operations, operations, business, properties or
prospects of the Guarantor or any such Material Subsidiary or which purports to
affect the legality, validity, or enforceability of any Obligations, this
Guaranty or any Operative Document;

(x)          promptly after the Guarantor (i) receives a rating from S&P and
Moody’s with respect to its commercial paper or senior unsecured non-credit
enhanced long-term debt (each a “Rating”), or (ii) knows of any change in such
Rating by S&P or Moody’s, a notice of such Rating or such changed Rating, as the
case may be; and

 

 

 

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(xi)        such other information respecting the condition or operations,
financial or otherwise, of the Guarantor or any of its Subsidiaries as the
Lessor or any Assignee may from time to time reasonably request.

(i)           Consolidated Net Worth. At the end of each fiscal quarter maintain
Consolidated Net Worth in an amount of not less than the sum of (i)
$625,000,000, plus (ii) fifty percent (50%) of the aggregate Consolidated Net
Income, if positive, for the period beginning January 1, 2005 and ending on the
last day of such fiscal quarter.

(j)          Interest Expense Coverage Ratio. Maintain an Interest Expense
Coverage Ratio of not less than 2.50 to 1.00, as determined at the end of each
fiscal quarter.

(k)         Compliance with ERISA. Promptly pay and discharge, and cause each of
its Subsidiaries to promptly pay and discharge, all obligations and liabilities
arising under ERISA of a character which if unpaid or unperformed might result
in the imposition of a Lien against any of its properties or assets and will
promptly notify the Lessor and Assignee of (i) the occurrence of any reportable
event (as defined in ERISA) affecting a Plan, other than any such event of which
the PBGC has waived notice by regulation, (ii) receipt of any notice from PBGC
of its intention to seek termination of any Plan or appointment of a trustee
therefor, (iii) its or any of its Subsidiaries’ intention to terminate or
withdraw from any Plan, and (iv) the occurrence of any event affecting any Plan
which could result in the incurrence by the Guarantor or any of its Subsidiaries
of any material liability, fine or penalty, or any material increase in the
contingent liability of the Guarantor or any of its Subsidiaries under any
post-retirement Welfare Plan benefit.

3.2          Negative Covenants. So long as the Agreement for Lease or the Lease
is in effect or the Lessee owes any amount thereunder which is guaranteed by the
Guarantor, the Guarantor will not, without the written consent of the Lessor:

(a)          Liens. Create, incur, permit to exist or to be incurred, or permit
any of its Subsidiaries to, create, incur, permit to exist or to be incurred,
any Lien of any kind on any Property owned by the Guarantor or any Subsidiary of
the Guarantor; provided, however, that this Section 3.2(a) shall not apply to
nor operate to prevent:

(i)           Liens arising by operation of law in respect of Property of the
Guarantor or any of its Subsidiaries which are incurred in the ordinary course
of business and which do not in the aggregate materially detract from the value
of such Property or materially impair the use thereof in the operation of the
business of the Guarantor or any of its Subsidiaries;

(ii)          Liens securing (i) Non-Recourse Indebtedness of any Subsidiary of
the Guarantor or (ii) the obligations of a Project Finance Subsidiary under a
power purchase agreement, provided, that in the case of clause (i) above any
such Lien is limited to the Property being financed or refinanced by such
Indebtedness and the stock (or similar equity interest) of the Subsidiary which
incurred such Non-Recourse Indebtedness, and in the case of clause (ii) above
any such Lien is limited to the Property and the stock (or similar equity
interest) of such Project Finance Subsidiary;

(iii)        Liens for taxes or assessments or other government charges or
levies on the Guarantor or any Subsidiary of the Guarantor or their respective
Properties which are being

 

 

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contested in good faith by appropriate proceedings and for which reserves in
conformity with GAAP have been provided on the books of the Guarantor; provided,
that the aggregate amount of liabilities (including interest and penalties, if
any) of the Guarantor and its Subsidiaries secured by such Liens shall not
exceed $20,000,000 at any one time outstanding;

(iv)         Liens arising out of judgments or awards against the Guarantor or
any Subsidiary of the Guarantor, or in connection with surety or appeal bonds in
connection with bonding such judgments or awards, the time for appeal from which
or petition for rehearing of which shall not have expired or with respect to
which the Guarantor or such Subsidiary shall be prosecuting an appeal or
proceeding for review, and with respect to which it shall have obtained a stay
of execution pending such appeal or proceeding for review; provided, that the
aggregate amount of liabilities (including interest and penalties, if any) of
the Guarantor and its Subsidiaries secured by such Liens shall not exceed
$20,000,000 at any one time outstanding;

(v)          Survey exceptions or encumbrances, easements or reservations, or
rights of others for rights-of-way, utilities and other similar purposes, or
zoning or other restrictions as to the use of real properties which are
necessary for the conduct of the activities of the Guarantor and any Subsidiary
of the Guarantor or which customarily exist on properties of corporations
engaged in similar activities and similarly situated and which do not in any
event materially impair their use in the operation of the business of the
Guarantor or any Subsidiary of the Guarantor;

(vi)         Liens existing on the date hereof and listed on Schedule 7.9 to the
Guarantor 2005 Credit Agreement;

(vii)       Liens securing (A) Indebtedness evidencing the deferred purchase
price of newly acquired property or incurred to finance the acquisition of
personal property of the Guarantor or a Subsidiary of the Guarantor used in the
ordinary course of business of the Guarantor or a Subsidiary of the Guarantor,
(B) Capitalized Lease Obligations, and (C) the performance of tenders, statutory
obligations, bids, leases or other similar obligations (other than for borrowed
money) entered into in the ordinary course of business or to secure obligations
on performance bonds; provided, that such Liens shall only be permitted to the
extent the aggregate amount of Indebtedness and other obligations secured by all
such Liens does not exceed five percent (5%) of Consolidated Assets as reflected
on the most recent balance sheet delivered by the Guarantor pursuant to Section
3.1(h);

(viii)      Liens in favor of carriers, warehousemen, mechanics, materialmen and
landlords granted in the ordinary course of business for amounts not overdue or
being diligently contested in good faith by appropriate proceedings and for
which adequate reserves in accordance with GAAP shall have been set aside on its
books;

(ix)         Liens incurred or deposits made in the ordinary course of business
in connection with worker’s compensation, unemployment insurance or other forms
of governmental insurance or benefits;

(x)          Liens relating to synthetic lease arrangements of the Guarantor or
a Subsidiary of the Guarantor, provided that (A) such Lien is limited to the
Property being leased, and (B) to the extent the lessor or any other Person has
recourse to the Guarantor, any Subsidiary or any of their Property (other than
the Property being so leased), through a Guarantee (including a residual
guarantee) or otherwise, such Lien shall be permitted if the Guarantor has
included the recourse

 

 

-10-

 

 

 

portion of such obligations as Indebtedness for all purposes (including
financial covenant calculations) under the Operative Documents;

(xi)         Liens on assets of the Marketing Subsidiaries granted in the
ordinary course of business securing the reimbursement obligations of Marketing
Subsidiaries with respect to letters of credit and any working capital facility
of the Marketing Subsidiaries so long as the holder of such reimbursement
obligation or provider of such working capital facility has no recourse against
the Guarantor or a Consolidated Subsidiary of the Guarantor other than such
Marketing Subsidiary or any of their other assets (whether directly, through a
Guarantee or otherwise);

(xii)       Liens securing Indebtedness issued pursuant to (A) that certain
Restated and Amended Indenture of Mortgage and Deed of Trust dated as of
September 1, 1999, between BHP and The Chase Manhattan Bank, as trustee (and any
successor trustee thereunder), and (B) that certain Indenture of Mortgage and
Deed of Trust dated March 1, 1948, between Cheyenne and The United States
National Bank of Denver, as trustee (and any successor trustee thereunder),
together with all amendments and supplemental indentures thereto, and the
industrial revenue bonds issued in connection therewith; and

(xiii)      Any extension, renewal or replacement (or successive extensions,
renewals or replacements) in whole or in part of any Lien referred to in the
foregoing paragraphs (i) through (x), inclusive; provided, however, that the
principal amount of Indebtedness secured thereby shall not exceed the principal
amount of Indebtedness so secured at the time of such extension, renewal or
replacement, and that such extension, renewal or replacement shall be limited to
the Property which was subject to the Lien so extended, renewed or replaced.

provided, that the foregoing paragraphs shall not be deemed under any
circumstance to permit a Lien to exist on any capital stock or other equity
interests of the Material Subsidiaries.

(b)        Mergers, Consolidations and Sales of Assets. Will not, and will not
permit any of its Material Subsidiaries to, (i) consolidate with or be a party
to merger with any other Person or (ii) sell, lease or otherwise dispose of all
or a “substantial part” of the assets of the Guarantor and its Subsidiaries;
provided, however, that (w) the foregoing shall not prohibit any sale, lease,
transfer or disposition to which the Lessor and Assignee have consented, such
consent not to by unreasonably withheld if (A) such transaction does not result
in a downgrade of either the Guarantor’s S&P Rating or Moody’s Rating, (B) such
transaction is for cash consideration (or other consideration acceptable to the
Lessor and Assignee) in an amount not less than the fair market value of the
applicable assets, and (C) such transaction, when combined with all other such
transactions, would not have a Material Adverse Effect, taken as a whole, (x)
any Subsidiary of the Guarantor may merge or consolidate with or into or sell,
lease or otherwise convey all or a substantial part of its assets to the
Guarantor or any Subsidiary of which the Guarantor holds (directly or
indirectly) at least the same percentage equity ownership; provided, that in any
such merger or consolidation involving the Guarantor, the Guarantor shall be the
surviving or continuing corporation, (y) the Guarantor and its Subsidiaries may
sell inventory, reserves and electricity in the ordinary course of business, and
(z) the Guarantor may enter into a merger with, or acquisition of all of,
another Person so long as:

 

 

(1)

the Guarantor is the surviving entity,

 

 

 

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(2)

unless consented to by the Lessor and Assignee, no downgrade in the Guarantor’s
S&P Rating or Moody’s Rating would occur as a result of the consummation of such
a transaction,

 

 

(3)

if such transaction is an acquisition, the Board of Directors (or similar
governing body) of the Person being acquired has approved being so acquired,

 

 

(4)

no Potential Default or Event of Default would has occurred and is continuing at
the time of, or would occur as a result of, such transaction.

 

As used in this Section 3.2(b), a sale, lease, transfer or disposition of assets
during any fiscal year shall be deemed to be of a “substantial part” of the
consolidated assets of the Guarantor and its Subsidiaries if the net book value
of such assets, when added to the net book value of all other assets sold,
leased, transferred or disposed of the Guarantor and its Subsidiaries (excluding
the Marketing Subsidiaries) during such fiscal year (other than inventory,
reserves and electricity in the ordinary course of business) exceeds ten percent
(10%) of the total assets of the Guarantor and its Subsidiaries, determined on a
consolidated basis as of the last day of the immediately preceding fiscal year.

 

(c)         Recourse Leverage Ratio. Guarantor will not at the end of any fiscal
quarter permit the Recourse Leverage Ratio to exceed 0.65 to 1.00.

 

SECTION 4

REPRESENTATIONS & WARRANTIES

The Guarantor represents and warrants to the Lessor that:

4.1          Corporate Existence; Compliance with Law. The Guarantor (a) has
been duly incorporated and is validly existing as a corporation in good standing
under the laws of the State of South Dakota, (b) has full power, authority and
legal right to own and operate its properties or to lease the properties it
operates and to conduct its business as presently conducted and (c) is duly
qualified to do business as a foreign corporation in good standing in each
jurisdiction where its ownership or lease of properties or the conduct of its
business requires such qualification.

4.2          Corporate Power; Authorization; Enforceable Obligations. The
Guarantor has full power, authority and legal right to execute, deliver and
perform its obligations under this Guaranty and has taken all necessary
corporate action to authorize the execution, delivery and performance of this
Guaranty. No consent of any other Person (including, without limitation,
stockholders and creditors of the Guarantor), and no authorization of, notice
to, or other act by or in respect of the Guarantor by or with any governmental
authority, agency or instrumentality is required in connection with the
execution, delivery, performance, validity or enforceability of this Guaranty.
This Guaranty has been duly executed and delivered by the Guarantor and
constitutes a legal, valid and binding obligation of the Guarantor, enforceable
against the Guarantor in accordance with its terms.

 

 

 

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4.3          No Legal Bar. The execution, delivery and performance by the
Guarantor of this Guaranty will not violate any provision of any existing Law or
regulation applicable to the Guarantor, or of any award, order or decree
applicable to the Guarantor of any court, arbitrator or governmental authority,
or of the certificate of incorporation or bylaws of the Guarantor, or of any
security issued by the Guarantor, or of any mortgage, indenture, lease, contract
or other agreement or undertaking to which the Guarantor is a party or by which
the Guarantor or any of its properties or assets is bound, or will result in the
creation or imposition of any lien, charge, encumbrance or security interest on
any of the properties or assets of the Guarantor pursuant to the provisions of
any of the foregoing.

4.4          ERISA. The Guarantor and its Subsidiaries are not in violation of
the Employee Retirement Income Security Act of 1974, as amended, except to the
extent any such violation could not reasonably be expected to have a material
adverse effect on, (a) the business, assets, properties, revenues, financial
condition, operations or prospects of the Guarantor or (b) the ability of the
Guarantor to perform its obligations under this Guaranty in a timely manner. For
purposes of this paragraph, the term “Subsidiary” shall mean with respect to any
Person, any corporation, partnership, joint venture, or other entity of which
more than 50% of the outstanding capital stock or other ownership interest
(irrespective of whether or not at the time capital stock or other equity
interest of any other class or classes of such corporation, partnership, joint
venture, or other entity shall or might have voting power upon the happening of
any contingency) is at the time owned directly or indirectly by such Person.

4.5          Ownership of Lessee. All of the Lessee’s capital stock is owned
(directly or indirectly) beneficially and of record by the Guarantor.

4.6          Financial Statements. The financial statements contained in the
Guarantor’s Annual Report on Form 10-K for the year ended December 31, 2005
fairly present the financial position, results of operations and cash flows of
the Guarantor and its Subsidiaries as of the dates and for the periods indicated
therein and have been prepared in accordance with GAAP.

4.7          Changes. Since December 31, 2005, there has been no material
adverse change in the business, assets, properties, revenues, financial
condition, operations or prospects of the Guarantor and its Subsidiaries, taken
as a whole, nor any change which would materially impair the ability of the
Guarantor to perform its obligations under this Guaranty in a timely manner.

4.8          Litigation. There is no action, suit, proceeding or investigation
at law or in equity by or before any court, governmental body, agency,
commission or other tribunal now pending or threatened against or affecting the
Guarantor or any of its Subsidiaries or any Property or rights of any of them or
questioning the enforceability of this Guaranty, which, if adversely determined,
could reasonably be expected to have a material adverse effect on, (a) the
business, assets, properties, revenues, financial condition, operations or
prospects of the Guarantor, (b) the ability of the Guarantor to perform its
obligations under this Guaranty in a timely manner or (c) which purports to
affect the legality, validity or enforceability of this Guaranty or the
transactions contemplated hereby.

 

SECTION 5

 

 

 

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MISCELLANEOUS

5.1          Payments. Each payment by the Guarantor under this Guaranty shall
be made in immediately available funds to or on the order of the Lessor or the
collateral agent under any Financing Arrangement, as the case may be, in each
case without setoff or counterclaim; provided, that no such payment shall be
deemed a waiver of any rights the Guarantor may have against the Lessor or the
Lessee.

5.2          Financial Covenants. Certain financial covenants relating to
consolidated net worth, the recourse leverage ratio, and the interest coverage
ratio are set forth in the Guarantor 2005 Credit Agreement and may be included
from time to time in other Guarantor Credit Agreements, and corresponding
financial covenants are set forth in Section 3.1(i) (Consolidated Net Worth),
Section 3.2(c) (Recourse Leverage Ratio) and Section 3.1(j) (Interest Expense
Coverage Ratio) herein (together the “Financial Covenants”). The Guarantor
agrees to amend this Guaranty such that the Financial Covenants set forth in
this Guaranty shall be made to conform to comparable Financial Covenants which
are more stringent and which may be set forth in any such Guarantor Credit
Agreements from time to time. In no event shall the Financial Covenants
contained in this Guaranty be amended to conform to any such Financial Covenant
that is less stringent than the corresponding Financial Covenant as set forth in
this Guaranty. The Guarantor shall deliver to the Lessor and Assignee a
certificate of a Senior Financial Officer (i) within thirty (30) days after each
amendment, modification, restatement or deletion of any Financial Covenant,
specifying the effective date of such amendment, modification, restatement or
deletion, and the Financial Covenant in effect as a result thereof, and (ii)
within thirty (30) days after a replacement Guarantor Credit Agreement becomes
effective, specifying the effective date of such Guarantor Credit Agreement and
enclosing copies of the Financial Covenants in effect as a result thereof.
Furthermore, the Guarantor shall sign any instrument necessary to effect any
amendment to this Guaranty, if necessary pursuant to provisions set forth in
this Section 5.2.

5.3          Parties. This Guaranty shall inure to the benefit of the Lessor and
each Assignee and its and their respective successors, assigns or transferees,
and shall be binding upon the Guarantor and its successors and assigns. The
Guarantor may not delegate any of its duties under this Guaranty without the
prior written consent of the Lessor and the collateral agent under any Financing
Arrangement. Upon notice to the Guarantor, the Lessor and its successors,
assigns and transferees may assign its or their rights and benefits under this
Guaranty to (i) any financial institutions providing financing to the Lessor in
connection with the Agreement for Lease and the Lease or any collateral agent
for such financial institutions, and (ii) any purchaser or transferee of all or
a substantial portion of the rights and interests of the Lessor and its
successors, assigns or transferees in and to the Project.

5.4          Notices. All notices, offers, acceptances, approvals, waivers,
requests, demands and other communications hereunder shall be in writing, shall
be addressed as provided below and shall be considered as properly given (a) if
delivered in person, (b) if sent by express courier service (including Federal
Express, DHL, Airborne Express, and other similar express delivery services),
(c) in the event overnight delivery services are not readily available, if
mailed through the United States Postal Service, postage prepaid, registered or
certified with return receipt requested, or (d) if sent by telecopy and
confirmed; provided, that in the case of a notice by

 

 

-14-

 

 

 

telecopy, the sender shall in addition confirm such notice by writing sent in
the manner specified in clauses (a), (b) or (c) of this Section 5.4. All notices
shall be effective upon receipt by the addressee; provided, however, that if any
notice is tendered to an addressee and the delivery thereof is refused by such
addressee, such notice shall be effective upon such tender. For the purposes of
notice, the addresses of the parties shall be as set forth below; provided,
however, that any party shall have the right to change its address for notice
hereunder to any other location by giving written notice to the other party in
the manner set forth herein. The initial addresses of the parties hereto are as
follows:

If to the Lessor:

 

Wygen Funding, Limited Partnership

 

c/o ML Leasing Equipment Corp.

 

Four World Financial Center

New York, New York 10080

 

 

Attn:

Natalya Anbinder

 

Tel:

(212) 449-7113

 

 

Fax:

(212) 449-4246

 

 

With a copy to:

 

 

ML Leasing Equipment Corp.

 

Four World Financial Center

 

 

New York, New York 10080

 

 

Attn:

Robert Lyons

 

 

Fax:

(212) 671-4511

 

 

and to:

 

 

Calyon New York Branch

 

 

1301 Avenue of the Americas

 

New York, New York 10019

 

 

Attn:

Martin Livingston

 

 

Tel:

(212) 261-7891

 

 

Fax:

(212) 261-3421

 

 

 

If to the Guarantor:

 

Black Hills Corporation

 

625 Ninth Street

 

 

Rapid City, South Dakota 57709

 

 

Attn:

Garner M. Anderson

 

 

 

-15-

 

 

 

 

 

Vice President - Treasurer

 

Tel:

(605) 721-2311

 

 

Fax:

(605) 721-2597

 

5.5          Remedies. The Guarantor stipulates that the remedies at law in
respect of any default or threatened default by the Guarantor in the performance
of or compliance with any of the terms of this Guaranty are not and will not be
adequate, and that any of such terms may be specifically enforced by a decree
for specific performance or by an injunction against violation of any such terms
or otherwise.

5.6          Right to Deal with the Lessee. At any time and from time to time,
without terminating, affecting or impairing the validity of this Guaranty or the
obligations of the Guarantor hereunder, the Lessor or any Assignee may deal with
the Lessee in the same manner and as fully and as if this Guaranty did not exist
and shall be entitled, among other things, to grant the Lessee, without notice
or demand and without affecting the Guarantor’s liability hereunder, such
extension or extensions of time to perform, renew, compromise, accelerate or
otherwise change the time for payment of or otherwise change the terms of
payment or any part thereof contained in or arising under any Operative
Document, or to waive any Obligation of the Lessee to perform any act or acts as
the Lessor or any Assignee may deem advisable.

5.7          Subrogation. The Guarantor will not exercise any rights which it
may acquire by way of subrogation hereunder, by any payment made hereunder or
otherwise, until all of the Obligations have been indefeasibly paid in full in
cash and performed in full. If any amount shall be paid to the Guarantor on
account of such subrogation rights at any time when all of the Obligations shall
not have been paid in full in cash, such amount shall be held in trust for the
benefit of the Lessor and the collateral agent under any Financing Arrangement
and shall forthwith be paid as provided in Section 5.1 hereof to be credited and
applied upon the Obligations, whether matured or unmatured, in accordance with
the terms of the Operative Documents. If (a) the Guarantor shall make payment to
the Lessor or any successor, assignee or transferee of the Lessor of all or any
part of the Obligations and (b) all the Obligations shall be indefeasibly paid
in full in cash, the Lessor or any such successor, assignee or transferee of the
Lessor will, at the Guarantor’s request and expense, execute and deliver to the
Guarantor appropriate documents, without recourse as set forth in Section 30 of
the Lease, and without representation or warranty, necessary to evidence the
transfer by subrogation to the Guarantor of an interest in the Obligations
resulting from such payment by the Guarantor.

5.8          Survival of Representations, Warranties, etc. All representations,
warranties, covenants and agreements made herein and in statements or
certificates delivered pursuant hereto shall survive any investigation or
inspection made by or on behalf of the Lessor or any Assignee and shall continue
in full force and effect until all of the obligations of the Guarantor under
this Guaranty shall be fully performed in accordance with the terms hereof,
including without limitation the payment and performance in full of all
Obligations.

5.9          Third Party Beneficiaries. The Guarantor acknowledges and agrees
that each Indemnified Person (as defined in the Lease) shall be a third party
beneficiary of this Guaranty with respect to all indemnified amounts and all
other amounts that are owed by the Lessee to such party under the Operative
Documents.

 

 

 

-16-

 

 

 

 

5.10       Governing Law and Consent to Jurisdiction; Waiver of Jury Trial. THIS
GUARANTY HAS BEEN EXECUTED AND DELIVERED IN THE STATE OF NEW YORK. THE GUARANTOR
AND LESSOR AGREE THAT, TO THE MAXIMUM EXTENT PERMITTED BY THE LAWS OF THE STATE
OF NEW YORK, THIS GUARANTY, AND THE RIGHTS AND DUTIES OF THE GUARANTOR AND
LESSOR HEREUNDER, SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
LAWS OF THE STATE OF NEW YORK IN ALL RESPECTS, INCLUDING, WITHOUT LIMITATION, IN
RESPECT OF ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE. THE GUARANTOR
HEREBY IRREVOCABLY SUBMITS, FOR ITSELF AND ITS PROPERTIES, TO THE JURISDICTION
OF THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK AND
THE SUPREME COURT OF THE STATE OF NEW YORK IN THE COUNTY OF NEW YORK IN ANY
ACTION, SUIT OR PROCEEDING BROUGHT AGAINST IT AND RELATED TO OR IN CONNECTION
WITH THIS GUARANTY, AND TO THE EXTENT PERMITTED BY APPLICABLE LAW, THE GUARANTOR
HEREBY WAIVES AND AGREES NOT TO ASSERT BY WAY OF MOTION, AS A DEFENSE OR
OTHERWISE IN ANY SUCH SUIT, ACTION OR PROCEEDING, ANY CLAIM THAT IT IS NOT
PERSONALLY SUBJECT TO THE JURISDICTION OF SUCH COURT, THAT THE SUIT, ACTION OR
PROCEEDING IS BROUGHT IN AN INCONVENIENT FORUM, THAT THE VENUE OF THE SUIT,
ACTION OR PROCEEDING IS IMPROPER, OR THAT THIS GUARANTY OR THE SUBJECT MATTER
HEREOF MAY NOT BE LITIGATED IN OR BY SUCH COURT. THIS SUBMISSION TO JURISDICTION
IS NONEXCLUSIVE AND DOES NOT PRECLUDE LESSOR OR ANY ASSIGNEE FROM OBTAINING
JURISDICTION OVER THE GUARANTOR IN ANY COURT OTHERWISE HAVING JURISDICTION. TO
THE EXTENT PERMITTED BY APPLICABLE LAW, THE GUARANTOR AGREES NOT TO SEEK AND
HEREBY WAIVES THE RIGHT TO ANY REVIEW OF THE JUDGMENT OF ANY SUCH COURT BY ANY
COURT OF ANY OTHER NATION OR JURISDICTION WHICH MAY BE CALLED UPON TO GRANT AN
ENFORCEMENT OF SUCH JUDGMENT. THE GUARANTOR AGREES THAT SERVICE OF PROCESS MAY
BE MADE UPON IT BY CERTIFIED OR REGISTERED MAIL TO THE ADDRESS FOR NOTICES SET
FORTH IN THIS GUARANTY OR ANY METHOD AUTHORIZED BY THE LAWS OF NEW YORK. THE
GUARANTOR AND LESSOR EXPRESSLY WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY ACTION,
PROCEEDING OR COUNTERCLAIM RELATED TO THIS GUARANTY. THE GUARANTOR AND LESSOR
ACKNOWLEDGE THAT THE PROVISIONS OF THIS SECTION 5.10 HAVE BEEN BARGAINED FOR AND
THAT THEY HAVE BEEN REPRESENTED BY COUNSEL IN CONNECTION THEREWITH.

5.11       Severability. If any term of this Guaranty or any application thereof
shall be invalid or unenforceable, the remainder of this Guaranty and any other
application of such term shall not be affected thereby. Any term of this
Guaranty may be amended, modified, waived, discharged or terminated only by an
instrument in writing signed by the Guarantor and Lessor, and consented to by
the collateral agent under any Financing Arrangement.

5.12       Counterparts. This Guaranty may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.

 

 

 

-17-

 

 

 

 

5.13       No Merger. There shall be no merger of this Guaranty and the Lease by
reason of the fact that the same person, firm or entity is, directly or
indirectly, the Guarantor and a lessee under the Lease or acquires or holds the
leasehold estate created by the Lease or any part of such leasehold estate.

5.13       Amendment and Restatement. This Guaranty amends, restates and
supercedes in its entirety the Original Guaranty in all respects.

[Signature Page Follows]

 

 

 

-18-

 

 

 

 

IN WITNESS WHEREOF, the undersigned have caused this Guaranty to be executed and
delivered as of the day and year first above written.

BLACK HILLS CORPORATION,

as Guarantor

By:___________________________

Name:

Title:

Acknowledged and Agreed:

WYGEN FUNDING, LIMITED PARTNERSHIP

By:

Wygen Capital, Inc., its

General Partner

By: ____________________________

Name:

Title:

 

 

-19-

 

 

 

 

EXHIBIT A

DEFINED TERMS

“Affiliate” means, as to any Person, any other Person that, directly or
indirectly, controls, is controlled by or is under common control with such
Person or is a director or officer of such Person.

“Agreement for Lease” means the Agreement for Lease, dated as of July 20, 2001,
between the Lessor and the Lessee.

“Bankruptcy” means, with respect to any Person, a Voluntary Bankruptcy or an
Involuntary Bankruptcy. A “Voluntary Bankruptcy” means, with respect to any
Person, (i)(a) the inability of such Person generally to pay its debts as such
debts become due, (b) the failure of such Person generally to pay its debts as
such debts become due or (c) an admission in writing by such Person of its
inability to pay its debts generally or a general assignment by such Person for
the benefit of creditors; (ii) the filing of any petition or answer by such
Person seeking to adjudicate it a bankrupt or insolvent, or seeking for itself
any liquidation, winding up, reorganization, arrangement, adjustment,
protection, relief, or composition of such Person or its debts under any law
relating to bankruptcy, insolvency or reorganization or relief of debtors, or
seeking, consenting to, or acquiescing in the entry of an order for relief or
the appointment of a receiver, trustee, custodian or other similar official for
such Person or for any substantial part of its Property; or (iii) corporate
action taken by such Person to authorize any of the actions set forth above. An
“Involuntary Bankruptcy” means, with respect to any Person, without the consent
or acquiescence of such Person, the entering of an order for relief or approving
a petition for relief or reorganization or any other petition seeking any
reorganization, arrangement, composition, readjustment, liquidation, dissolution
or other similar relief under any present or future bankruptcy, insolvency, or
similar statute, law or regulation, or the filing of any such petition against
such Person which petition shall not be dismissed or stayed within sixty (60)
days, or, without the consent or acquiescence of such Person, the entering of an
order appointing a trustee, custodian, receiver or liquidator of such Person or
of all or any substantial part of the Property of such Person which order shall
not be dismissed or stayed within sixty (60) days.

“BHP” means Black Hills Power, Inc., a South Dakota corporation, and its
successors.

“Capital” means, as of any date of determination thereof, without duplication,
the sum of (A) Consolidated Net Worth plus (B) all Recourse Indebtedness
(provided that for purposes of clause (B) of this definition, to the extent
otherwise included, Indebtedness of Marketing Subsidiaries in an aggregate
amount not to exceed the Marketing Subsidiary Indebtedness Limit incurred under
Marketing Subsidiary Excluded Credit Facilities shall not be deemed to be
Recourse Indebtedness).

“Capital Lease” means at any date any lease of Property which, in accordance
with GAAP, would be required to be capitalized on the balance sheet of the
lessee.

“Capitalized Lease Obligations” means, for any Person, the amount of such
Person’s liabilities under Capital Leases determined at any date in accordance
with GAAP.

 

 

 

-1-

 

 

 

 

“Change of Control Event” means one or more of the following events:

(a)          less than a majority of the members of the Board of Directors of
the Guarantor shall be persons who either (i) were serving as directors on the
date hereof or (ii) were nominated as directors and approved by the vote of the
majority of the directors who are directors referred to in clause (i) above or
this clause (ii); or

(b)          the stockholders of the Guarantor shall approve any plan or
proposal for the liquidation or dissolution of the Guarantor; or

(c)          a Person or group of Persons acting in concert (other than the
direct or indirect beneficial owners of the Voting Stock of the Guarantor as of
the date hereof) shall, as a result of a tender or exchange offer, open market
purchases, privately negotiated purchases or otherwise, have become the direct
or indirect beneficial owner (within the meaning of Rule 13d-3 under the
Securities Exchange Act of 1934, as amended from time to time) of Voting Stock
of the Guarantor representing more than ten percent (10%) of the combined voting
power of the outstanding Voting Stock or other ownership interests for the
election of directors or shall have the right to elect a majority of the Board
of Directors of the Guarantor; or

(d)          Except as permitted by Section 3.2(b), the Guarantor ceases at any
time to own one hundred percent (100%) of the Voting Stock and other equity
interest of any Material Subsidiary.

“Cheyenne” means Cheyenne Light, Fuel & Power Company, a Wyoming corporation,
and its successors.

“Compliance Certificate” means a certificate in the form of Exhibit B hereto.

“Consolidated Assets” means all assets which should be listed on the
consolidated balance sheet of the Guarantor and its Consolidated Subsidiaries,
as determined on a consolidated basis in accordance with GAAP.

“Consolidated EBITDA” means, for any period, for the Guarantor and its
Consolidated Subsidiaries on a consolidated basis, (A) the sum of the amounts
for such period of (i) Consolidated Net Income, (ii) to the extent deducted in
arriving at Consolidated Net Income, net federal, state and local income taxes
in respect of such period, (iii) to the extent deducted in arriving at
Consolidated Net Income, Consolidated Interest Expense, (iv) to the extent
deducted in arriving at Consolidated Net Income, the amount charged for the
amortization of intangible assets, (v) to the extent deducted in arriving at
Consolidated Net Income, the amount charged for the depreciation and depletion
of assets, and (vi) to the extent deducted in arriving at Consolidated Net
Income, losses on sales of assets (excluding sales in the ordinary course of
business) and other extraordinary losses, less (B) the amount for such period of
(i) to the extent added in arriving at Consolidated Net Income, interest income
arising from traditional investment activities with banks, investment banks and
other financial institutions or relating to governmental or other marketable
securities and (ii) to the extent added in arriving at Consolidated Net Income,
gains on sales of assets (excluding sales in the ordinary course of business)
and other extraordinary gains, all as determined on a consolidated basis in
accordance with GAAP.

 

 

 

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“Consolidated Net Income” means, for any period of the Guarantor and its
Consolidated Subsidiaries, the amount for such period of consolidated net income
(or net loss) of the Guarantor and its Consolidated Subsidiaries, as determined
on a consolidated basis in accordance with GAAP.

“Consolidated Net Worth” means, as of any time the same is to be determined, the
total shareholders’ equity (including capital stock, additional paid-in-capital
and retained earnings after deducting treasury stock, but excluding (to the
extent otherwise included in calculating shareholders’ equity), minority
interests in Subsidiaries) which would appear on the consolidated balance sheet
of the Guarantor determined on a consolidated basis in accordance with GAAP.

“Consolidated Subsidiary” means, as to any Person, each subsidiary of such
Person (whether now existing or hereafter created or acquired) the financial
statements of which shall be (or should have been) consolidated, with the
financial statements of such Person in accordance with GAAP, including
principles of consolidation.

“Consolidated Interest Expense” means, with reference to any period of the
Guarantor and its Subsidiaries, the sum of (i) all interest charges (including
capitalized interest, imputed interest charges with respect to Capitalized Lease
Obligations and all amortization of debt discount and expense and other deferred
financing charges) of the Guarantor and its subsidiaries on a consolidated basis
for such period determined in accordance with GAAP, (ii) all commitment or other
fees payable in respect of the issuance of standby letters of credit or other
credit facilities for the account of the Guarantor or its Subsidiaries, and
(iii) net costs/expenses incurred by the Guarantor and its Subsidiaries under
interest rate derivative arrangements.

“Covenant Obligations” means, all obligations, covenants, and undertakings of
the Lessee contained in or arising under the Operative Documents, other than
Payment Obligations.

“Credit Agreement” means the Amended and Restated Credit Agreement, dated as of
the date hereof, entered into among the Lessor, the lenders parties thereto, the
liquidity purchasers parties thereto and Calyon New York Branch (formerly known
as Credit Lyonnais New York Branch), as Administrative Agent, as the same may be
amended, restated, modified or supplemented from time to time.

“Derivative Arrangement” means any agreement (including any master agreement and
any agreement, whether or not in writing, relating to any single transaction)
that is an interest rate swap agreement, basis swap, forward rate agreement,
commodity swap, commodity option, equity or equity index swap or option, bond
option, interest rate option, forward foreign exchange agreement, rate cap,
collar or floor agreement, future agreement, currency swap agreement,
cross-currency rate swap agreement, swaption, currency option, that relates to
fluctuations in raw material prices or utility or energy prices or other costs,
or any other similar agreement, including any option to enter into any of the
foregoing, or any combination of any of the foregoing. “Derivative Arrangements”
shall include all such agreements or arrangements made or entered into at any
time, or in effect at any time, whether or not related to a Loan or L/C
Obligations (as such terms are defined in the Guarantor 2005 Credit Agreement).

“Derivative Obligations” means, with respect to any Person, all liabilities of
such Person under any Derivative Arrangement (including but not limited to
obligations and liabilities arising in connection with or as a result of early
or premature termination of a Derivative Arrangement,

 

 

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whether or not occurring as a result of a default thereunder), absolute or
contingent, now or hereafter existing or incurred or due or to become due.

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended.

“ERISA Affiliate” means any Person who, for purposes of Title IV of ERISA, is a
member of the Guarantor’s controlled group, or under common control with the
Guarantor, within the meaning of Section 414 of the Code and the regulations
promulgated and rulings issued thereunder.

“ERISA Event” means (i) a reportable event, within the meaning of Section 4043
of ERISA, unless the 30-day notice requirement with respect thereto has been
waived by the PBGC, (ii) the provision by the administrator of any Plan of a
notice of intent to terminate such Plan, pursuant to Section 4041(a)(2) of ERISA
(including any such notice with respect to a plan amendment referred to in
Section 4041(e) of ERISA), (iii) the cessation of operations at a facility in
the circumstances described in Section 4068(f) of ERISA; (iv) the withdrawal by
the Guarantor or an ERISA Affiliate from a Multiple Employer Plan during a plan
year for which it was a substantial employer, as defined in Section 4001(a)(2)
of ERISA, (v) the failure by the Guarantor or any ERISA Affiliate to make a
payment to a Plan required under Section 302(f)(1) of ERISA, which Section
imposes a lien for failure to make required payments; (vi) the adoption of an
amendment to a Plan requiring the provision of security to such Plan, pursuant
to Section 307 of ERISA; or (vii) the institution by the PBGC of proceedings to
terminate a Plan, pursuant to Section 4042 of ERISA, or the occurrence of any
event or condition which might constitute grounds under Section 4042 of ERISA
for the termination of, or the appointment of a trustee to administer, a Plan.

“Event of Default” means any of the following events shall occur and be
continuing:

(a)          the Guarantor shall fail to pay any amount due under this Guaranty
when the same becomes due and payable; or

(b)          any representation or warranty made by the Guarantor in this
Guaranty or by the Guarantor (or any of its officers) in connection with this
Guaranty or any Financing Arrangement shall prove to have been incorrect in any
material respect when made; or

(c)         the Guarantor shall fail to perform or observe (i) any term,
covenant or agreement contained in Section 3.2 hereof, or (ii) any other term,
covenant or agreement contained in this Guaranty on its part to be performed or
observed if the failure to perform or observe such other term, covenant or
agreement shall remain unremedied for (30) thirty days after written notice
thereof shall have been given to the Guarantor by the Lessor or any Assignee; or

(d)         the Lessee, the Guarantor or any of its Material Subsidiaries shall
fail to pay any principal of or premium or interest on any Indebtedness which is
outstanding in a principal amount of at least $20,000,000 in the aggregate of
the Lessee, the Guarantor or any such Material Subsidiary (as the case may be),
when the same becomes due and payable (whether by scheduled maturity, required
prepayment, acceleration, demand or otherwise), and such failure shall continue
after the applicable grace period, if any,

 

 

-4-

 

 

 

specified in the agreement or instrument relating to such Indebtedness; or any
other event shall occur or condition shall exist under any agreement or
instrument relating to any such Indebtedness and shall continue after the
applicable grace period, if any, specified in such agreement or instrument, if
the effect of such event or condition is to accelerate, or to permit the
acceleration of, the scheduled maturity of such Indebtedness; or any such
Indebtedness shall be declared to be due and payable, or required to be prepaid
(other than by a regularly scheduled required prepayment), prior to the stated
maturity thereof; or

(e)         the entry of a decree or order for relief in respect of the Lessee
or the Guarantor by a court having jurisdiction in the premises or the
appointment of a receiver, liquidator, assignee, custodian, trustee,
sequestrator (or similar official) of the Lessee or the Guarantor or of any
substantial part of the Lessee’s or the Guarantor’s Property, or ordering the
winding up or liquidation of the Lessee’s or the Guarantor’s affairs, in an
involuntary case under the Federal bankruptcy laws, as now or hereafter
constituted, or any other applicable Federal or state bankruptcy, insolvency or
other similar law, and such decree or order remains unstayed and in effect for
sixty (60) consecutive days; or the commencement against the Lessee or the
Guarantor of an involuntary case under the Federal bankruptcy laws, as now or
hereafter constituted, or any other applicable Federal or state bankruptcy,
insolvency or other similar law, and the continuance of any such case unstayed
and in effect for a period of sixty (60) consecutive days; or

(f)           the suspension or discontinuance of the Lessee’s or the
Guarantor’s business operations, or the Lessee’s or the Guarantor’s insolvency
(however evidenced), or the Lessee’s or the Guarantor’s admission of insolvency
or bankruptcy, or the commencement by the Lessee or the Guarantor of a voluntary
case under the Federal bankruptcy laws, as now or hereafter constituted, or any
other applicable Federal or state bankruptcy, insolvency or other similar law,
or the consent by the Lessee or the Guarantor to the appointment of or taking
possession by a receiver, liquidator, assignee, custodian, trustee, sequestrator
(or other similar official) of the Lessee or the Guarantor or of any substantial
part of the Lessee’s or the Guarantor’s Property, or the making by the Lessee or
the Guarantor of an assignment for the benefit of creditors, or the failure of
the Lessee or the Guarantor generally to pay its debts as such debts become due,
or the taking of corporate action by the Lessee or the Guarantor in furtherance
of any such action; or

(g)         any final judgment or judgments for the payment of money in excess
of $20,000,000 in the aggregate shall be rendered against the Lessee, the
Guarantor or any of its Material Subsidiaries by any court of competent
jurisdiction and the same shall remain undischarged for a period of thirty (30)
days during which execution of such judgment or judgments shall not be
effectively stayed; or

(h)         any ERISA event shall have occurred with respect to a Plan and,
thirty (30) days after notice thereof shall have been given to the Guarantor by
the Lessor or any Assignee, (i) such ERISA Event shall still exist and (ii) the
sum (determined as of the date of occurrence of such ERISA Event) of the
Insufficiency of such Plan and the Insufficiency of any and all other Plans with
respect to which an ERISA Event shall have occurred and then lost (or, in the
case of a Plan with respect to which an ERISA Event

 

 

-5-

 

 

 

described in clauses (iii) through (vi) of the definition of ERISA Event shall
have occurred and then exist, the liability related thereto) is equal to or
greater than $20,000,000; or

(i)          the Guarantor or any ERISA Affiliate shall have been notified by
the sponsor of a Multiemployer Plan that it has incurred Withdrawal Liability to
such Multiemployer Plan in an amount which, when aggregated with all other
amounts required to be paid to Multiemployer Plans by the Guarantor and its
ERISA Affiliates as Withdrawal Liability (determined as of the date of such
notification), exceeds $20,000,000 or requires payments exceeding $20,000,000
per annum; or

(j)          the Guarantor or any ERISA Affiliate shall have been notified by
the sponsor of a Multiemployer Plan that such Multiemployer Plan is in
reorganization or is being terminated, within the meaning of Title IV of ERISA,
if as a result of such reorganization or termination the aggregate annual
contributions of the Guarantor and its ERISA Affiliates to all Multiemployer
Plans which are then in reorganization or being terminated have been or will be
increased over the amounts contributed to such Multiemployer Plans for the
respective plan year of each such Multiemployer Plan immediately preceding the
plan year in which the reorganization or termination occurs by an amount
exceeding $20,000,000, or

(k)         the Guarantor or any ERISA Affiliate shall have committed a failure
described in Section 302(f)(1) of ERISA and the amount determined under Section
302(f)(3) of ERISA is equal to or greater than $20,000,000; or

 

(l)

a Change of Control Event shall have occurred.

“Financial Statements” means the financial statements accompanying the
Guarantor’s Annual Report on Form 10-K or the Guarantor’s Quarterly Reports on
Form 10-Q filed from time to time with the SEC pursuant to the Securities
Exchange Act of 1934.

“GAAP” means generally accepted accounting principles as in effect in the United
States from time to time, applied by the Guarantor and its Subsidiaries on a
basis consistent with the preparation of the Guarantor’s financial statements
furnished to the Lessor as described in Section 4.6 hereof.

“Guarantee” means, in respect of any Person, any obligation, contingent or
otherwise, of such Person directly or indirectly guaranteeing any Indebtedness
or other obligations of another Person, including, without limitation, by means
of an agreement to purchase or pay (or advance or supply funds for the purchase
or payment of) such Indebtedness or to maintain financial covenants, or to
assure the payment of such Indebtedness by an agreement to make payments in
respect of goods or services regardless of whether delivered, or otherwise,
provided, that the term “Guarantee” shall not include endorsements for deposit
or collection in the ordinary course of business; and such term when used as a
verb shall have a correlative meaning.

“Guarantor Credit Agreement” means the Guarantor 2005 Credit Agreement and any
other credit agreement pertaining to Indebtedness entered into by the Guarantor,
including any such credit agreement to replace or refinance the Indebtedness
under the Guarantor 2005 Credit Agreement.

 

 

 

-6-

 

 

 

 

“Guarantor 2005 Credit Agreement” means the Credit Agreement, dated as of May 5,
2005, among the Guarantor, the financial institutions from time to time party
thereto, U.S. Bank, National Association and Union Bank of California, N.A., as
co-syndication agents, Bank of America, N.A. and Bank of Montreal dba Harris
Nesbitt, as co-documentation agents, and ABN AMRO Bank N.V., as administrative
agent, as the same may be amended, restated, modified, supplemented or replaced
from time to time.

“Immaterial Subsidiary” shall mean, any direct or indirect subsidiary of the
Guarantor (i) whose total assets (as determined in accordance with GAAP) do not
represent at least five percent (5%) of the total assets (as determined in
accordance with GAAP) of the Guarantor and its subsidiaries on a consolidated
basis or (ii) whose total revenues (as determined in accordance with GAAP) do
not represent at least five percent (5%) of the total revenues (as determined in
accordance with GAAP) of the Guarantor and its subsidiaries on a consolidated
basis, provided that no subsidiary shall be deemed an Immaterial Subsidiary to
the extent (a) the total assets of such subsidiary, when combined with the total
assets of other subsidiaries which are Immaterial Subsidiaries, represent at
least ten percent (10%) of the total assets (as determined in accordance with
GAAP) of the Guarantor and its subsidiaries on a consolidated basis or (ii) the
total revenues of such subsidiary, when combined with the total revenues of
other Immaterial Subsidiaries, (as determined in accordance with GAAP) represent
at least ten percent (10%) of the total revenues (as determined in accordance
with GAAP) of the Guarantor and its subsidiaries on a consolidated basis. As
used in this definition “subsidiary” shall mean any Person whose financial
statements are consolidated into the financial statements of the Guarantor in
accordance with GAAP.

“Indebtedness” means, as to any Person, without duplication: (i) all obligations
of such Person for borrowed money or evidenced by bonds, debentures, notes or
similar instruments; (ii) all obligations of such Person for the deferred
purchase price of property or services (other than in respect of trade accounts
payable arising in the ordinary course of business which are not past-due);
(iii) all Capitalized Lease Obligations of such Person; (iv) all Indebtedness of
others secured by a Lien on any properties, assets or revenues of such Person
(other than stock, partnership interests or other equity interests of the
Guarantor or any Subsidiary of the Guarantor in other entities) to the extent of
the lesser of the value of the property subject to such Lien or the amount of
such Indebtedness; (v) all Guarantees issued by such Person, provided that
Long-Term Guarantees shall not be deemed “Indebtedness” for purposes of
calculating the Guarantor’s compliance with the financial covenants set forth
herein; (vi) all obligations of such Person, contingent or otherwise, in respect
of any letters or credit (whether commercial or standby) or bankers’
acceptances, (vii) all Derivative Obligations of such Person (but excluding
Derivative Obligations of Marketing Subsidiaries), provided that for purposes of
determining the Guarantor’s compliance with the financial covenants set forth
herein, only the Guarantor’s Derivative Obligations under Derivative
Arrangements which must be marked-to-market in accordance with GAAP shall be
included as Indebtedness of the Guarantor, and (viii) all obligations of such
Person under synthetic (and similar type) lease arrangements, provided that for
purposes of calculating such Person’s Indebtedness under such synthetic (or
similar type) lease arrangements, such lease arrangement shall be treated as if
it were a Capital Lease.

 

“Insufficiency” means, with respect to any Plan, the amount, if any, of its
unfunded benefit liabilities, as defined in Section 4001(a)(18) of ERISA.

 

 

 

-7-

 

 

 

 

“Interest Expense Coverage Ratio” means, for any period of four consecutive
quarters of the Guarantor ending with the most recently completed such fiscal
quarter, the ratio of (A) Consolidated EBITDA to (B) Consolidated Interest
Expense for such period.

“Law” shall mean any law (including, without limitation, any environmental Law),
treaty, directive, statute, rule, regulation, ordinance, order, directive, code,
interpretation, judgment, decree, injunction, writ, determination, award,
permit, license, authorization, direction, requirement or decision of or
agreement with or by any governmental or governmental department, commission,
board, court, authority, agency, official or officer having jurisdiction of the
matter in question.

“Lease” means the Lease Agreement, dated as of July 20, 2001, between Wygen
Funding, Limited Partnership, as Lessor, and Black Hills Wyoming, Inc. (f/k/a
Black Hills Generation, Inc.), as Lessee, as the same may be amended, restated,
modified or supplemented from time to time.

“Lessee” means Black Hills Wyoming, Inc. (f/k/a Black Hills Generation, Inc.),
both in its capacity as Lessee under the Lease and in its capacity as Agent
under the Agreement for Lease, and its successors and assigns.

“Lien” means any interest in Property securing an obligation owed to, or a claim
by, a Person other than the owner of the Property, whether such interest is
based on the common law, statute or contract, including, but not limited to, the
security interest or lien arising from a mortgage, encumbrance, pledge,
conditional sale, security agreement or trust receipt, or a lease, consignment
or bailment for security purposes. For the purposes of this definition, a Person
shall be deemed to be the owner of any Property which it has acquired or holds
subject to a conditional sale agreement, Capital Lease or other arrangement
pursuant to which title to the Property has been retained by or vested in some
other Person for security purposes, and such retention of title shall constitute
a “Lien.”

“Long-Term Guarantee” means (i) any Guarantee issued by the Guarantor or its
Subsidiaries under which the holder or beneficiary of such Guarantee is not
permitted under any circumstance or contingency to make demand or exercise any
other remedies under such Guarantee prior to the termination of the Guarantor
2005 Credit Agreement, as extended from time to time in accordance with the
terms thereof and (ii) any coal mining reclamation bonds or contingent indemnity
or reimbursement obligations with respect to such reclamation bonds (so long as
such reclamation bonds have not been called upon).

“Marketing Subsidiary” means each of Black Hills Energy Resources, Inc., a South
Dakota corporation, and Enserco Energy, Inc., a South Dakota corporation, and
their respective subsidiaries.

 

“Marketing Subsidiary Excluded Credit Facilities” means those certain credit
facilities of the Marketing Subsidiaries described on Schedule I hereto, as such
credit facilities are in effect on the date hereof, or as any such credit
facility may be amended, restated or otherwise modified on terms and conditions
and pursuant to documentation to accommodate an increase in the borrowings
thereunder from $200,000,000 to $260,000,000, provided that such credit
facilities shall cease to be Marketing Subsidiary Excluded Credit Facilities to
the extent availability is otherwise increased, any substantive term thereof is
materially modified, or such credit facility is

 

 

-8-

 

 

 

extended more than once in any fiscal year for a period of more than one year.
Any replacement credit facility of a Marketing Subsidiary Excluded Credit
Facility shall be deemed a Marketing Subsidiary Excluded Credit Facility only if
such replacement credit facility contains terms substantially the same as the
Marketing Subsidiary Excluded Credit Facility being replaced (including tenor
but excluding the increase in borrowings otherwise permitted above) or is
approved in writing by the Lessor and Assignee.

 

“Marketing Subsidiary Indebtedness Limit” means the sum of (i) the aggregate
amount of credit availability (used or unused) under Marketing Subsidiary
Excluded Credit Facilities as of the date hereof and (ii) $25,000,000.

 

“Material Adverse Effect” means a material adverse effect on (i) the business,
financial position or results of operations of the Guarantor or the Guarantor
and its Subsidiaries taken as a whole, (ii) the ability of the Guarantor to
perform its material obligations under this Guaranty or any other Operative
Document, (iii) the validity or enforceability of the material obligations of
the Guarantor under this Guaranty or any other Operative Document, (iv) the
rights and remedies of the Lessor or any Assignee against the Guarantor; or (v)
the timely payment of any amounts payable by the Guarantor hereunder.

“Material Subsidiaries” means BHP, Black Hills Energy, Inc., Wyodak Resources
Development Corp., Black Hills Generation, Inc., Cheyenne, and any other
Subsidiary of the Guarantor which is not either an Immaterial Subsidiary or a
Project Finance Subsidiary.

 

“Moody’s” means Moody’s Investors Service, Inc.

“Moody’s Rating” means the rating assigned by Moody’s and any successor thereto
that is a nationally recognized rating agency to the outstanding senior
unsecured non-credit enhanced long-term indebtedness of a Person (or if neither
Moody’s nor any such successor shall be in the business of rating long-term
indebtedness, a nationally recognized rating agency in the United States of
America as mutually agreed among the Lessor, the Assignee and the Guarantor).
Any reference in this Guaranty to any specific rating is a reference to such
rating as currently defined by Moody’s (or such a successor) and shall be deemed
to refer to the equivalent rating if such rating system changes.

“Multiemployer Plan” means a multiemployer plan, as defined in Section
4001(a)(3) of ERISA, to which the Guarantor or any ERISA Affiliate is making or
accruing an obligation to make contributions, or has within any of the preceding
five plan years made or accrued an obligation to make contributions, such plan
being maintained pursuant to one or more collective bargaining agreements.

“Multiple Employer Plan” means a single employer plan, as defined in Section
4001(a)(15) of ERISA, which (i) is maintained for employees of the Guarantor or
an ERISA Affiliate and at least one Person other than the Guarantor and its
ERISA Affiliates, or (ii) was so maintained and in respect of which the
Guarantor or an ERISA Affiliate could have liability under Section 4064 or 4069
of ERISA in the event such plan has been or were to be terminated.

“Non-Recourse Indebtedness” means, without duplication, all Indebtedness of the
Guarantor and its Consolidated Subsidiaries determined on a consolidated basis
in accordance

 

 

-9-

 

 

 

with GAAP incurred in connection with project financings (including project
financings of existing assets) as to which the holder of such Indebtedness has
recourse solely against the assets of the Project Finance Subsidiary that incurs
such Indebtedness and not against the Guarantor or a Consolidated Subsidiary of
the Guarantor other than a Project Finance Subsidiary or any of their other
assets (whether directly, through a Guarantee or otherwise), other than the
pledge of the stock (or similar equity interest) of the Project Finance
Subsidiary which incurred such Indebtedness. For purposes of clarification, any
Indebtedness of a Project Finance Subsidiary which would otherwise constitute
Non-Recourse Indebtedness but for the issuance by the Guarantor or a
Consolidated Subsidiary of the Guarantor of a Guarantee or other document which
provides recourse with respect to such Indebtedness, such Indebtedness shall for
all purposes of this Guaranty be deemed Non-Recourse Indebtedness so long as (i)
the Guarantor’s or such Consolidated Subsidiary’s obligations under such
Guarantee or other document are treated for all purposes as Recourse
Indebtedness hereunder, (ii) such Recourse Indebtedness of the Guarantor or such
Consolidated Subsidiary is unsecured and is otherwise permitted by this
Guaranty, and (iii) such Recourse Indebtedness of the Guarantor or such
Consolidated Subsidiary does not in the aggregate exceed $100,000,000 at any one
time outstanding.

 

“Obligations” means Payment Obligations and Covenant Obligations, individually
and collectively.

“Operative Documents” means this Guaranty, the Lease, the Agreement for Lease,
the Ground Lease (as defined in the Lease), the Pledge Agreement, the Management
Agreement, the Credit Agreement, the Security Documents and the Notes (each as
defined in the Credit Agreement), the Shortfall Agreement (as defined in the
Credit Agreement), the Fee Agreement, the Hannover LAPA and the Securities
Collateral Account Agreement (each as defined in the Credit Agreement).

“Payment Obligations” means all rent, obligations, liabilities, indebtedness and
other amounts of every kind arising out of the Operative Documents and payable
by the Lessee, all amounts payable or reimbursable in respect to indemnities
provided for in the Operative Documents in respect of a failure or refusal by
the Lessee to make any such payment or reimbursement, howsoever created, arising
or evidenced, voluntary or involuntary, whether direct or indirect, absolute or
contingent, now or hereafter existing or owing to the Lessor.

“PBGC” means the Pension Benefit Guaranty Corporation or successor.

“Person” means an individual, partnership, corporation (including a business
trust), joint stock company, trust, limited liability company, unincorporated
association, joint venture or other entity, or a government or any political
subdivision or agency thereof.

“Permitted Liens” means, (a) Liens for taxes, assessments or governmental
charges or levies to the extent not past due; (b) Liens imposed by law, such as
materialmen’s, mechanics’, carriers’, workmen’s and repairmen’s liens and other
similar Liens arising in the ordinary course of business securing obligations
which are not overdue or which adequate reserves therefor, if any, shall have
been established as required by GAAP and are being contested in good faith; (c)
pledges or deposits to secure obligations under workmen’s compensation laws or
similar legislation or to secure public or statutory obligations of the
Guarantor or any Subsidiary of the Guarantor; (d) purchase money Liens upon or
in Property hereafter acquired by the Guarantor in

 

 

-10-

 

 

 

the ordinary course of business (consistent with present practices) to secure
the purchase price of such Property or to secure Indebtedness incurred solely
for the purpose of financing the acquisition, construction or improvement of any
such Property to be subject to such Liens, or Liens existing on any such
Property at the time of acquisition, or extensions, renewals or replacements of
any of the foregoing; (e) attachment, judgment or other similar Liens arising in
connection with court proceedings, provided that the execution or other
enforcement of such Liens is effectively stayed, the claims secured thereby are
being actively contested in good faith by appropriate proceedings and the
payment of which is covered in full (subject to customary deductible amounts) by
insurance maintained with responsible insurance companies; (f) Liens securing
Non-Recourse Indebtedness of the Guarantor; and (g) Liens existing on the date
hereof and listed on Schedule 7.9 to the Guarantor 2005 Credit Agreement.

“Plan” means a Multiemployer Plan or a Multiple Employer Plan.

“Pledge Agreement” means the pledge agreement, dated as of July 20, 2001, by and
between the Lessee, as pledgor, and Lessor, as pledgee, as the same may be
amended, restated, modified, or supplemented from time to time in accordance
with the terms thereof.

“Potential Default” means any event that, with the giving of notice, lapse of
time or both would constitute an Event of Default.

“Project Finance Subsidiary” means any Subsidiary of the Guarantor as to which
the creditors and other holders of Indebtedness of such Subsidiary have recourse
solely against the assets of such Subsidiary and not against the Guarantor or
any other Subsidiary of the Guarantor or any of their other assets (whether
directly, through a Guarantee or otherwise) other than (i) pursuant to a
Guarantee permitted under the Guarantor 2005 Credit Agreement and (ii) the stock
of such special purpose Subsidiary (or similar equity interest).

“Property” means any interest in any kind of property or asset, whether real,
personal or mixed, or tangible or intangible.

“Recourse Indebtedness” means, without duplication, all Indebtedness of the
Guarantor and its Consolidated Subsidiaries determined on a consolidated basis
in accordance with GAAP other than Non-Recourse Indebtedness.

“Recourse Leverage Ratio” means, as of any time the same is to be determined,
the ratio of the amount of (A) Recourse Indebtedness outstanding at such time
(provided that for purposes of clause (A) of this definition, to the extent
otherwise included, Indebtedness of Marketing Subsidiaries in an aggregate
amount not to exceed the Marketing Subsidiary Indebtedness Limit incurred under
Marketing Subsidiary Excluded Credit Facilities shall not be deemed to be
Recourse Indebtedness) to (B) the amount of Capital at such time.

“S&P” means Standard & Poor’s Ratings Group, a division of The McGraw-Hill
Companies, Inc.

 

“S&P Rating” means the rating assigned by S&P and any successor thereto that is
a nationally recognized rating agency to the outstanding senior unsecured
non-credit enhanced long-term indebtedness of a Person (or, if neither such
division nor any successor shall be in the business of rating long-term
indebtedness, a nationally recognized rating agency in the United

 

 

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States as mutually agreed among the Lessor, the Assignee and the Guarantor). Any
reference in this Guaranty to any specific rating is a reference to such rating
as currently defined by S&P’s (or such a successor) and shall be deemed to refer
to the equivalent rating if such rating system changes.

“SEC” means the Securities and Exchange Commission.

“Senior Financial Officer” means the Chief Financial Officer, Treasurer or
Controller of the Guarantor.

“Single Employer Plan” means a single employer plan, as defined in Section
4001(a)(15) of ERISA, which (i) is maintained for employees of the Guarantor or
an ERISA Affiliate and no Person other than the Guarantor and its ERISA
Affiliate, or (ii) was so maintained and in respect of which the Guarantor or an
ERISA Affiliate could have liability under Section 4069 of ERISA in the event
such plan has been or were to be terminated.

“Subsidiary” means, with respect to the Guarantor, any corporation or other
entity (i) which is consolidated into the financial statements of such Guarantor
in accordance with GAAP or (ii) of which more than fifty (50%) of the
outstanding stock or comparable equity interests having ordinary voting power
for the election of the Board of Directors of such corporation or similar
governing body in the case of a non-corporation (irrespective of whether or not,
at the time, stock or other equity interests of any other class or classes of
such corporation or other entity shall have or might have voting power by reason
of the happening of any contingency) is at the time directly or indirectly owned
by such Guarantor or by one or more of its Subsidiaries.

“Triggering Event” means the Guarantor’s S&P Rating ceases to be at least BBB-
or its Moody’s Rating ceases to be at least Baa3.

“Voting Stock” of any Person means capital stock of any class or classes or
other equity interests (however designated) having ordinary voting power for the
election of directors or similar governing body of such Person.

“Welfare Plan” means a “welfare plan”, as defined in Section 3(l) of ERISA.

“Withdrawal Liability” shall have the meaning given such term under Part I of
Subtitle E of Title IV of ERISA.

 

 

 

 

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