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Exhibit 10.35
SPONSOR GUARANTY
This SPONSOR GUARANTY ("GUARANTY"), dated as of September 1,
2006, is
entered into by and between Robert M. Worsley and Christi M.
Worsley
(individually, a "GUARANTOR" and collectively, "GUARANTORS") and
CoBank, ACB, as
Administrative Agent under the Credit Agreement, as defined
below (together with
its successors, designees and assigns in such capacity,
"ADMINISTRATIVE AGENT").
WHEREAS, Snowflake White Mountain Power, LLC ("SWMP"), Renegy,
LLC
("Renegy") and Renegy Trucking, LLC (together with SWMP and
Renegy,
"BORROWERS"), Administrative Agent, CoBank ACB as Collateral
Agent, the LC
Issuer as defined therein, and the Lenders party thereto have
entered into that
certain Credit Agreement, dated as of September 1, 2006 (the
"Credit
Agreement"), pursuant to which the Lenders have agreed to extend
credit to
Borrowers;
WHEREAS, Guarantors are principals of SWMP and Guarantors expect
to benefit
as a result of Lenders extending the credit and other financial
accommodations
provided to Borrowers pursuant to the Credit Agreement; and
WHEREAS, Guarantors are entering into this Guaranty as an
inducement to
Lenders to enter into the Credit Agreement and other Credit
Documents (such term
and each other term used but not defined herein has the meaning
given to it in
Exhibit A of the Credit Agreement), with knowledge that the
Lenders will rely
hereon.
NOW, THEREFORE, in consideration of the premises and other good
and
valuable consideration, the adequacy, receipt and sufficiency of
which are
hereby acknowledged, Guarantors hereby agree as follows:
1. GUARANTY. Guarantors hereby jointly and severally
unconditionally,
irrevocably, continuously, and absolutely guarantee to
Administrative Agent
payment of the following obligations, should they arise, in
connection with the
Borrowers' business activities (collectively, the "GUARANTEED
OBLIGATIONS"):
(a) If Project Costs which are necessary to achieve Completion
exceed
budgeted Project Costs of $67,310,572, Guarantors shall pay such
excess amount
to SWMP in sufficient time for SWMP to be able to pay the
applicable Projects
Costs.
(b) Certain insurance coverages were recommended by the
Insurance
Consultant, as set forth on Exhibit A (the "Missing Coverages"),
but were not
available to the Borrowers, or not available on commercially
reasonable terms.
If a casualty or other event occurs which would have been
covered by the Missing
Coverages, Guarantors shall contribute to SWMP, within two
Business Days of
demand by Administrative Agent, such amount as Administrative
Agent in
consultation with the Insurance Consultant reasonably determines
would have been
payable by the provider of the applicable Missing Coverage if it
had been in
place.
(c) In the event that liquidated damages are payable by B&W
pursuant
to Section 19 of the Boiler Purchase Contract, Administrative
Agent in
consultation with the
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Independent Engineer shall input into the Base Case Project
Projections the
as-tested boiler output upon which are based such liquidated
damages, and shall
then determine the debt level which the Project could support
keeping all
coverage ratios and other assumptions in the Base Case Project
Projections
constant. The difference between the originally-provided debt
level and such
revised debt level is the "Performance Shortfall Prepayment
Amount". Guarantors
shall contribute to SWMP, within two Business Days of demand by
Administrative
Agent, the difference between the Performance Shortfall
Prepayment Amount and
the liquidated damages paid by B&W, and such contribution
shall be applied to
prepay Construction Loans (or Term Loans, if Term-Conversion has
occurred), or
Renegy Term Loans, as determined by Administrative Agent.
(d) In connection with disbursement of each Construction Loan,
an
analysis is performed as to "Available Construction Funds," as
defined in the
Credit Agreement, to pay Project Costs. If such analysis
projects that Available
Construction Funds will be insufficient to make the $500,000
payment owed by
SWMP to Abitibi pursuant to Section 4.2 of the Ground Lease, or
if,
notwithstanding earlier projections, Available Construction
Funds are in fact
insufficient to make such payment, Guarantors shall contribute
to SWMP, within
two Business Days of demand by Administrative Agent, the amount
necessary to
make up the shortfall, up to $500,000 in the aggregate.
(e) In the event that on any Interest Payment Date (as defined
in the
Indenture), sufficient funds are not available in the Revenue
Account to
reimburse the LC Issuer for a draw under the Letter of Credit in
respect of
interest on the Bonds, Guarantors shall contribute to SWMP,
within two Business
Days of demand by Administrative Agent, the amount necessary to
make up the
shortfall, up to $911,891 in the aggregate for all such Interest
Payment Dates.
2. GUARANTY ABSOLUTE. The liability of Guarantors under this
Guaranty shall
be absolute, continuous, and unconditional irrespective of:
(a) any lack of validity or enforceability of or defect or
deficiency
in this Guaranty, any other Credit Document or any other
documents to which any
Borrower and/or either Guarantor is or may become a party;
(b) any modification, extension or waiver of any of the terms of
this
Guaranty or any other Credit Document;
(c) any existence, value or condition of, or failure to perfect
the
Collateral Agent's Lien against, any Collateral or any action or
the absence of
any action, by any Secured Party in respect thereof (including,
without
limitation, the release of any such security);
(d) except as to applicable statutes of limitation, failure,
omission,
delay, waiver or refusal by any Secured Party to exercise, in
whole or in part,
any right or remedy held by such Secured Party with respect to
this Guaranty or
any other Credit Document;
(e) any change in the existence, structure or ownership of
any
Borrower, or any insolvency, bankruptcy, reorganization or other
similar
proceeding affecting any Borrower or its assets; or
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(f) any other circumstance that might otherwise constitute a
defense
available to, or a discharge of, Guarantors in respect of the
Guaranteed
Obligations, other than payment in full of the Guaranteed
Obligations.
3. OBLIGATIONS SEVERAL. This is a guaranty of payment and not
of
collection. The obligations of Guarantors hereunder are several
from the
Borrowers or any other person, and are primary obligations
concerning which
Guarantors are the principal obligors. There are no conditions
precedent to the
enforcement of this Guaranty, except as expressly contained
herein. It shall not
be necessary for Administrative Agent, in order to enforce
payment by Guarantors
under this Guaranty, to show any proof of any Borrower's
default, to exhaust its
remedies against Borrowers, any other guarantor, or any other
person liable for
the payment or performance of the Guaranteed Obligations.
Administrative Agent
shall not be required to mitigate damages or take any other
action to reduce,
collect, or enforce the Guaranteed Obligations other than under
Section 9
hereof.
4. OBLIGATIONS CONTINUING. This Guaranty shall continue to be
effective or
be reinstated, as the case may be, if at any time any payment of
any of the
Guaranteed Obligations are annulled, set aside, invalidated,
declared to be
fraudulent or preferential, rescinded or must otherwise be
returned, refunded or
repaid by Administrative Agent upon the insolvency, bankruptcy,
dissolution,
liquidation or reorganization of any Borrower or any other
guarantor, or upon or
as a result of the appointment of a receiver, intervener or
conservator of, or
trustee or similar officer for, any Borrower or any other
guarantor or any
substantial part of its property or otherwise, all as though
such payment or
payments had not been made.
5. ENFORCEMENT OF GUARANTY. In no event shall Administrative
Agent have any
obligation (although it is entitled, at its option) to proceed
against Borrowers
or any Colla
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