Exhibit 10.13

 

[Execution Copy]

 

GUARANTEE

 

dated as of August 11, 2011

 

by FS Energy and Power Fund, a Delaware statutory trust (the Guarantor) in favor
of Citibank, N.A. (the Beneficiary).

 

EP Investments LLC, a limited liability company formed under the laws of the
State of Delaware (the Obligor), and the Beneficiary are parties to an ISDA
Master Agreement dated as of August 11, 2011 (as modified and supplemented and
in effect from time to time, including by all Confirmations evidencing
Transactions entered into thereunder, the Master Agreement).  Terms used but not
defined herein have the respective meanings given to such terms in the Master
Agreement.

 

In order to induce the Beneficiary to enter into one or more Transactions with
the Obligor under the Master Agreement, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged by
the Guarantor, the Guarantor hereby agrees as follows:

 

GUARANTEE

 

1.             The Guarantor hereby guarantees to the Beneficiary the prompt
payment or delivery when expressed to be due (whether when stated to become due,
upon early termination or otherwise) of all amounts from time to time owing to
the Beneficiary by the Obligor under the Master Agreement and in respect of each
Transaction (including, without limitation, any interest payable thereon to the
extent provided in the Master Agreement), in each case strictly in accordance
with the terms of the Master Agreement (such obligations, collectively, the
Guaranteed Obligations).  If on or after any date when payment or delivery of
the Guaranteed Obligations is due any corporate officer of the Guarantor obtains
actual knowledge, or receives written notice from the Beneficiary, that such
payment or delivery was not made when due, the Guarantor shall make such payment
or delivery to the Beneficiary strictly in accordance with the terms of the
Guaranteed Obligations.

 

OBLIGATIONS UNCONDITIONAL; ETC.

 

Obligations Unconditional

 

2.(a)        The obligations of the Guarantor hereunder are absolute and
unconditional, irrespective of the value, genuineness, validity, regularity or
enforceability of the obligations of the Obligor under the Master Agreement or
any other agreement or instrument referred to therein and, to the fullest extent
permitted by applicable law, irrespective of any other circumstance whatsoever
that might otherwise constitute a legal or equitable discharge or defense of a
surety or guarantor in its

 

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capacity as such.  Without limiting the generality of the foregoing, the
occurrence of one or more of the following shall not (x) preclude the exercise
by the Beneficiary of any right, remedy or power hereunder or (y) alter or
impair the liability of the Guarantor hereunder, which will remain absolute and
unconditional as described above:

 

(i)     at any time or from time to time, without notice to the Guarantor, the
time for any performance of or compliance with any of the Guaranteed Obligations
shall be extended, waived or renewed, or any of the Guaranteed Obligations shall
be subordinated in right of payment to any other liability of the Obligor;

 

(ii)     any of the Guaranteed Obligations shall become due prior to their
stated maturity (whether upon early termination or otherwise), or any of the
Guaranteed Obligations shall be amended or otherwise modified in any respect, or
any right under the Master Agreement or any other agreement or instrument
referred to therein shall be amended or otherwise modified in any respect (other
than any amendment or other modification of this Guarantee not consented to by
the Guarantor), or any other guarantee of any of the Guaranteed Obligations or
any security therefor shall be released, substituted or exchanged in whole or in
part or otherwise dealt with;

 

(iii)      any lien or security interest granted to, or in favor of, the
Beneficiary as security for any of the Guaranteed Obligations shall fail to be
perfected;

 

(iv)     the occurrence of any Event of Default, Potential Event of Default or
Termination Event (or of any similar event with respect to any agreement or
instrument referred to in the Master Agreement);

 

(v)     the existence of any proceedings of the type described in
Section 5(a)(vii) of the Master Agreement with respect to the Obligor or any
other guarantor of or obligor on any of the Guaranteed Obligations; or the
Master Agreement or any agreement or instrument referred to in the Master
Agreement shall be rejected by any administrator, provisional liquidator,
conservator, receiver, trustee, custodian or other similar official for the
Obligor or for all or substantially all its assets in any such proceedings;

 

(vi)     any delay, failure or inability of the Obligor or any other guarantor
or obligor in respect of any of the Guaranteed Obligations to perform, willful
or otherwise, any provision of the Master Agreement or any agreement or
instrument referred to therein or otherwise in connection with the Guaranteed
Obligations;

 

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(vii)    the failure or breach of any representation or warranty (whether
written or oral) made by the Obligor or any other person or entity in the Master
Agreement or any agreement or instrument referred to therein or otherwise in
connection with the Guaranteed Obligations; or any event or circumstance
constituting fraud in the inducement or any other similar event or circumstance;

 

(viii)   any action or failure to act by the Beneficiary that adversely affects
the Guarantor’s right of subrogation arising by reason of any performance by the
Guarantor of this Guarantee;

 

(ix)      any suit or other action brought by, or any judgment in favor of, any
beneficiaries or creditors of, the Obligor or any other person or entity for any
reason whatsoever, including any suit or action in any way disaffirming,
repudiating, rejecting or otherwise calling into question any issue, matter or
thing in respect of the Master Agreement or any agreement or instrument referred
to therein or otherwise in connection with the Guaranteed Obligations;

 

(x)       any lack or limitation of status or of power, incapacity or disability
of the Obligor or any other guarantor or obligor in respect of any of the
Guaranteed Obligations; or

 

(xi)      any change in the laws, rules or regulations of any jurisdiction, or
any present or future action or order of any governmental authority, amending,
varying or otherwise affecting any of the Guaranteed Obligations or the
obligations of any other guarantor or obligor in respect of any of the
Guaranteed Obligations, including any thereof affecting the validity or
enforceability of any of the Guaranteed Obligations or the obligations of any
other guarantor or obligor in respect of any of the Guaranteed Obligations or
the currency in which the Guaranteed Obligations are denominated or payable.

 

Guarantee of Payment and Not Collection

 

(b)           The Guarantor hereby expressly waives any requirement that the
Beneficiary exhaust any right, power or remedy or proceed against the Obligor
under the Master Agreement or any other agreement or instrument referred to
therein, or against any other person or entity under any other guarantee of, or
security for, any of the Guaranteed Obligations, it being agreed that this
Guarantee is a guarantee of payment and not of collection.

 

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Certain Waivers

 

(c)           The Guarantor hereby expressly waives notice of acceptance of this
Guarantee and of the Beneficiary entering into any Transaction and also
expressly waives diligence, presentment, demand of payment, protest and notice
of dishonor.

 

Suborogation

 

(d)           The Guarantor hereby agrees that, until the payment and
satisfaction in full of all Guaranteed Obligations and the termination of all
outstanding Transactions, the Guarantor will not exercise any right or remedy
(including, without limitation, the filing of any proof of claim in competition
with the Beneficiary in any proceedings of the type described in
Section 5(a)(vii) of the Master Agreement with respect to the Obligor) against
the Obligor or any other guarantor of any of the Guaranteed Obligations or any
security therefor arising by reason of any performance by the Guarantor of its
obligations under Section 1, whether by subrogation or otherwise.  In the event
that, prior to the payment and satisfaction in full of all Guaranteed
Obligations and the termination of all outstanding Transactions, any amount is
received by the Guarantor from the Obligor in respect of the performance by the
Guarantor of its obligations under Section 1, whether by subrogation or
otherwise, the Guarantor will promptly following receipt thereof pay such amount
to the Beneficiary for application to any Guaranteed Obligations owing to the
Beneficiary, whether matured or unmatured.

 

Reinstatement

 

(e)           The obligations of the Guarantor under this Guarantee will be
automatically reinstated if and to the extent that for any reason any payment or
delivery by or on behalf of the Obligor in respect of the Guaranteed Obligations
is rescinded or must be otherwise restored by any holder of any of the
Guaranteed Obligations, whether as a result of any proceedings in bankruptcy or
reorganization or otherwise, all as though such payment or delivery had not been
made.

 

Set-Off

 

(f)            Any amount that the Guarantor is obligated to pay or deliver
under this Guarantee shall be paid or delivered without set-off, deduction or
counterclaim; provided that nothing herein shall limit the ability of the
Guarantor to assert any right of set-off, deduction or counterclaim that the
Obligor is expressly entitled to assert under the Master Agreement.

 

Liability of the Guarantor in respect of Successor or Transferee

 

(g)           In the event that the Obligor shall consolidate or amalgamate
with, or merge with or into, or transfer all or substantially all its assets to,
another entity, the Guarantor will, unless the Beneficiary shall otherwise
consent in writing, continue

 

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to be obligated hereunder in respect of the Guaranteed Obligations, whether or
not the Guaranteed Obligations are assumed by such entity, and each reference
herein to the Obligor shall thereafter instead be a reference to such entity. 
In the event that the Obligor shall transfer any obligation of the Obligor under
the Master Agreement to any Affiliate of the Obligor that is incorporated in a
jurisdiction within the United States of America, the Guarantor will, unless the
Beneficiary shall otherwise consent in writing, continue to be obligated
hereunder in respect of the Guaranteed Obligations, and each reference herein to
the Obligor shall, with respect to the obligations so transferred, thereafter
instead be a reference to such Affiliate.

 

TAXES

 

No Deduction or Withholding Except as Required by Law

 

3.(a)        All payments under this Guarantee will be made without any
deduction or withholding for or on account of any Tax unless such deduction or
withholding is required by any applicable law, as modified by the practice of
any relevant governmental revenue authority, then in effect.

 

Notice; Payment; Additional Amounts

 

(b)           If the Guarantor is so required to deduct or withhold, then the
Guarantor will:  (i) promptly notify the Beneficiary of such requirement;
(ii) pay to the relevant authorities the full amount required to be deducted or
withheld (including the full amount required to be deducted or withheld from any
additional amount paid under Section 3(b)(iv) of this Guarantee) promptly upon
the earlier of determining that such deduction or withholding is required or
receiving notice that such amount has been assessed against the Beneficiary, and
in any event before penalties attach thereto or interest accrues thereon;
(iii) promptly forward to the Beneficiary an official receipt (or a certified
copy), or other documentation reasonably acceptable to the Beneficiary,
evidencing such payment to such authorities; and (iv) pay to the Beneficiary, in
addition to the payment to which the Beneficiary is otherwise entitled under
this Guarantee, such additional amount as is necessary to ensure that the net
amount actually received by the Beneficiary (free and clear of any Indemnifiable
Taxes, whether assessed against the Guarantor or the Beneficiary) will equal the
full amount the Beneficiary would have received had no such deduction or
withholding been required.

 

Limitations on Payment of Additional Amounts

 

(c)           The Guarantor will not be required to pay any additional amount to
the Beneficiary under Section 3(b)(iv) of this Guarantee to the extent that
(i) the Obligor would not be required to pay such additional amount to the
Beneficiary pursuant to Section 2(d)(i)(4) of the Master Agreement had the
payment in respect of which such deduction or withholding is or was required
been made by the

 

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Obligor instead of the Guarantor or (ii) such additional amount would not be
required to be paid but for the failure by the Beneficiary to furnish any form,
document or certificate that may be required or reasonably requested by the
Guarantor in order to allow the Guarantor to make a payment under this
Guarantee, or to allow the Guarantor to make a payment under or in respect of
the Master Agreement or any Transaction on behalf of the Obligor, without any
deduction or withholding for or on account of any Tax or with such deduction or
withholding at a reduced rate (so long as the completion, execution or
submission of such form, document or certificate would not materially prejudice
the legal or commercial position of the Beneficiary).

 

Liability of the Beneficiary

 

(d)           If:  (i) the Guarantor is required by any applicable law, as
modified by the practice of any relevant governmental revenue authority, to make
any deduction or withholding in respect of which the Guarantor would not be
required to pay an additional amount to the Beneficiary under
Section 3(b)(iv) of this Guarantee; (ii) the Guarantor does not so deduct or
withhold; and (iii) a liability resulting from such Tax is assessed directly
against the Guarantor, then, except to the extent the Beneficiary has satisfied
or then satisfies the liability resulting from such Tax, the Beneficiary, by its
acceptance of this Guarantee, shall be deemed to have agreed to promptly pay to
the Guarantor the amount of such liability (including any related liability for
interest or penalties).

 

Representations

 

4.             The Guarantor hereby represents to the Beneficiary (which
representations will be deemed to be repeated by the Guarantor on each date on
which a Transaction is entered into) that:

 

Status

 

(a)           It is a statuory trust duly organized, validly existing and in
good standing under the laws of the State of Delaware.

 

Powers

 

(b)           It has the power to execute and deliver this Guarantee and to
perform its obligations under this Guarantee and has taken all necessary action
to authorize such execution, delivery and performance.

 

No Violation or Conflict

 

(c)           Such execution, delivery and performance do not violate or
conflict with any law applicable to it, any provision of its constitutional
documents, any order or

 

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judgment of any court or other agency of government applicable to it or any of
its assets or any contractual restriction binding on or affecting it or any of
its assets.

 

Consents

 

(d)           All governmental and other consents that are required to have been
obtained by it with respect to the execution, delivery and performance of this
Guarantee have been obtained and are in full force and effect and all conditions
of any such consents have been complied with.

 

Obligations Binding

 

(e)           This Guarantee constitutes its legal, valid and binding
obligation, enforceable against the Guarantor in accordance with its terms
(subject to applicable bankruptcy, reorganization, insolvency, moratorium or
similar laws affecting creditors’ rights generally and subject, as to
enforceability, to equitable principles of general application (regardless of
whether enforcement is sought in a proceeding in equity or at law)).

 

Absence of Litigation

 

(f)            There is not pending or, to its knowledge, threatened against the
Guarantor, or against any entity controlled, directly or indirectly, by the
Guarantor, any entity that controls, directly or indirectly, the Guarantor or
any entity directly or indirectly under common control with the Guarantor, any
action, suit or proceeding at law or in equity or before any court, tribunal,
governmental body, agency or official or any arbitrator that is likely to affect
the legality, validity or enforceability against it of this Guarantee or its
ability to perform its obligations under this Guarantee.

 

Absence of Certain Events; Status as Credit Support Document

 

(g)           No Event of Default or Potential Event of Default or, to its
knowledge, Termination Event with respect to the Obligor would occur as a result
of its entering into or performing its obligations under this Guarantee, and
this Guarantee constitutes a Credit Support Document with respect to the Obligor
under the Master Agreement.

 

BENEFIT OF GUARANTEE; TRANSFER

 

5.             This Guarantee shall inure to the benefit of the Beneficiary and
its successors.  Neither this Guarantee nor any interest or obligation in or
under this Guarantee may be transferred (whether by way of security or
otherwise) by the Guarantor or the Beneficiary without the prior written consent
of the other; provided that the Beneficiary may, without the consent of the
Guarantor, transfer its interest in this Guarantee to any person or entity to
which any interest or obligation in or under the Master Agreement or any
Transaction

 

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is transferred in a manner that is not inconsistent with the Master Agreement. 
Any purported transfer that is not in compliance with this Section will be void.

 

CONTRACTUAL CURRENCY

 

6.             The provisions in the Master Agreement relating to payments and
judgments in the Contractual Currency (as defined in, or for purposes of, the
Master Agreement) shall apply to all payments by the Guarantor under this
Guarantee as though such provisions were set forth in full in this Guarantee,
except that references in such provisions to the Master Agreement and the
Obligor shall be deemed to be references, respectively, to this Guarantee and
the Guarantor.

 

AMENDMENTS; ETC.

 

Amendments

 

7.(a)        No amendment, modification or waiver in respect of this Guarantee
will be effective unless in writing and executed by each of the Guarantor and
the Beneficiary.

 

Survival of Obligations

 

(b)           Subject to Section 9, the obligations of the Guarantor under this
Guarantee will survive the termination of any Transaction.

 

No Waiver of Rights

 

(c)           A failure or delay in exercising any right, power or privilege in
respect of this Guarantee will not be presumed to operate as a waiver, and a
single or partial exercise of any right, power or privilege will not be presumed
to preclude any subsequent or further exercise, of that right, power or
privilege or the exercise of any other right, power or privilege.  The remedies
provided herein, in the Master Agreement and in any other agreement or
instrument referred to therein are cumulative, are not exclusive of any remedies
provided by law and may be exercised by the Beneficiary from time to time.

 

Headings

 

(d)           The headings used in this Guarantee are for convenience of
reference only and are not to affect the construction of or to be taken into
consideration in interpreting this Guarantee.

 

EXPENSES

 

8.             If the Guarantor defaults in the performance of any of its
obligations to the Beneficiary under this Guarantee, the Guarantor will, on
demand, indemnify and hold harmless the Beneficiary for and against all
reasonable out-of-pocket expenses, including

 

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reasonable legal fees, incurred by the Beneficiary by reason of the enforcement
and protection of its rights under this Guarantee, including, but not limited
to, costs of collection.

 

TERMINATION

 

9.             This Guarantee is a continuing and irrevocable guarantee, and
will apply to all Guaranteed Obligations whenever arising (including, without
limitation, with respect to outstanding Transactions entered into prior to the
date hereof); provided that the Guarantor may, by at least five Business Days’
prior written notice to the Beneficiary (such notice to be effective upon the
Beneficiary’s receipt of such notice), terminate its obligations under this
Guarantee, it being agreed that any such termination will not affect the
obligations of the Guarantor hereunder in respect of any Transaction entered
into prior to the date of any such termination.

 

NOTICES

 

Effectiveness

 

10.(a)      Any notice or other communication in respect of this Guarantee may
be given to the Guarantor to the address or number set forth beneath its
signature to this Guarantee in any manner set forth below and will be deemed
effective as indicated:

 

(i)     if in writing and delivered in person or by courier, on the date it is
delivered;

 

(ii)    if sent by telex, on the date the recipient’s answerback is received;

 

(iii)   if sent by facsimile transmission, on the date that transmission is
received by a responsible employee of the recipient in legible form (it being
agreed that the burden of proving receipt will be on the sender and will not be
met by a transmission report generated by the sender’s facsimile machine); or

 

(iv)  if sent by certified or registered mail (airmail, if overseas) or the
equivalent (return receipt requested), on the date that mail is delivered or its
delivery is attempted.

 

unless the date of that delivery (or attempted delivery) or that receipt, as
applicable, is not a Business Day or that communication is delivered (or
attempted) or received, as applicable, after the close of business on a Business
Day, in which case that communication shall be deemed given and effective on the
first following day that is a Business Day.

 

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Change of Addresses

 

(b)           The Guarantor may by notice to the Beneficiary change the address
or telex number at which notices or other communications are to be given to the
Guarantor.

 

Business Day

 

(c)           As used in this Guarantee, Business Day means a day on which
commercial banks are open for business (including dealings in foreign exchange
and foreign currency deposits) in New York City and in Philadelphia and, in
relation to any payment hereunder, in the place where the account to which a
payment is to be made is located and, if different, in the principal financial
center, if any, of the currency of payment.

 

GOVERNING LAW; JURISDICTION; SERVICE OF PROCESS

 

Governing Law

 

11.(a)      This Guarantee shall be construed in accordance with, and this
Guarantee and all matters arising out of or relating in any way whatsoever to
this Guarantee (whether in contract, tort or otherwise) shall be governed by,
the law of the State of New York.

 

Jurisdiction

 

(b)           With respect to any suit, action or proceedings relating to this
Guarantee (Proceedings), the Guarantor irrevocably:

 

(i)     submits to the non-exclusive jurisdiction of the courts of the State of
New York and the United States District Court located in the Borough of
Manhattan in New York City; and

 

(ii)    waives any objection which it may have at any time to the laying of
venue of any Proceedings brought in any such court, waives any claim that such
Proceedings have been brought in an inconvenient forum and further waives the
right to object, with respect to such Proceedings, that such court does not have
any jurisdiction over the Guarantor.

 

Nothing in this Guarantee precludes either party from bringing Proceedings in
any other jurisdiction nor will the bringing of Proceedings in any one or more
jurisdictions preclude the bringing of Proceedings in any other jurisdiction. 
The Guarantor hereby agrees that a final judgment in any such Proceedings shall
be conclusive and may be enforced in other jurisdictions otherwise having
jurisdiction over the Guarantor by suit on such final judgment or in any other
manner provided by law.

 

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Waiver of Immunities

 

(c)           The Guarantor irrevocably waives, to the fullest extent permitted
by applicable law, with respect to itself and its revenues and assets
(irrespective of their use or intended use), all immunity on the grounds of
sovereignty or other similar grounds from (i) suit, (ii) jurisdiction of any
court, (iii) relief by way of injunction, order for specific performance or for
recovery of property, (iv) attachment of its assets (whether before or after
judgment) and (v) execution or enforcement of any judgment to which it or its
revenues or assets might otherwise be entitled in any Proceedings in the courts
of any jurisdiction and irrevocably agrees, to the extent permitted by
applicable law, that it will not claim any such immunity in any Proceedings.

 

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IN WITNESS WHEREOF the Guarantor has executed this Guarantee on the date
specified below with effect from the date specified on the first page of this
Guarantee.

 

 

FS ENERGY AND POWER FUND

 

 

 

 

 

 

 

By

/s/ Gerald F. Stahlecker

 

Name: Gerald F. Stahlecker

 

Title: Executive Vice President

 

 

 

Address for Notices:

 

 

 

FS Energy and Power Fund

 

Circa Centre

 

2929 Arch Street, Suite 675

 

Philadelphia, PA 19104

 

 

 

Attention: William Goebel

 

Phone: 215-220-4247

 

Email: bill.goebel@franklinsquare.com

 

 

 

Attention: Ken Miller

 

Phone: 215-495-1164

 

Email: ken.miller@franklinsquare.com

 

Fax: 215-222-4649

 

 

 

With copy to:

 

 

 

GSO Capital Partners

 

280 Park Ave., 11th Floor

 

New York, N.Y. 10028

 

 

 

Attention: Angelina Perkovic

 

Angelina.perkovic@gso.com

 

Phone: 212-503-2146

 

Fax: 212-503-6921

 

 

 

- and -

 

 

 

Isabelle Pradel

 

Isabelle.pradel@gsocap.com

 

Phone: 212-503-2149

 

Fax: 212-503-2149

 

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