Exhibit 10.5.3.2
Detroit New York Chicago Dallas
(APSERVICES LLC LOGO) [f27583f2758302.gif]
November 3, 2006
Robert May
Calpine Corporation
50 West San Fernando Street
San Jose, CA 95113
Re: Agreement for Restructuring Services
This letter is the first amendment of the Agreement dated December 17, 2005 (the
“Agreement”), between AP Services LLC, a Michigan limited liability company
(“APS”) and Calpine Corporation (“Calpine” or the “Company”). Unless otherwise
modified herein, the terms and conditions of the Agreement remain in full force
and effect.

Tasks
The following tasks are added to those stated in the Agreement:

•   Assist in the review and assessment of executory contracts to identify
rejection opportunities.   •   Collaborate with internal and external legal
counsel to develop strategies for dealing with uneconomic contracts that cannot
be rejected due to jurisdictional issues.   •   Support Company process to
evaluate and sell certain plants and assets that are no longer strategically
relevant to Calpine.   •   Assist in the development and process for completing
the monthly operating reports and other reporting required during the
bankruptcy.   •   Assist the Company in analyzing and reconciling Chapter 11
bankruptcy claims, including reclamation analysis and potential preferences.   •
  Advising the Company’s accounting department on certain reporting requirements
and evaluating the closing process to accelerate the reporting of financial
results.   •   Support US company and evaluate issues related to the Canadian
chapter 11 filing.   •   Develop analysis to assess solvency of CES, LP and the
trading operations, including evaluating interco transactions.

2000 Town Center | Suite 2400 | Southfield, MI | 48075 | 248.358.4420 |
248.358.1969 fax | www.alixpartners.com

 

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(APSERVICES LLC LOGO) [f27583f2758302.gif]
Calpine Corporation
November 3, 2006
Page 2

•   Work with the Company to identify the total population of inter-company
general ledger accounts and to understand the purpose and nature of activity for
each inter-company account.   •   Work with management and the Company’s outside
counsel to review a sample of structured finance transactions, assess the
economic value of the transactions, and identify potential pre and post-petition
claims for the respective transactions.   •   Maintain a controlled and
repeatable forecasting methodology for the Debtors’ trading operations to
provide a forecast of cash flows based on current commodity prices and dispatch
trends rather than historical trends.   •   Develop a model whereby contractual
toll payments indexed to power and gas prices can be updated on a weekly basis
to account for changes in the commodity price index.   •   Assist the Company by
providing an analyst in the Treasury department responsible for maintaining a
daily bank reconciliation between forecasted and actual cash flow activity for
all cash accounts that sweep to Corp (over 20 accounts).   •   Assist the
Company by providing an analyst in the Credit Department responsible for
interacting with all counterparties on a daily basis, assessing the net exposure
between the counterparty and Calpine, and determining if any cash collateral
will need to posted or can be colleted. This analyst maintains the information
and documentation that will allow the Director of Credit the ability to help
minimize the working capital required in the trading organization.   •   Assist
the Company and its legal advisors in identifying possible substantive
consolidation scenarios, as well as support the Company in understanding both
the third-party and intercompany affiliate claims associated with each legal
entity and scenario   •   Managing the transition of accounting and finance
functions from San Jose to Houston, to include:

  •   Retentions of key San Jose staff through an appropriate transition period
    •   Recruiting, retention and training of new staff in Houston     •  
Transitioning of duties from San Jose staff to Houston staff

•   Diagnosis and develop strategies and tactics to enhance processes
surrounding accounting close and consolidation

 

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(APSERVICES LLC LOGO) [f27583f2758302.gif]
Calpine Corporation
November 3, 2006
Page 3

Staffing
The Staffing section of the Agreement is replaced in its entirety by the
following:
APS will provide Lisa Donahue to serve as the Company’s Chief Financial Officer,
reporting to the Company’s Chief Executive Officer. Working collaboratively with
the senior management team, the Board of Directors and other Company
professionals, Ms. Donahue will assist the Company in evaluating and
implementing strategic and tactical options through the restructuring process.
She will be assisted by Michael Feder and a staff of professionals at various
levels as provided on Exhibit A, all of whom have a wide range of skills and
abilities related to this type of assignment. In addition, we have relationships
with and periodically retain independent contractors with specialized skills and
abilities to assist us.
Staffing levels and assignments shall be determined through consultation between
the Company and APS. The staff may be assisted by or replaced by other
professionals at various levels, as required. APS will keep the Company informed
as to APS’ staffing and will add additional staff to the assignment after
consulting with the Company.
If APS finds it desirable to augment its professional staff with independent
contractors (an “I/C”) in this case, it shall do so consistent with applicable
bankruptcy law.

Schedule 1, Fees and Expenses
Section 2, Contingent Success Fee, of Schedule 1 is replaced in its entirety
with the following:
APS shall be eligible to receive an Emergence Incentive Bonus of up to
$6.0 million earned upon consummation of a confirmed plan of reorganization. The
threshold at which such bonus shall be earned and the maximum amount of the
Emergence Incentive Bonus shall be as specified in the schedule attached hereto;
provided that it shall remain within the sole discretion of the CEO to reduce
the Emergence Incentive Bonus below the maximum amount specified in the
schedule.
Please see the attached schedule for a detailed analysis of the APS Incentive
Bonuses.
APS reviews and revises its billing rates on January 1 of each year. However,
rates were not revised for the Temporary Staff in place on the engagement at
January 1, 2006. Therefore, APS will be returning to standard rates effective
January 1, 2007

Exhibit A
The attached Exhibit A replaces in its entirety the Exhibit A attached to the
Agreement.

 

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(APSERVICES LLC LOGO) [f27583f2758302.gif]
Calpine Corporation
November 3, 2006
Page 4
APS reviews and revises its billing rates on January 1 of each year. However,
rates were not revised for the Temporary Staff in place on the engagement at
January 1, 2006. Therefore, APS will be returning to standard rates effective
January 1, 2007

Exhibit A
The attached Exhibit A replaces in its entirety the Exhibit A attached to the
Agreement.
* * *
This letter is supplemental to, and not in lieu of, the Agreement, and, except
as modified herein, the Agreement shall remain in full force and effect.
Sincerely yours,
AP Services, LLC
/s/ Lisa J. Donahue
Lisa J. Donahue
Managing Director
Acknowledged and Agreed to:
CALPINE CORPORATION

         
By:
Its:
  /s/ Robert P. May
 
   
Dated:
 
 
   
 
 
 
   

 

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AP Services, LLC
Employment by Calpine Corporation
Exhibit A — Temporary Employees
Individuals with Executive Officer Positions

                          Commitment Name   Description   Hourly Rate   Full1 or
Part Time  
Lisa Donahue
  Chief Financial Officer   $670   Full  

Additional Temporary Employees

                          Commitment Name   Description   Hourly Rate   Full1 or
Part2Time
Amanda Knudsen
  Claims Resolution   $220   Full  
Timothy Rosolio
  Claims Resolution   $220   Full  
Christopher Anderson
  Contract Resolution   $260   Full  
Aleksandra Bozic
  Contract Resolution   $280   Full  
Adam Hollerbach
  Treasury Analyst   $300   Full  
Robert Albergotti
  Restructuring   $300   Full  
Andrew Baker
  Intercompany claims   $300   Full  
Ryan Thurber-Dean
  Contract Resolution   $300   Part  
Robb McWilliams
  Claims Management   $300   Full  
Lauren Schulman
  Intercompany Claims   $300   Full  
Terry Singla
  Cash Management and Forecasting   $320   Full  
Meaghan Frawley
  Intercompany Claims   $330   Full  
Drew Lockard
  Claims Management   $330   Full  
Kevin Montague
  Restructuring   $350   Full  
Kyle Braden
  Cash Management and Forecasting   $380   Full  
Salvador Caputto
  Accounts Payable   $380   Full  
Jeffrey Webb
  Credit Analyst   $380   Full  
Heather Stack
  Intercompany Claims   $380   Full  
Tamie Vitek
  Accounting   $425   Full  
Jon Shell
  Accounting   $430   Full  
Henry Colvin
  Restructuring   $440   Full  
David Johnston
  Restructuring   $460   Full  
Bryan Porter
  Claims Management   $460   Full  
Thomas Osmun
  Business Plan/Restructuring   $480   Full  
Deborah Rieger-Paganis
  Contract Resolution   $480   Full  
Barry Folse
  Claims Management   $480   Full  
Doug Jung
  Intercompany Claims   $495   Full  
Michael Tinsely
  Contract Resolution   $495   Full  
Jamie Lisac
  Contract Resolution   $495   Full  
Robert Rakowski
  Contract Resolution   $495   Full  
John Castellano
  Cash Management, Forecasting and Restructuring   $510   Full  
Jared Yerian
  Restructuring   $590   Part  
Michael Feder
  Restructuring   $630   Full  

      The parties agree that Exhibit A can be amended by APS from time to time
to add or delete staff, and the Monthly Staffing Reports shall be treated by the
parties as such amendments.   1   Full time is defined as substantially full
time.   2   Part time is defined as approximately 2-3 days per week, with some
weeks more or less depending on the needs and issues facing the Company at that
time.

 

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Calpine Corporation
AP Services, LLC Compensation Summary
($MM)

         
Additional Emergence Incentive Component
  -   At the discretion of the CEO, upon consummation of a confirmed plan of
reorganization, earned on achievement of Market Adjusted Enterprise Value
(“Market AEV”) (1) and Plan Adjusted Enterprise Value (“Plan AEV”) metrics(2)
 
       
 
  -   To be earned beginning at Initial Market AEV hurdle of $5.0 billion
provided that Plan AEV is greater than $5.0 billion
 
       
 
  -   Increase by $133,334 for each $100 million increase in market AEV over
$4.5 billion(3) provided that payments do not exceed $4.0 million and Total
Incentive Bonus does not exceed $6.0 million.

Plan Adjusted Enterprise Value > $5,000

                                                                               
                                              Market Adjusted Enterprise Value  
                                                     
 
  $ 3,500     $ 4,000     $ 4,500     $ 5,000     $ 5,500     $ 6,000     $
6,500     $ 7,000     $ 7,500     $ 8,000     $ 8,500     $ 9,000        
Minimum Emergence Bonus
    *       *       *     $ 2.00     $ 2.00     $ 2.00     $ 2.00     $ 2.00    
$ 2.00     $ 2.00     $ 2.00     $ 2.00  
Valuation Component
    —       —       —       0.67       1.33       2.00       2.67       3.33    
  4.00       4.00       4.00       4.00  
% of Valuation Increase
                            0.13 %     0.13 %     0.13 %     0.13 %     0.13 %  
  0.13 %     0.00 %     0.00 %     0.00 %      
Total Incentive Bonus
  $ 0.00     $ 0.00     $ 0.00     $ 2.67     $ 3.33     $ 4.00     $ 4.67     $
5.33     $ 6.00     $ 6.00     $ 6.00     $ 6.00  

 

(1)   Market AEV shall be equal to: The market value of debt that is primarily
the obligation of reorganized Calpine Corporation (“Calpine”) (i.e., debt other
than all project-level debt and guarantees thereon including, without
limitation, notes payable, capital leases, project loans, project-level
preferred interests, and sale lease back obligations (collectively,
“Project-Level Debt”); plus the market value of preferred equity at reorganized
Calpine; minus cash on the balance sheet of reorganized Calpine upon the
effective date of a Plan or Reorganization (other than any restricted cash held
by direct or indirect subsidiaries posted in favor of trading counterparties,
cash posted to collateralize letters of credit and pre-petition asset sales
proceeds in escrow); plus the market value of reorganized Calpine’s common stock
(and any other equity-link securities including warrants) excluding non-vested
equity (including options) issued as part of the management incentive
compensation pursuant to a Plan of Reorganization. All market prices shall be
calculated as a 10-day average beginning on the 60th trading day following the
consummation date and for the following nine (9) trading days. Prices for debt
and preferred equity shall be calculated as an average price based on
AdvantageData (ADI quote), Factset, Market Loans (LoanX) and Bloomberg. The
average market price for any given debt, preferred or convertible security on
any given day shall be equal to the average of the trade prices for all trades
recorded on that day greater than or equal to $1 million of said security. Any
corporate-level debt, equity or equity-linked security (“Corporate-Level
Securities” for which there is no publicly quoted price shall be valued at face
value. Volume weighted-average prices for common equity shall be determined by
reference to Bloomberg’s AQR function. Market AEV shall be further adjusted for
the exclusion of any debt or other securities issues at reorganized Calpine used
to refinance Project-Level Debt.   (2)   Plan AEV shall be equal to: Total
Enterprise Value, as set forth in a confirmed Plan of Reorganization and/or its
accompanying Disclosure Statement, plus cash (excluding cash escrowed from
pre-petition asset sales) which will be distributed on or around the effective
date in accordance with said Plan of Reorganization (excluding any cash raised
through any and all post-petition and exit financing transactions); minus the
book value of all Project-Level Debt. Plan AEV shall be further adjusted upward,
to include 9a) cash received from asset sales consummated post-petition used to
repay any Corporate-Level Securities prior to the consummation of the Plan of
Reorganization; and (b) corporate-level cash used to repay Corporate-Level
Securities during the pendency of the chapter 11 cases (excluding any cash
raised through all pre- or post-petition financing and cash held in escrow from
pre-petition asset sales).   (3)   Equivalent to 13.3 bps for each incremental
$100 million in AEV achieved.   *   APS will have the same threshhold as for the
senior executives in the Emergence Incentive Plan.