Document:

Exhibit 10.16

 

EMPLOYMENT AGREEMENT

 

THIS EMPLOYMENT AGREEMENT (the “Agreement”) is entered into and effective as of the          day of                                                2012, by and between TWIN CITIES POWER, L.L.C., a Minnesota Limited Liability Company, with its principal place of business at 16233 Kenyon Avenue, Suite 210, Lakeville, Minnesota 55044 (the “COMPANY”) and                                                                           , an individual with his principal residence at                                                                                      (the “EMPLOYEE”). The COMPANY and EMPLOYEE are jointly referred to as PARTIES (“PARTIES”).

 

A.                                   The PARTIES wish to provide for the employment of the EMPLOYEE by the COMPANY;     and

 

B.                                     The EMPLOYEE wishes to receive compensation from the COMPANY for the EMPLOYEE’s services, and the COMPANY wants reasonable protection for its confidential business and technical information that has been acquired and is being developed by the COMPANY at substantial expense.

 

1.                                      Employment.  Subject to all of the terms and conditions of this Agreement, the COMPANY agrees to employ the EMPLOYEE as a Trader in the business of the COMPANY and the EMPLOYEE accepts such employment.

 

2.                                      Duties.

 

(a)                                  The EMPLOYEE will devote substantially all of his business hours to, and, during such time, make the best use of his energy, knowledge and training in advancing the COMPANY’s interests. The EMPLOYEE will diligently and conscientiously perform the duties of the EMPLOYEE’s position within the general guidelines to be determined by the COMPANY’s President. While the EMPLOYEE is employed by the COMPANY, the EMPLOYEE will keep the COMPANY informed of any other business activities or outside employment and will, at the COMPANY’s request, promptly stop any activity or employment that might conflict with the COMPANY’s interests or adversely affect the performance of the EMPLOYEE’s duties for the COMPANY.

 

(b)                                 Notwithstanding the above, the EMPLOYEE shall be permitted, to the extent such activities do not substantially interfere with his performance of his duties and responsibilities to: (i) manage his personal, financial and legal affairs, (ii) serve on civic or charitable boards or committees, (iii) serve on boards of other companies of organization that do not compete with the COMPANY or its subsidiaries in any shape or

 

 

form, and the EMPLOYEE shall be entitled to receive and retain all remuneration received by him from the items listed in clauses (i) through (iii) of this paragraph.

 

3.                                      Term.  The term of this Agreement shall commence on the effective date first written above and continue unless terminated in accordance with Section 5 below.

 

4.                                      Compensation.

 

(a)                                  Salary. The COMPANY agrees to pay the EMPLOYEE an annual base salary of                                                                    Dollars ($                                  ) per year (the “Base Salary”), in semi-monthly installments, and in arrears, in accordance with the standard payroll practices of the COMPANY.  Within 30 days of the anniversary date of this Agreement and within 30 days of every anniversary thereafter, during the term of this Agreement, the Base Salary will be reviewed by the COMPANY considering both the EMPLOYEE’s performance and the performance of the COMPANY during the preceding calendar year. If the EMPLOYEE’s Base Salary is adjusted by the COMPANY, such adjusted Base Salary shall then constitute the Base Salary for all purposes under this Agreement.

 

(b)                                 Benefits and Vacation. The EMPLOYEE will be entitled to participate in all benefit plans adopted by the COMPANY to the extent that the terms of such benefit plans permit the EMPLOYEE to participate. The EMPLOYEE will be entitled to fifteen (15) days per year of personal time off (“PTO”) and all legal holidays observed by the COMPANY, in each case, in accordance with the COMPANY’s policies as in effect from time-to-time. In the event EMPLOYEE does not use all PTO for a given fiscal year, up to five days of unused PTO may be carried over to the next fiscal year.

 

(c)                                  Bonus Plan. The EMPLOYEE shall be eligible for a quarterly bonus to be calculated in the manner set forth on Exhibit “A”  (the “Bonus”). For purposes of this Agreement, any calculation of the Bonus shall be computed for each quarter year in accordance with generally accepted accounting principles.

 

(d)                                 Expenses.  EMPLOYEE shall be reimbursed monthly by the COMPANY for reasonable expenses which are incurred and accounted for in accordance with the COMPANY’S practices (hereafter “Expenses”).  The provisions of the previous sentence shall survive the termination of this Agreement.

 

5.                                      Termination.  Subject to the respective continuing obligations of the COMPANY and the EMPLOYEE under Sections 6 and 7 below:

 

(a)                                  Employment At-Will. Nothing in this Agreement is intended to establish any minimum period of the EMPLOYEE’s continuing employment, and such employment continues to be on an “at-will” basis. The EMPLOYEE acknowledges that his employment with the COMPANY is terminable at-will at any time.

 

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(b)                                 Termination by the Company.

 

(i)                                     Termination Without Cause.  In the event of termination of this Agreement by the COMPANY other than termination for Cause as set forth in Section 5(b)(ii) below, EMPLOYEE shall be entitled to receive the following (collectively the “Accrued Rights”): (A) all accrued but unpaid amounts of Base Salary and Bonuses through the effective date of termination, (B) accrued PTO through the effective date of termination, (C) reimbursement of Expenses under Section 4(d) hereof with respect to the period prior to termination, and (D) all rights afforded to EMPLOYEE under the applicable benefit plans in place at the time of termination of employment, payable in accordance with the provisions of any such plans, which the EMPLOYEE shall receive at no additional cost to EMPLOYEE during the time period during which EMPLOYEE receives post-termination salary, and after the expiration of such time period, all rights under COBRA to purchase continuation of health insurance benefits for himself and his dependants for the maximum time period permitted by law.

 

(ii)                                  Termination for Cause. The COMPANY may terminate this Agreement upon written notice to the EMPLOYEE for Cause (as defined herein).  In the event that EMPLOYEE is terminated for Cause, EMPLOYEE shall not be entitled to any Accrued Rights, except as required by applicable law.  For purposes of this Agreement “Cause” shall mean: (A) dishonesty, fraud, material and deliberate injury or attempted injury, in each case related to the COMPANY or its business, (B) any unlawful or criminal activity of a serious nature, (C) any willful breach of duty or habitual neglect of duty, or (D) any breach of Sections 6 or 7 of this Agreement.

 

(c)                                  Termination by the Employee.

 

(i)                                     Termination Without Good Reason.  In the event of termination of this Agreement by EMPLOYEE other than termination for Good Reason as set forth in Section 5(c)(ii) below, EMPLOYEE shall be entitled to receive all accrued but unpaid amounts of Base Salary and Bonuses through the effective date of termination and reimbursement of Expenses, but shall not otherwise be entitled to receive any Accrued Rights, except as required by applicable law.

 

(ii)                                  Termination for Good Reason.  EMPLOYEE may terminate this Agreement upon written notice to the EMPLOYEE for Good Reason (as defined herein). In the event that EMPLOYEE terminates this Agreement for Good Reason, EMPLOYEE shall be entitled to receive Accrued Rights as set forth in Section 5(b)(i) hereof.  For purposes of this Agreement, “Good Reason” shall mean: (A) a relocation of the principal place of performance of EMPLOYEE’s duties to a location more than thirty (30) miles from Minneapolis, MN, (B) a failure by the COMPANY to pay EMPLOYEE Base Salary, Bonuses and/or benefits to which EMPLOYEE is entitled, or (C) a material change in EMPLOYEE’s titles, duties, responsibilities or the Bonus compensation structure, in each case without EMPLOYEE’s prior written consent.

 

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(d)                                 Termination for Death or Disability. This Agreement will terminate upon the EMPLOYEE’s death or “permanent disability.” For purposes of this Agreement the term “permanent disability” means the occurrence of an event which constitutes permanent and total disability within the meaning of Section 22(e)(3) of the Code.

 

6.                                      Inventions.

 

(a)                                  Definition.  “Inventions”, as used in this Agreement, means any inventions, discoveries, software programs, code, improvements and ideas, whether or not in writing or reduced to practice and whether or not patentable or copyrightable, made, authored or conceived by the EMPLOYEE, whether by the EMPLOYEE’s individual efforts or in connection with the efforts of others, and that either: (i) relate in any way to the COMPANY’s business, products or processes, past, present, anticipated or under development, or (ii) result in any way from the EMPLOYEE’s employment by the COMPANY, or (iii) use the COMPANY’s equipment, supplies, facilities or trade secret information.

 

(b)                                 Ownership of Inventions.  The EMPLOYEE agrees that all Inventions made by the EMPLOYEE during the period of the EMPLOYEE’s employment with the COMPANY, whether made during the working hours of the COMPANY or on the EMPLOYEE’s own time, will be the sole and exclusive property of the COMPANY.  The EMPLOYEE will, with respect to any Invention:  (i) keep current, accurate, and complete records, which will belong to the COMPANY and be kept and stored on the COMPANY’s premises; (ii) promptly and fully disclose the existence and describe the nature of the Invention to the COMPANY in writing (and without request); (iii) assign (and the EMPLOYEE hereby assigns) to the COMPANY all of the EMPLOYEE’s right, title and interest in and to the Invention, any applications the EMPLOYEE makes for patents or copyrights in any country, and any patents or copyrights granted to the EMPLOYEE in any country; and (iv) acknowledge and deliver promptly to the COMPANY any written instruments, and perform any other acts necessary in the COMPANY’s opinion to preserve property rights in the Invention against forfeiture, abandonment or loss and to obtain and maintain letters patent and/or copyrights on the Invention and to vest the entire right and title to the Invention in the COMPANY.  The EMPLOYEE agrees to perform promptly (without charge to the COMPANY but at the expense of the COMPANY) all acts as may be necessary in the COMPANY’s opinion to preserve all patents and/or copyrights granted upon the EMPLOYEE’s Inventions or to prevent forfeiture, abandonment or loss.

 

The requirements of this Section 6(b) do not apply to any Invention for which no equipment, supplies, facility or trade secret information of the COMPANY was used and which was developed entirely on the EMPLOYEE’s own time, and (i) which does not relate directly to the COMPANY’s business or to the COMPANY’s actual or demonstrably anticipated research or development, or (ii) which does not result from any work the EMPLOYEE performed for the COMPANY.  The EMPLOYEE represents that, except as disclosed below, as of the date of this Agreement, the EMPLOYEE has no rights under and will make no claims against the COMPANY with respect to, any

 

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inventions, discoveries, improvements, ideas or works of authorship which would be Inventions if made, conceived, authored or acquired by the EMPLOYEE during the term of this Agreement.

 

(c)                                  Works Made for Hire.  To the extent that any Invention qualifies as “work made for hire” as defined in 17 U.S.C. § 101 (1976), as amended, such Invention will constitute “work made for hire” and, as such, will be the exclusive property of the COMPANY.

 

(e)                                  Other Works.  If any Invention does not qualify as “work made for hire” as defined in 17 U.S.C. § 101 (1976), as amended, EMPLOYEE agrees to assign the patent right, copyright, and all other protectable interest rights in the Invention to the COMPANY.

 

(f)                                    Presumption.  In the event of any dispute, arbitration or litigation concerning whether any Invention made or conceived by the EMPLOYEE is the property of the COMPANY, such Invention will be presumed the property of the COMPANY and the EMPLOYEE will bear the burden of establishing otherwise, and if it is established otherwise, the COMPANY will reimburse EMPLOYEE for the cost of arbitration or litigation involved in such determination.

 

(g)                                 Survival.  The obligations of this Section 6 will survive the termination of this Agreement.

 

7.                                      Confidential Information.

 

(a)                                  Prohibition on Use of Confidential Information.  The EMPLOYEE agrees not to, directly or indirectly, disclose or use at any time, either during or subsequent to his employment by the COMPANY and any of its subsidiaries or affiliates (which obligation will survive indefinitely), any code, software, technology, trade secrets, know-how, or other information, knowledge, or data possessed, used or licensed by the COMPANY or to which the EMPLOYEE gains access in connection with his employment and which the COMPANY deems confidential, proprietary or protected under grant of license or which the EMPLOYEE has reason to believe is confidential, proprietary or protected under grant of license, except as such disclosure or use may be required in connection with his work for the COMPANY or unless the EMPLOYEE first secures the written consent of the COMPANY.  Upon termination of his employment and upon the COMPANY’s written request the EMPLOYEE will promptly return to the COMPANY all originals and all copies of all property and assets of the COMPANY created or obtained by the EMPLOYEE as a result of or in the course of or in connection with his employment with the COMPANY which are in the EMPLOYEE’s possession or control, whether confidential or not, including, but not limited to, computer files, software programs, computer equipment, correspondence, notes, memoranda, notebooks, drawings, customer lists, or other documents delivered to the EMPLOYEE concerning any idea, product, apparatus, invention or process manufactured, used, developed, investigated, or marketed by the COMPANY during the period of his employment.

 

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(b)                                 Third-Party Information.  The EMPLOYEE understands and acknowledges that the COMPANY has a policy prohibiting the receipt by the COMPANY of any confidential information in breach of the EMPLOYEE’s obligations to third parties and does not desire to receive any confidential information under such circumstances.  Accordingly, the EMPLOYEE will not disclose to the COMPANY or use in the performance of any duties for the COMPANY any confidential information in breach of an obligation to any third party.  The EMPLOYEE represents that he has provided the COMPANY with a copy of any agreement which the EMPLOYEE is bound that restrict the EMPLOYEE’s use of any third party’s confidential information and all such agreements are set forth on Exhibit “B”  which is incorporated herein.

 

(c)                                  Survival.  The obligations of this Section 7 will survive the termination of this Agreement.

 

8.              Twin Cities Companies Code of Conduct and Compliance Program.

 

The EMPLOYEE agrees to be bound by and comply with the Twin Cities Companies’ Code of Conduct and Compliance Program, as it may be amended from time to time.  The EMPLOYEE acknowledges and agrees that it is his responsibility to know the terms of the program as in force from time to time and where the EMPLOYEE has any doubts to check with the Companies’ Compliance Officer and to conduct his duties in conformity with the Officer’s directives.

 

9.              Miscellaneous.

 

(a)                              Conflicts of Interest. The EMPLOYEE agrees that he will not, directly or indirectly, transact business with the COMPANY personally, or as an agent, owner, partner or shareholder of any other entity; provided, however, that any such transaction may be entered into if approved by the Board of the COMPANY.

 

(b)                                 No Adequate Remedy.  The EMPLOYEE understands that if the EMPLOYEE fails to fulfill the EMPLOYEE’s obligations under Section 6 and Section 7 of this Agreement, the damages to the COMPANY would be very difficult to determine.  Therefore, in addition to any other rights or remedies available to the COMPANY at law, in equity or by statute, the EMPLOYEE hereby consents to the specific enforcement of Sections 6 and 7 of this Agreement by the COMPANY through an injunction or restraining order issued by an appropriate court.

 

(c)                                  Successors and Assigns.  This Agreement is binding on and inures to the benefit of the COMPANY’s successors and assigns, (all of which are included in the term the “COMPANY” as it is used in this Agreement); provided, however, that the COMPANY may assign this Agreement only in connection with a merger, consolidation, assignment, sale or other disposition of substantially all of its assets or business.

 

(d)                                 Modification.  This Agreement may be modified or amended only by a written statement signed by both the COMPANY and the EMPLOYEE.

 

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(e)                                  Governing Law.  The laws of the State of Minnesota will govern the validity, construction and performance of this Agreement.  Any legal proceeding related to this Agreement will be brought in an appropriate Minnesota court, and both the COMPANY and the EMPLOYEE hereby consent to the exclusive jurisdiction of that court for this purpose.

 

(f)                                    Construction.  Wherever possible, each provision of this Agreement will be interpreted so that it is valid under the applicable law.  If any provision of this Agreement is to any extent invalid under the applicable law that provision will still be effective to the extent it remains valid.  The remainder of this Agreement also will continue to be valid, and the entire Agreement will continue to be valid in other jurisdictions.

 

(g)                                 Waivers.  No failure or delay by either the COMPANY or the EMPLOYEE in exercising any right or remedy under this Agreement will waive any provision of the Agreement.  Nor will any single or partial exercise by either the COMPANY or the EMPLOYEE of any right or remedy under this Agreement preclude either of them from otherwise or further exercising these rights or remedies, or any other rights or remedies granted by any law or any related document.

 

(h)                                 Captions.  The headings in this Agreement are for convenience only and do not affect this Agreement’s interpretation.

 

(i)                                     Entire Agreement.  This Agreement supersedes all previous and contemporaneous oral negotiations, commitments, writings and understandings between the PARTIES concerning the matters in this Agreement, including, without limitation, any policy or personnel manuals of the COMPANY. The exhibits referred to in this Agreement are incorporated in and constitute a part of this Agreement.

 

(j)                                     Notices.  All notices and other communications required or permitted under this Agreement will be in writing and will be hand delivered or sent by registered or certified first class mail, postage prepaid, and will be effective upon delivery if hand delivered, or three (3) days after mailing if mailed to the address stated as follows:

 

	
To   the COMPANY:
    	
TWIN   CITIES POWER, L.L.C.
    
	
 
    	
16233   Kenyon Avenue, Suite 210
    
	
 
    	
Lakeville,   Minnesota 55044
    
	
 
    	
 
    
	
 
    	
Attn:  Tim Krieger
    
	
 
    	
 
    
	
 
    	
 
    
	
To   the EMPLOYEE:
    	
 
    
	
 
    	
 
    
	
 
    	
 
    

 

These addresses may be changed at anytime by like notice.

 

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(k)                                  Counterparts.  This Agreement may be executed in counterparts, each of which will be deemed an original, and all of which, taken together, shall constitute one instrument.

 

The COMPANY and the EMPLOYEE have duly executed this Agreement as of the        day of                                      2012.

 

	
TWIN   CITIES POWER, L.L.C.
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
By:  TIM KRIEGER
    	
 
    
	
Its: President/Chief Manager
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
EMPLOYEE
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
By:
    	
 
    	
 
    
			

 

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EXHIBIT “A”

TO

 

EMPLOYMENT AGREEMENT

 

(a)                                  Bonus Plan.  The EMPLOYEE shall be entitled to a bonus equal to the net profit of his “Trading Book” (as defined in Section (b) below) which net profit shall be determined in accordance with Generally Accepted Accounting Practices (“GAAP”).  Twenty-Five percent (25%) of the EMPLOYEE’s net Trading Book profit shall be distributed as a bonus to the EMPLOYEE of the COMPANY within 90 days from the close of each fiscal quarter.  If the EMPLOYEE has two consecutive losing quarters, then, and in that event, the EMPLOYEE’s Trading Book Profit shall be distributed annually.  Net Trading Book profits will be calculated by taking the EMPLOYEE’s gross Trading Book profits, subtracting the EMPLOYEE’s expenses, including, but not limited to, interest on the money the EMPLOYEE utilizes at prime plus 3% with a floor of 6%, expenses only related to the EMPLOYEE including his salary and health insurance, and a pro-rata portion of industry related subscriptions such as Weather Bug and Reuters.  For the sake of clarity, if the EMPLOYEE’s Trading Book Net Loss in the first quarter is (-$300,000) and in the second quarter the EMPLOYEE has a Net Trading Book Profit of $319,500, the EMPLOYEE would be paid out on the net difference or 25% or $4,875, i.e. any previous quarter’s loss shall be carried forward to the existing quarter and be deducted.

 

For example:

 

	
Gross Trading Book Profit
    	
 
    	
$
    	
300,000
    	
 
    
	
Employee Salary
    	
 
    	
–7,500
    	
 
    
	
Interest
    	
 
    	
–5,000
    	
 
    
	
Genscape/MCG Ware
    	
 
    	
–3,000
    	
 
    
	
Payroll Tax
    	
 
    	
–2,000
    	
 
    
	
Health Insurance
    	
 
    	
–1,000
    	
 
    
	
Lease Space/Rent
    	
 
    	
–1,300
    	
 
    
	
Net Trading Book Profit
    	
 
    	
$
    	
280,200
    	
 
    

 

The EMPLOYEE would be entitled to 25% of the $280,200 allocated as Net Profit or an additional $70,050 for that individual month.

 

(b)                                 Trading Book. Is defined as the profit of all trading activities of the EMPLOYEE, including strategies and sub books of the EMPLOYEE.

 

	
Acknowledged   and Agreed:
    	
 
    	
 
    
	
TWIN   CITIES POWER, L.L.C.
    	
 
    	
EMPLOYEE
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
By:  TIM KRIEGER 
    	
 
    	
By:   
    	
 
    
	
Its: President/Chief Manager 
    	
 
    	
 
    

 

 

EXHIBIT “B”

TO

 

EMPLOYMENT AGREEMENT

 

Third Party Information

 

	
 
    	
COMPANY:
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
EMPLOYEE:Exhibit 10.17

 

	
Midwest ISO
    	
 
    	
First Revised Sheet No. 2563
    
	
FERC Electric Tariff, Fourth Revised Volume   No. 1
    	
 
    	
Superseding Original Sheet   No. 2563
    

 

EXHIBIT I

CORPORATE GUARANTY

 

For good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, including, without limitation, the credit advance by the Midwest Independent Transmission System Operator, Inc. (“Transmission Provider”) to Twin Cities Power, LLC (“TCP”), Twin Cities Energy, LLC (“TCE”), Summit Energy, LLC (“SE”), TC Energy Trading, LLC (“TCET”), and Cygnus Energy Futures, LLC (“CEF”) (TCP, TCE, SE, TCET and CEF being collectively referred to as “Company”), the undersigned guarantor Twin Cities Power Holdings, LLC (“Guarantor”), hereby unconditionally and irrevocably guarantees the prompt and complete payment of all amounts that Company (or any of TCP, TCE, SE, TCET and/or CEF) now or hereafter owes, and the performance of all other obligations of the Company (or any of TCP, TCE, SE, TCET and/or CEF), under the terms and conditions of the Transmission Provider’s Transmission, Energy and Operating Reserve Markets Tariff on file with the Federal Energy Regulatory Commission, as may be amended and supplemented from time to time, together with all schedules and attachments thereto and any replacements or substitutes (the “Tariff”), any agreements entered into by Company (or any of TCP, TCE, SE, TCET and/or CEF) under, pursuant to, or in connection with the Tariff and/or any agreements to which Transmission Provider and Company (or any of TCP, TCE, SE, TCET and/or CEF) are Parties, as may be amended or supplemented from time to time whether now existing or hereafter arising in accordance with their respective terms, together with costs of enforcement and collection, including attorneys’ fees (collectively, the “Liabilities”).  The Tariff, any and all agreements entered into by Company (or any of TCP, TCE, SE, TCET and/or CEF) under, pursuant to or in connection with the Tariff, and any and all agreements to which the Company (or any of TCP, TCE, SE, TCET and/or CEF) and Transmission Provider are parties, each as it may be amended from time to time and whether it currently exists or is entered into at anytime in the future are collectively referred to herein as the “Agreements”.

 

	
Issued by: Stephen G. Kozey, Issuing   Officer
    	
 
    	
Effective: November 14, 2009
    
	
Issued on: September 15, 2009
    	
 
    	
 
    

 

 

	
Midwest ISO
    	
 
    	
Original Sheet No. 2570
    
	
FERC Electric Tariff, Fourth Revised Volume   No. 1
    	
 
    	
 
    

 

1.              If Company (or any of TCP, TCE, SE, TCET and/or CEF) does not perform each of its obligations in strict accordance with each respective Agreement, Guarantor shall immediately pay upon demand all amounts now or hereafter due under all of the Agreements (including, without limitation, all principal, interest and fees) and otherwise proceed to complete the same and satisfy all of the Liabilities, including Company’s (including all of TCP’s, TCE’s, SE’s, TCET’s and/or CEF’s) obligations under all of the Agreements. This Guaranty may be satisfied by Guarantor paying and/or performing (as appropriate) Company’s (and each of TCP’s, TCE’s, SE’s, TCET’s and/or CEF’s) Liabilities or by the Guarantor causing Company’s (and each of TCP’s, TCE’s, SE’s, TCET’s and/or CEF’s) Liabilities to be paid or performed; provided, however, that Guarantor shall at all times remain fully responsible and liable for its obligations hereunder notwithstanding any such payment or performance (or failure thereof) by any third party.  The maximum aggregate liability of Guarantor under this Guaranty is limited to the amount of $2,500,000 USD (Two Million Five Hundred Thousand U.S. Dollars), plus all costs and expenses incurred by Transmission Provider in enforcing this Guaranty against Guarantor and the Agreements against Company (or any of TCP, TCE, SE, TCET and/or CEF) (including attorneys’ fees).

 

2.              This Guaranty is an absolute, unconditional and continuing guaranty of the full and punctual payment and performance by Company (including each of TCP, TCE, SE, TCET and/or CEF) of all of the Liabilities, including each of its obligations under each of the Agreements, and not of collectibility only, and is in no way conditioned upon any requirement that Transmission Provider (or any other person) first attempt to collect payment from Company (or any of TCP, TCE, SE, TCET and/or CEF) or any other guarantor or surety or resort to any security or other means of obtaining payment of all or any part of the Liabilities or upon any other contingency. This is a continuing guaranty and shall be binding upon Guarantor regardless of:  (i) how long after the date hereof the Agreement is entered into; (ii) how long after the date hereof any part of the obligations under the Agreements is incurred by Company (or any of TCP, TCE, SE, TCET and/or CEF); and (iii) the amount of the obligations under the Agreements at any time outstanding. Transmission Provider may enforce this Guaranty from time to time and as often as occasion for such enforcement may arise.

 

3.              The obligations hereunder are independent of the obligations of Company (and each of TCP, TCE, SE, TCET and/or CEF) and a separate action or actions may be brought and prosecuted against Guarantor whether action is brought against Company (or any of TCP, TCE, SE, TCET and/or CEF) or whether  Guarantor is joined in any such action or actions. Guarantor’s liability under this Guaranty is not conditioned or contingent upon genuineness, validity, regularity or enforceability of any of the Agreements.

 

4.              Guarantor authorizes Transmission Provider, without notice or demand and without affecting its liability hereunder, from time to time, to:  (i) renew, extend, modify, supplement or otherwise change the terms of any or all the Agreements or any part thereof; (ii) take and hold security for the payment of this Guaranty or any or all of the Liabilities, and exchange, enforce, waive and release any such security; and (iii) apply such security and direct the order or manner of sale of any collateral provided as such

 

	
Issued by: Stephen G. Kozey, Issuing   Officer
    	
 
    	
Effective: January 6, 2009
    
	
Issued on: October 1, 2008
    	
 
    	
 
    

 

 

security as Transmission Provider (or any other person) in its sole discretion may determine. The obligations and liabilities of Guarantor hereunder shall be absolute and unconditional, shall not be subject to any counterclaim, set-off, deduction or defense based upon any claim Guarantor may have against Company (or any of TCP, TCE, SE, TCET and/or CEF), any other Guarantor, or any other person or entity, and shall remain in full force and effect until all of the obligations of Guarantor hereunder and all of the Liabilities, including all obligations of Company (and each of TCP, TCE, SE, TCET and/or CEF) under each of the Agreements, have been fully and irrevocably satisfied, without regard to, or release or discharge by, any event, circumstance or condition (whether or not Guarantor shall have knowledge or notice thereof) which might constitute a legal or equitable defense or discharge of a Guarantor or surety or which might in any way limit recourse against Guarantor, including without limitation: (i) any renewal, amendment or modification of, or supplement to, the terms of any or all of the Agreements; (ii) any waiver, consent or indulgence by Transmission Provider (or any other person), or any exercise or non-exercise by Transmission Provider (or any other person) of any right, power or remedy, under or in respect of this Guaranty or any of or all the Agreements (whether or not Guarantor or Company (or any of TCP, TCE, SE, TCET and/or CEF) has or have notice or knowledge of any such action or inaction); (iii) the invalidity or unenforceability, in whole or in part, of any or all of the Agreements, or the termination, cancellation or frustration of any thereof, or any limitation or cessation of Company’s (or any of TCP’s, TCE’s, SE’s, TCET’s and/or CEF’s) liability under any thereof (other than any limitation or cessation expressly provided for therein), including without limitation any invalidity, unenforceability or impaired liability resulting from Company’s (or any of TCP’s, TCE’s, SE’s, TCET’s and/or CEF’s) lack of capacity, power and/or authority to enter into any or all of the Agreements and/or to incur any or all of the obligations thereunder, or from the execution and delivery of any or all of the Agreements by any person acting for Company (and each of TCP, TCE, SE, TCET and/or CEF) without or in excess of authority; (iv) any actual, purported or attempted sale, assignment or other transfer by Transmission Provider (or any other person) of any or all of the Agreements or of any or all of its rights, interests or obligations thereunder; (v) the taking or holding by Transmission Provider of a security interest, lien or other encumbrance in or on any property as security for any or all of the Liabilities, including any or all of the obligations of Company (and each of TCP, TCE, SE, TCET and/or CEF) under any or all of the Agreements, the posting of a cash deposit, letter of credit, performance bond or other financial accommodation, or any exchange, release, non-perfection, loss or alteration of, or any other dealing with, any such security; (vi) the addition of any party as a guarantor or surety of all or any part of the Liabilities, including obligations of Company (or any of TCP, TCE, SE, TCET and/or CEF) under any or all of the Agreements; (vii) any merger, amalgamation or consolidation of Company (or any of TCP, TCE, SE, TCET and/or CEF) into or with any other entity, or any sale, lease, transfer or other disposition of any or all of Company’s (or any of TCP’s, TCE’s, SE’s, TCET’s and/or CEF’s) assets or any sale, transfer or other disposition of any or all of the shares of capital stock or other securities of Company (or any of TCP, TCE, SE, TCET and/or CEF) to any other person or entity; or (viii) any change in the financial condition of Company (or any of TCP, TCE, SE, TCET and/or CEF) or (as applicable) of any subsidiary, affiliate, partner or controlling shareholder thereof, or

 

 

Company’s (or any of TCP’s, TCE’s, SE’s, TCET’s and/or CEF’s) entry into an assignment for the benefit of creditors, an arrangement or any other Agreement or procedure for the restructuring of its liabilities, or Company’s (or any of TCP’s, TCE’s, SE’s, TCET’s and/or CEF’s) insolvency, bankruptcy, reorganization, dissolution, liquidation or any similar action by or occurrence with respect to Company (or any of TCP, TCE, SE, TCET and/or CEF).

 

5.              Guarantor unconditionally waives, to the fullest extent permitted by law: (i) notice of any of the matters referred to in §4 hereof; (ii) any right to the enforcement, assertion or exercise by Transmission Provider (or any other person) of any of Guarantor of its rights, powers or remedies under, against or with respect to (a) any of the Agreements, (b) any other guarantor or surety, or (c) any security for all or any part of the Liabilities, including the obligations of Company (or any of TCP, TCE, SE, TCET and/or CEF) under all or any of the Agreements or obligations of Guarantor hereunder; (iii) any requirement of diligence and any defense based on a claim of laches; (iv) all defenses which may now or hereafter exist by virtue of any statute of limitations, or of any stay, valuation, exemption, moratorium or similar law, except the sole defense of full and indefeasible payment; (v) any requirement that Guarantor be joined as a party in any action or proceeding against Company (or any of TCP, TCE, SE, TCET and/or CEF) to enforce any of the provisions of any of the Agreements; (vi) any requirement that Guarantor be involved in any dispute resolution procedures involving the Company (or any of TCP, TCE, SE, TCET and/or CEF) to enforce any of its obligations under any of the Agreements (including the dispute resolution procedures set forth in the Tariff); (vii) any requirement that Transmission Provider (or any other person) mitigate or attempt to mitigate damages resulting from a default by Guarantor hereunder or from a default by Company (or any of TCP, TCE, SE, TCET and/or CEF) under any of the Agreements; (viii) acceptance of this Guaranty; and (ix) all presentments, protests, notices of dishonor, demands for performance and any and all other demands upon and notices to Company (or any of TCP, TCE, SE, TCET and/or CEF), and any and all other formalities of any kind, the omission of or delay in performance of which might but for the provisions of this Section constitute legal or equitable grounds for relieving or discharging Guarantor in whole or in part from its irrevocable, absolute and continuing obligations hereunder, it being the intention of Guarantor that its obligations hereunder shall not be discharged except by payment and performance and then only to the extent thereof.

 

6.              Guarantor waives any right to require Transmission Provider (or any other person) to (i) proceed against Company (or any of TCP, TCE, SE, TCET and/or CEF); (ii) proceed against or exhaust any security held from Company (or any of TCP, TCE, SE, TCET and/or CEF); or (iii) pursue any other remedy whatsoever. So long as any obligations remain outstanding under this Guaranty or any of the Agreements, Guarantor shall not exercise any rights against Company (or any of TCP, TCE, SE, TCET and/or CEF) arising as a result of payment by Guarantor hereunder, by way of subrogation or otherwise, and will not prove any claim in competition with Transmission Provider (or any other party to any of the Agreements) in respect of any payment under the Agreements in bankruptcy or insolvency proceedings of any nature. Guarantor will not claim any set-off or counterclaim against Company (or any of TCP, TCE, SE, TCET

 

 

and/or CEF) in respect of any liability of Guarantor to Company (or any of TCP, TCE, SE, TCET and/or CEF) and Guarantor waives any benefit of any right to participate in any collateral which may be held by Transmission Provider (or any other party to any of the Agreements or holding any security for any of the Liabilities).

 

7.              If after receipt of any payment of, or the proceeds of any collateral for, all or any part of the Liabilities, the surrender of such payment or proceeds is compelled or volunteered to any person because such payment or application of proceeds is or may be avoided, invalidated, recaptured, or set aside as a preference, fraudulent conveyance, impermissible set -off or for any other reason, whether or not such surrender is the result of:  (i) any judgment, decree or order of any court or administrative body having jurisdiction, or (ii) any settlement or compromise of any claim as to any of the foregoing with any person (including Company, or any of TCP, TCE, SE, TCET and/or CEF), then the Liabilities, or part thereof affected, shall be reinstated and continue and this Guaranty shall be reinstated and continue in full force as to such Liabilities or part thereof as if such payment or proceeds had not been received, notwithstanding any previous cancellation of any instrument evidencing any such Liabilities or any previous instrument delivered to evidence the satisfaction thereof. The provisions of this Section shall survive the termination of this Guaranty and any satisfaction and discharge of Company (or any of TCP, TCE, SE, TCET and/or CEF) by virtue of any payment, court order or any Federal, state or local law.

 

8.              Any indebtedness of Company (or any of TCP, TCE, SE, TCET and/or CEF) now or hereafter held by Guarantor is hereby subordinated to the Liabilities and any indebtedness of Company (or any of TCP, TCE, SE, TCET and/or CEF) under any of the Agreements; and such indebtedness of Company (or any of TCP, TCE, SE, TCET and/or CEF) to Guarantor shall be collected, enforced and received by Guarantor as trustee for Transmission Provider and be paid over to Transmission Provider on account of the Liabilities but without reducing or affecting in any manner the liability of Guarantor under the other provisions of this Guaranty.

 

9.              Guarantor represents and warrants to Transmission Provider, as an inducement to Transmission Provider to make the credit advances to Company (and each of TCP, TCE, SE, TCET and/or CEF), that: (i) the execution, delivery and performance by Guarantor of this Guaranty (a) are within Guarantor’s powers and have been duly authorized by all necessary action; (b) do not contravene Guarantor’s charter documents or any law or any contractual restrictions binding on or affecting Guarantor or by which Guarantor’s property may be affected; and (c) do not require any authorization or approval or other action by, or any notice to or filing with, any public authority or any other person except such as have been obtained or made; (ii) this Guaranty constitutes the legal, valid and binding obligation of Guarantor, enforceable in accordance with its terms, except as the enforceability thereof may be subject to or limited by bankruptcy, insolvency, reorganization, arrangement, moratorium or other similar laws relating to or affecting the rights of creditors generally and by general principles of equity; (iii) each of TCP, TCE, SE, TCET and CEF, are wholly owned subsidiaries of Guarantor; and (iv) there is no action, suit or proceeding affecting Guarantor pending or threatened before any court,

 

 

arbitrator, or public authority that may materially adversely affect Guarantor’s ability to perform its obligations under this Guaranty.

 

10.       The Guarantor must submit any and all documents that the Guarantor would be required to submit under Transmission Provider’s Credit Policy (as may be amended from time to time) if the Guarantor applied for and/or obtained credit under such Credit Policy, including, without limitation, (i) at least annually a current bond/debt rating report for senior unsecured debt of the Guarantor and an issuer rating issued by Moody’s Investor Services or Standard & Poor’s, promptly upon its issuance, and (ii) financial reports of the Guarantor promptly upon their issuance including, without limitation, annual audited financial statements prepared in accordance with generally accepted accounting principles, with auditor notes and auditor’s report, to be delivered no later than one hundred twenty (120) days after the end of each fiscal year of the Guarantor and internally prepared quarterly financial statements prepared in accordance with generally accepted accounting principles, no later than sixty (60) days after the end of each fiscal quarter of the Guarantor. Further, Guarantor must inform Transmission Provider in writing within five (5) Business Days of any Material Change (as defined in the Transmission Provider’s Credit Policy, as may be amended from time to time) in its financial status.  In addition to any other remedies available at law or in equity, a Guarantor’s failure to provide this information may result in proceedings by Transmission Provider to terminate the Agreements with the Company (or any of TCP, TCE, SE, TCET and/or CEF).

 

11.       Guarantor agrees to pay on demand reasonable attorneys’ fees and all other costs and expenses which Transmission Provider, and any ITCs (as defined in the Tariff), their affiliates, representatives, successors and assigns may incur in the enforcement of this Guaranty. No terms or provisions of this Guaranty may be changed, waived, revoked or amended without Transmission Provider’s prior written consent. Should any provision of this Guaranty be determined by a court of competent jurisdiction to be unenforceable, all of the other provisions shall remain effective. This Guaranty embodies the entire Agreement among the parties hereto with respect to the matters set forth herein, and supersedes all prior Agreements among the parties with respect to the matters set forth herein. No course of prior dealing among the parties, no usage of trade, and no parole or extrinsic evidence of any nature shall be used to supplement, modify or vary any of the terms hereof. There are no conditions to the full effectiveness of this Guaranty. Transmission Provider may assign this Guaranty, and its rights hereunder in whole or in part, without consent and without in any way affecting Guarantor’s liability under it. This Guaranty shall inure to the benefit of Guarantor, Transmission Provider, Company (including each of TCP, TCE, SE, TCET and/or CEF), the ITCs and their successors and assigns.  Guarantor may not assign this Guaranty without Transmission Provider’s consent. This Guaranty is in addition to the guaranties of any other guarantors and any and all other guaranties of any of the Liabilities, including Company’s (and each of TCP’s, TCE’s, SE’s, TCET’s and/or CEF’s) indebtedness or obligations under any or all of the Agreements.

 

 

	
 
    	
 
    	
Original Sheet No. 2576
    

 

12.       This Guaranty shall be governed by the laws of the State of Indiana, without regard to conflicts of law principles. Guarantor hereby irrevocably submits to the jurisdiction of any Indiana or United States Federal court sitting in Indiana over any action or proceeding arising out of or relating to this Guaranty or any of the Agreements, and Guarantor hereby irrevocably agrees that all claims in respect of such action or proceeding may be heard and determined in such Indiana state or federal court. Guarantor irrevocably consents to the service of any and all process in any such action or proceeding by the mailing of copies of such process to Guarantor at its address set forth herein. Guarantor agrees that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law. Guarantor further waives any objection to venue in Indiana and any objection to an action or proceeding in such State on the basis of forum non-conveniens. Guarantor further agrees that any action or proceeding brought against Transmission Provider shall be brought only in Indiana or the United States Federal courts sitting in Indiana. Nothing herein shall affect the right of Transmission Provider to bring any action or proceeding against the Guarantor or its property in the courts of any other jurisdictions.

 

13.       GUARANTOR ACKNOWLEDGES THAT IT HAS BEEN ADVISED BY COUNSEL OF ITS CHOICE WITH RESPECT TO THIS GUARANTY AND THAT IT MAKES THE FOLLOWING WAIVER KNOWINGLY AND VOLUNTARILY. GUARANTOR IRREVOCABLY WAIVES TRIAL BY JURY IN ANY COURT AND IN ANY SUIT, ACTION OR PROCEEDING OR ANY MATTER ARISING IN CONNECTION WITH OR IN ANY WAY RELATED TO THE TRANSACTIONS CONTEMPLATED BY THIS GUARANTY, THE AGREEMENTS OR ANY DOCUMENTS RELATED THERETO (INCLUDING CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW OR STATUTORY CLAIMS) AND THE ENFORCEMENT OF ANY OF COMPANY’S (OR ANY OF TCP’S, TCE’S, SE’S, TCET’S AND/OR CEF’S) RIGHTS AND REMEDIES.

 

14.       GUARANTOR HEREBY KNOWINGLY AND VOLUNTARILY AGREES THAT THE RESOLUTION OF ANY DISPUTE THAT ARISES UNDER THIS GUARANTY SHALL NOT BE SUBJECT TO THE DISPUTE RESOLUTION PROCEDURES SET FORTH IN THE TARIFF AND WAIVES ANY RIGHTS TO THE CONTRARY.

 

 

IN WITNESS WHEREOF, the undersigned Guarantor has executed this Guaranty as of this 29th day of December, 2011.

 

	
Twin Cities Power Holdings, LLC
    	
 
    	
Tax I.D.   No. 27-1658449
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
By:
    	
/s/ Timothy S. Krieger
    	
 
    	
 
    
	
Print Name: Tim Krieger
    	
 
    	
 
    
	
Title: CEO
    	
 
    	
 
    
	
Address: 16233   Kenyon Avenue, Suite 210
    	
 
    	
 
    
	
Lakeville, MN   55044

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