Document:

Exhibit 10.3 - LS Power Equity Partners Guarantee

EXHIBIT 10.3
LS POWER EQUITY PARTNERS GUARANTEE

This GUARANTEE dated as of April 17, 2014 (the “Effective Date”), is made by LS Power Equity Partners III, L.P., a Delaware limited partnership (“Guarantor”), for the benefit of Calpine Corporation, a Delaware limited liability company (“Beneficiary”) in its own capacity and as representative for Calpine Project Holdings, Inc., a Delaware corporation (“Calpine Project Holdings”), and CalGen Expansion Company, LLC (“CalGen”).

WHEREAS, NatGen Southeast Power LLC (“Purchaser”) and each of Beneficiary, Calpine Project Holdings and CalGen (collectively, “Sellers”), entered into that certain Purchase and Sale Agreement dated as of April 17, 2014 (the “Agreement”) (terms used herein and not otherwise defined having the means set forth in the Agreement); and
 
WHEREAS, Sellers desire to sell to Purchaser, and Purchaser desires to purchase from Sellers, all of the Interests, on the terms and conditions provided in the Agreement; and
WHEREAS, Guarantor is the ultimate parent of Purchaser; and
WHEREAS, Sellers are willing to execute and deliver the Agreement on the condition that Guarantor execute and deliver this Guarantee.

NOW, THEREFORE, for value received, Guarantor agrees as follows:

		
	1.
	Guarantee.  Guarantor irrevocably and unconditionally guarantees (as primary obligor and not merely as surety), subject to such limitations of liabilities of Purchaser as are set forth in the Agreement, to Beneficiary the prompt and complete payment by Purchaser when and as due of its payment obligations under, and in accordance with, Section 8.03 of the Agreement (the “Obligations”), commencing on the Effective Date and terminating on the Termination Date (as defined below). This is a guarantee of payment and performance not merely a guarantee of collection and a separate action or actions may be brought and prosecuted against Guarantor to enforce this Guarantee, irrespective of whether any action is brought against Purchaser or whether Purchaser is joined in any such action or actions. If at any time Purchaser fails to pay or otherwise perform any Obligation for any reason as and when due, Guarantor will pay or otherwise perform, or cause to be paid or otherwise performed in full such Obligation directly for Beneficiary’s benefit promptly upon Beneficiary’s demand therefor and without Beneficiary having to make a prior demand on Purchaser and Beneficiary may take any and all actions available hereunder or under applicable law to collect or cause to be performed any of Guarantor’s liabilities and obligations hereunder in respect of such Obligation. Guarantor hereby irrevocably and unconditionally (i) waives all defenses it may have as a guarantor or surety and (ii) covenants not to assert or otherwise seek to take advantage of any such defenses.  Notwithstanding anything to the contrary herein, this Guarantee shall continue to be effective or reinstated, as the case may be, if at 

any time payment of any of the Obligations, or any part thereof, is rescinded or must otherwise be returned by Beneficiary for any reason, including without limitation upon the insolvency, bankruptcy or reorganization of Purchaser or otherwise, all as though the payment of such Obligations had not been made.  Notwithstanding anything to the contrary contained herein or in the Agreement, Guarantor’s maximum aggregate liability under this Guaranty shall not exceed One Hundred Nine Million Nine Hundred Thousand Dollars (US$109,900,000) (the “Maximum Amount”)

		
	2.
	Guarantor’s Obligations.  Without limitation or waiver of any defenses to performance or payment that Purchaser would otherwise be entitled to under the Agreement, Guarantor’s obligations under this Guarantee are absolute and unconditional, shall remain in force until the Termination Date and shall not be affected, impaired, reduced, modified, released or discharged for any reason whatsoever prior thereto, including without limitation:

		
	(i)
	the extension of time for payment or performance of any Obligation or the amendment, extension or renewal of the Agreement or any Obligation;

		
	(ii)
	any delay or failure by Beneficiary to enforce or exercise any right or remedy under the Agreement, or waiver by Beneficiary of any such right or remedy;

		
	(iii)
	any transfer, assignment or mortgaging by Beneficiary of any interest in the Agreement or this Guarantee;

		
	(iv)
	the voluntary or involuntary liquidation, dissolution, sale or other disposition of all or substantially all the assets and liabilities, or the voluntary or involuntary receivership, insolvency, bankruptcy, assignment for the benefit of creditors, reorganization or other similar proceeding affecting Purchaser, or the disaffirmance of the Agreement in any such proceeding;

		
	(v)
	any merger, consolidation or other reorganization to which Purchaser, Guarantor or any related entity is a party, or any direct or indirect sale or disposition of Guarantor’s or Purchaser’s assets or Guarantor’s direct or indirect ownership interest in Purchaser;

		
	(vi)
	the status, power or authority (or lack thereof) of Purchasers to enter into the Agreement or to perform thereunder;

		
	(vii)
	the failure of Purchaser to have authorized or obtained any necessary approval (governmental or otherwise) to enter into the Agreement;

		
	(viii)
	the lack of validity or enforceability of the Agreement; or

		
	(ix)
	the existence, validity, enforceability, perfection, release, or extent of any collateral for such Obligations. 

Beneficiary shall not be obligated to file any claim relating to the Obligations owing to it in the event that Purchaser become subject to a bankruptcy, reorganization, or a similar 

proceeding, and the failure of Beneficiary to so file shall not affect Guarantor’s obligations hereunder.

All payments made hereunder shall be made in immediately available funds without reduction, whether by offset, payment in escrow or otherwise. Guarantor shall pay the reasonable costs (including attorney’s fees) incurred by Beneficiary in connection with enforcing this Guaranty.

		
	3.
	Waivers by Guarantor.  Guarantor waives (i) notice of the acceptance of this Guarantee, demand or presentment for payment to Purchaser or the making of any protest, notice of the amount of the Obligations outstanding at any time, notice of failure to perform on the part of Purchaser, notice of any amendment, modification or  waiver  of  or  under  the  Agreement, and all other notices or demands not specified hereunder, (ii) any requirement of diligence or promptness on the part of Beneficiary or that Beneficiary exhaust any right or take any action against Purchaser, any collateral security or any other guarantor or surety, and (iii) until the indefeasible payment in full of the Obligations, any right to subrogation to any of the rights of Purchaser or any other guarantor against Beneficiary, reimbursement, exoneration or contribution from Purchaser or any other guarantor in respect of payments made by Guarantor hereunder or any other similar rights.  If any amount shall be paid to Guarantor on account of such subrogation rights at any time when all the Obligations shall not have been absolutely, completely and indefeasibly paid, performed or otherwise discharged, all such amounts shall be held in trust for the benefit of Beneficiary and shall forthwith be paid to Beneficiary and applied to the Obligations, whether matured or unmatured.

		
	4.
	Representations and Warranties. Guarantor hereby represents and warrants to Beneficiary that (i) it is a limited liability company validly existing and in good standing under the laws of the state of Delaware and has all necessary and appropriate corporate powers and authority to execute, deliver and perform under this Guarantee, (ii) its execution, delivery and performance of this Guarantee and the consummation of the transactions contemplated hereby have been duly and validly authorized by all necessary limited liability action, and no other proceedings on the part of Guarantor are necessary to authorize this Guarantee or to consummate the transactions contemplated hereby and (iii) this Guarantee constitutes its legal, valid and binding obligations enforceable against Guarantor in accordance with its terms (except as enforceability may be limited by bankruptcy, insolvency, moratorium and other similar laws affecting enforcement of creditors’ rights in general principles of equity).

		
	5.
	Liability.  (i) Guarantor shall not be liable for special, punitive, exemplary, consequential or indirect damages, or lost profits or Losses calculated by reference to any multiple of earnings before interest, tax, depreciation or amortization (or any other valuation methodology) whether based on contract, tort, strict liability, other Law or otherwise and whether or not arising from the Beneficiary’s sole, joint or concurrent negligence, strict liability or other fault for any matter relating to this Guarantee; provided, that, Guarantor shall be liable for such damages solely to the extent claimed by third parties.

(ii)       No Representative, Affiliate of, or direct or indirect equity owner in, Guarantor shall have any personal liability to Beneficiary or any other Person as a result of the breach of any representation, warranty, covenant, agreement or obligation of Guarantor in this Guarantee.

(iii)       Guarantor shall have the benefit of all limitations on liability set forth in the Agreement.

		
	6.
	Miscellaneous.  No provision of this Guarantee may be amended or waived except by a written instrument executed by Guarantor and Beneficiary.  This Guarantee shall not be deemed to benefit any person except Beneficiary. This Guarantee supersedes and replaces any guarantees that pertain to the Agreement prior to the effective date of this Guarantee.  This Guarantee shall be binding upon the successors and assigns of Guarantor and inure to the benefit of the Beneficiary and its successors and assigns.  Guarantor may not assign its obligations under this Guarantee without the express prior written consent of Beneficiary and any purported assignment without such consent shall be null and void, provided that, for purposes of clarity, any transaction involving a merger, consolidation, sale of all or substantially all of its assets or similar corporate transaction by Guarantor shall not be deemed an assignment hereunder.  Beneficiary may assign its rights and obligations hereunder, in whole or in part, to one or more of its Affiliates and the Beneficiary or any such Affiliate may collaterally assign its rights hereunder to its lenders.  Any provision contained in this Guarantee which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction

		
	7.
	GOVERNING LAW.  THIS GUARANTEE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED ENTIRELY WITHIN SUCH STATE, WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES THEREOF. ANY DISPUTES OR CLAIMS ARISING OUT OF OR IN CONNECTION WITH THIS GUARANTEE SHALL BE SUBMITTED TO THE EXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK AND THE FEDERAL COURTS OF THE UNITED STATES OF AMERICA LOCATED IN THE STATE OF NEW YORK, COUNTY OF NEW YORK, AND APPROPRIATE APPELLATE COURTS THEREFROM; PROVIDED THAT TO THE EXTENT THAT PERSONAL JURISDICTION CAN NOT BE HAD OVER A PARTY IN THE STATE OF NEW YORK, THE OTHER PARTY MAY SEEK TO BRING A CLAIM AGAINST SUCH PARTY WHEREVER JURISDICTION MAY BE PROPERLY ASSERTED. EACH OF THE PARTIES HERETO ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS GUARANTEE IS LIKELY TO 

INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE EACH SUCH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OR RELATING TO THIS GUARANTEE. THE PARTIES HEREBY IRREVOCABLY WAIVE, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY OBJECTION WHICH THEY MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY DISPUTE ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREBY BROUGHT IN SUCH COURT OR ANY DEFENSE OF INCONVENIENT FORUM FOR THE MAINTENANCE OF SUCH DISPUTE. EACH OF THE PARTIES HERETO AGREES THAT A JUDGMENT IN ANY SUCH DISPUTE MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW.  THIS CONSENT TO JURISDICTION IS BEING GIVEN SOLELY FOR PURPOSES OF THIS GUARANTEE, AND IS NOT INTENDED TO, AND SHALL NOT, CONFER CONSENT TO JURISDICTION WITH RESPECT TO ANY OTHER DISPUTE IN WHICH A PARTY TO THIS GUARANTEE MAY BECOME INVOLVED. EACH OF THE PARTIES HERETO HEREBY CONSENTS TO PROCESS BEING SERVED BY ANY PARTY TO THIS AGREEMENT IN ANY SUIT, ACTION, OR PROCEEDING OF THE NATURE SPECIFIED IN THIS PARAGRAPH 7 BY THE MAILING OF A COPY THEREOF IN THE MANNER SPECIFIED BY THE PROVISIONS OF PARAGRAPH 8.

		
	8.
	Notices. All notices and other communications hereunder shall be in writing and shall be deemed given if delivered personally to, or by nationally recognized overnight courier service, or mailed by registered or certified mail (return receipt requested) if and when received by, or sent via facsimile if and when received by, the parties at the following addresses (or at such other address for a party as shall be specified by like notice). Any party may change its address to which notice is given hereunder by providing notice of same in accordance with this paragraph 8.

		
	                   To Guarantor:
	LS Power Equity Partners III, LP

c/o LS Power Equity Advisors LLC
Two Tower Centre
East Brunswick, NJ 06880
Attention: General Counsel
Fax: 212-615-3440

		
	With copy to:
	Milbank, Tweed, Hadley & McCloy LLP

1 Chase Manhattan Plaza

New York, New York 10005
Attention: William Bice
Fax: 212-530-5219

		
	To Beneficiary:
	Calpine Corporation

717 Texas Avenue, Suite 1000
Houston, TX 77002
Attn: Chief Legal Officer
Fax: (713) 830-2001

		
	With copy to:
	White & Case LLP

1155 Avenue of the Americas
New York, NY 10036
Attn: Michael S. Shenberg, Esq.
Carolyn Vardi, Esq.
Fax: (212) 829-8535

		
	9.
	Termination. This Guarantee shall terminate and be of no further force and effect on the earliest to occur of (a) the occurrence of Closing (as such term is defined in the Agreement), (b) the termination of the Agreement except for a termination pursuant to Section 8.01(d) thereof and (c) the date when the Maximum Amount due under this Guaranty has been paid (the earliest such date, the “Termination Date”) unless Beneficiary shall have asserted a claim under the Agreement prior to such termination, in which case this Guarantee shall not terminate until such claim shall have been resolved.

IN WITNESS WHEREOF, Guarantor has caused this Guarantee to be duly executed and delivered as of the date first above written.

LS POWER EQUITY PARTNERS III, L.P.

By LS POWER PARTNERS III, L.P., its general partner

By LS POWER FUND III GP, LLC, its general partner

By:      ____/s/ EDWARD J. SONDEY________
Name: Edward J. Sondey
Title: Sr Managing Director

[Signature Page to LS Fund Guaranty]

NEWYORK 9180982
	
			
	NEWYORK 9190442Exhibit 10.4 - Confidentiality and Non-Disclosure Agreement

EXHIBIT 10.4
CONFIDENTIALITY AND
NON-DISCLOSURE AGREEMENT

This Confidentiality and Non-Disclosure Agreement (“Agreement”) is entered into as of February 19, 2014, by and between Calpine Corporation, a Delaware corporation with its principal executive offices at 717 Texas Avenue, Suite 1000, Houston, Texas 77002 ("Calpine"); and LS Power Equity Advisors, LLC, a Delaware limited liability company, with its principal executive offices at  1700 Broadway, 35th Floor, NY, NY 10019 (“LS Power”), referred to collectively as "Parties" and individually as "Party."

RECITALS

		
	A.
	The Parties desire to exchange certain proprietary or confidential information for the purpose of evaluating the potential acquisition of certain of Calpine’s power generating facilities and other assets (the “Proposed Transaction”); and

		
	B.
	The Parties are willing to provide such information for such purpose in accordance with the terms hereof;

NOW, THEREFORE, Calpine and LS Power do hereby mutually agree as follows:

1.    Definitions.

		
	a.
	"Confidential Information" shall mean all confidential or proprietary written, recorded, electronic or oral information or data (including without limitation research, developmental, engineering, manufacturing, technical, marketing, sales, financial, operating, performance, cost, business and process information or data, trade secrets, discoveries, ideas, designs, data, source code, object code, processes, computer programs, developments, flow diagrams, know-how, and computer programming and other software and software techniques) provided (whether such confidentiality or proprietary status is indicated orally or in writing, whether or not the specific words "confidential" or "proprietary" are used) to a Party (the “Receiving Party”) by the other Party (the “Disclosing Party”) in the course of the exchange of such information or data between the Parties.  Without limiting the aforesaid, the existence of discussions between the Parties regarding the Proposed Transaction shall constitute Confidential Information hereunder.  

		
	b.
	“Person” shall be broadly interpreted to include, without limitation, any corporation, company, partnership, other entity or individual.

		
	c.
	“Representatives” shall mean as to any Person, its directors, officers, employees, agents and advisors (including, without limitation, financial advisors, attorneys and accountants).

		
	2.
	Confidentiality and Non-Use.  In consideration of each Party's providing Confidential Information, the Parties agree as follows:

1

		
	a.
	The Receiving Party shall hold confidential and not disclose to any Person, without the prior written consent of the Disclosing Party, all Confidential Information and any information about the Proposed Transaction, or the terms or conditions or any other facts relating thereto, including, without limitation, the fact that discussions are taking place with respect thereto or the status thereof, or the fact that Confidential Information has been made available to the Receiving Party or its Representatives; provided, however, that the Receiving Party may disclose such Confidential Information to its Representatives who are actively and directly participating in its evaluation of the Proposed Transaction or who otherwise need to know the Confidential Information for the purpose of evaluating the Proposed Transaction;

		
	b.
	The Receiving Party shall cause all its Representatives to observe the terms of this Agreement and shall be responsible for any breach of the terms of this Agreement by it or its Representatives; and

		
	c.
	The Receiving Party shall return or destroy all Confidential Information (including all copies thereof) within thirty (30) days of receipt of a written request.

In addition to the foregoing, the Receiving Party will not use the Confidential Information (a) in any way detrimental to the Disclosing Party’s shareholders or (b) for any purpose other than in connection with the Proposed Transaction between the Parties.

		
	3.
	Exceptions to the Confidentiality and Non-Use Obligations.  The obligations imposed by Section 2 hereof shall not apply, or shall cease to apply, to any Confidential Information if or when, but only to the extent that, such Confidential Information:

		
	a.
	was known to the Receiving Party prior to the receipt of the Confidential Information; or

		
	b.
	was, or becomes through no breach of the Receiving Party's obligations hereunder, known to the public; or

		
	c.
	becomes known to the Receiving Party from sources other than the Disclosing Party under circumstances not involving any breach of any confidentiality obligation; or

		
	d.
	is independently developed by the Receiving Party, as evidenced by the written records thereof.

It shall not be a breach of the confidentiality obligations hereof for a Receiving Party to disclose Confidential Information where, but only to the extent that, such disclosure is required by law or applicable legal process, provided in such case the Receiving Party shall (i) give the earliest notice possible to the Disclosing Party that such disclosure is or may be required and (ii) reasonably cooperate in protecting such confidential or proprietary nature of the Confidential Information which must so be disclosed.

2

		
	4.
	No Further Agreements Hereunder.  Neither Calpine nor LS Power or any parent, subsidiary or affiliate thereof, shall be under any obligation to enter into any further agreements with the other signatory hereto or its parents, subsidiaries or affiliates of any nature whatsoever as a result of this Agreement.  The Parties shall be free at all times to hold negotiations or enter into agreements with any other persons whatsoever (including with respect to projects under discussion by the Parties hereto) in addition to or in lieu of the discussions hereunder and any such activities shall not be a breach of this agreement or any obligations owed to the other Party hereunder.  Each Party hereto reserves the right, in its sole discretion, to decline, to retract or to reject at any time any proposal which has not yet become legally binding by execution of a written agreement between the Parties with respect thereto, or with respect to any further agreements or business arrangements with the other Party hereto, its parents, subsidiaries or affiliates and to terminate all further discussions and negotiations.

		
	5.
	No Representations and Warranties.  Each of the Parties make no representation or warranties, express or implied, of any kind to the other Party with respect to the Confidential Information, including without limitation with respect to the accuracy or completeness thereof.  Any representations or warranties shall be made thereby, if at all, only in definitive written agreements that may be entered into hereafter.

		
	6.
	Termination; Duration of Obligations.  Unless sooner terminated by mutual written Agreement of the Parties hereto, this Agreement and the obligations hereunder shall terminate one (1) year from the date hereof. 

		
	7.
	Entire Agreement.  This Agreement represents the entire understanding and agreement of the Parties and supersedes all prior communications, agreements and understandings between the Parties relating to the subject matter hereof.  

		
	8.
	Waivers; Amendments; Assignment; Counterparts.  This Agreement may not be modified, amended or waived except by a written instrument duly executed by both Parties.  No failure or delay by either Party in exercising any right, power or privilege hereunder shall operate as a waiver thereof, nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any right, power or privilege hereunder.  This Agreement may not be assigned by either Party without the prior written consent of the other and shall be binding on, and inure to the benefit of, the respective successors of the Parties thereto.  This Agreement may be signed in two or more counterpart originals, each of which shall constitute an original document.  The Parties agree that this Agreement can be executed via facsimile signatures and be binding.  

		
	9.
	Governing Law; Disputes.  This Agreement is made subject to and shall be construed under the laws of the State of New York, without giving effect to its principles or rules regarding conflicts of laws, and that the state and federal courts situated in the State of New York shall have exclusive jurisdiction to resolve any disputes with respect to this Agreement or the Confidential Information with each Party irrevocably consenting to the jurisdiction thereof for any actions, suits or proceedings arising out of or relating to this Agreement or the Confidential Information, and each Party irrevocably waives its rights to jury trials with respect thereto.  

3

		
	10.
	Remedies.  Without prejudice to the rights and remedies otherwise available to either Party, each Party shall be entitled to equitable relief by way of injunction or otherwise if the Receiving Party or any of its Representatives breach or threaten to breach any of the provisions of this Agreement and the Receiving Party shall not plead in defense thereto that there would be an adequate remedy at law. 

		
	11.
	Non-Publicity: All media releases, public announcements and other disclosures by either Party relating to this Agreement or the subject matter hereof, including promotional or marketing material, but excluding announcements intended solely for internal distribution or to meet legal or regulatory requirements, shall be coordinated with and approved by the other Party prior to release.  In addition, the Receiving Party shall refrain from removing, overprinting or defacing any notices of copyright, trademark, logo or other proprietary identifications or notices of confidentiality, from any originals or copies of the Disclosing Party’s Confidential Information.

IN WITNESS WHEREOF, each of the Parties has caused this Agreement to be executed by their respective, fully authorized representatives as of the date first written above.
    
	
					
	Calpine Corporation
	 
	LS Power Equity Advisors, LLC

	

By:
	/s/ W. THADDEUS MILLER
	 
	

By:
	/s/ JAMES BARTLETT

	

Name:
	W. Thaddeus Miller
	 
	

Name:
	James Bartlett

	

Title:
	Executive Vice President, Chief Legal Officer & Secretary
	 
	

Title:
	President

	

Date:
	02/19/14
	 
	

Date:
	02/19/14

4

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