<PAGE>

                                                                   EXHIBIT 10.16
                                                                  EXECUTION COPY

                       WORKING CAPITAL FACILITY AGREEMENT

                            Dated as of March 23, 2004

                  CALPINE GENERATING COMPANY, LLC, a Delaware limited liability
company, as borrower hereunder (the "Borrower"), CALPINE CALGEN HOLDINGS, INC.,
a Delaware corporation, as lender hereunder (the "Lender"), and CALPINE
CORPORATION, a Delaware corporation, solely as guarantor of the Lender's
obligations hereunder and for no other purpose (the "Lender Guarantor"), agree
as follows:

                                   ARTICLE I

                        DEFINITIONS AND ACCOUNTING TERMS

                  SECTION 1.01. Certain Defined Terms. As used in this
Agreement, the following terms shall have the following meanings (such meanings
to be equally applicable to both the singular and plural forms of the terms
defined):

                  "Affiliate" means, as to any Person, any other Person that,
         directly or indirectly, controls, is controlled by or is under common
         control with such Person or, in each case in which "Affiliate" is used
         in relation to the Borrower, is a director or officer of such Person.
         For purposes of this definition, the term "control" (including the
         terms "controlling", "controlled by" and "under common control with")
         of a Person means the possession, direct or indirect, of the power to
         vote, in each case in which "Affiliate" is used in relation to the
         Borrower, 10% or more of the Voting Stock or, in each case in which
         "Affiliate" is used in relation to the Lender, a majority of the Voting
         Stock of such Person or to direct or cause the direction of the
         management and policies of such Person, whether through the ownership
         of Voting Stock, by contract or otherwise.

                  "Agreement" means this Working Capital Facility Agreement.

                  "Business Day" means a day of the year on which banks are not
         required or authorized by law to close in New York City and, if the
         applicable Business Day relates to any Loan, on which dealings are
         carried on in the London interbank market and banks are open for
         business in London.

                  "Columbia Facility" means the natural gas-fired combined cycle
         power generation facility owned by a Subsidiary of the Borrower located
         in or about Columbia, South Carolina and which is under construction on
         the date of this Agreement.

                  "Confidential Information" means information that the Borrower
         or its advisors or agents furnish to the Lender in a writing designated
         as confidential, but does not include any such information that is or
         becomes generally available to the public (other than as a breach of
         Section 9.05) or that is or becomes available to the Lender on a
         non-confidential basis from a source other than the Borrower or its
         advisors or agents; provided that such source is not known by the
         Lender to be bound by a confidentiality agreement or other obligations
         of secrecy to the Borrower or another party.

                  "Daily Spark Spread Amount," as of any date of determination,
         shall be calculated as provided under Section 4.1 of the Index Based
         Gas Sale and Power Purchase Agreement.

                  "Debt" of any Person means, without duplication, (a) all
         indebtedness of such Person for borrowed money, (b) all obligations of
         such Person for the deferred purchase price of property or services
         (other than trade payables not overdue incurred in the ordinary course
         of such Person's business), (c) all obligations of such Person
         evidenced by notes, bonds, debentures or other similar instruments, (d)
         all obligations of such Person created or arising under any conditional
         sale or other title retention agreement with respect to property
         acquired by such Person (even though the rights and remedies of the
         seller or lender under such agreement in the event of default are
         limited to repossession or sale of such property),

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         (e) all obligations of such Person as lessee under leases that have
         been or should be, in accordance with GAAP, recorded as capital leases,
         (f) all non-contingent obligations of such Person in respect of
         acceptances, letters of credit or similar extensions of credit, (g) all
         net obligations of such Person in respect of Hedge Agreements, (h) all
         Debt of others referred to in clauses (a) through (g) above or clause
         (i) below guaranteed directly or indirectly in any manner by such
         Person, or in effect guaranteed directly or indirectly by such Person
         through an agreement (1) to pay or purchase such Debt or to advance or
         supply funds for the payment or purchase of such Debt, (2) to purchase,
         sell or lease (as lessee or lessor) property, or to purchase or sell
         services, primarily for the purpose of enabling the debtor to make
         payment of such Debt or to assure the holder of such Debt against loss,
         (3) to supply funds to or in any other manner invest in the debtor
         (including any agreement to pay for property or services irrespective
         of whether such property is received or such services are rendered) or
         (4) otherwise to assure a creditor against loss, and (i) all Debt
         referred to in clauses (a) through (h) above secured by (or for which
         the holder of such Debt has an existing, non-contingent right to be
         secured by) any Lien on property (including, without limitation,
         accounts and contract rights) owned by such Person, even though such
         Person has not assumed or become liable for the payment of such Debt.

                  "Debt for Borrowed Money" means Debt of the types described in
         clauses (a) though (f) of the definition of "Debt".

                  "Default" means any Event of Default or any event that would
         constitute an Event of Default but for the requirement that notice be
         given or time elapse or both.

                  "Disqualified Capital Stock" means that portion of any capital
         stock that, by its terms (or by the terms of any security into which it
         is convertible or for which it is exchangeable at the option of the
         holder thereof), or upon the happening of any event, matures or is
         mandatorily redeemable, pursuant to a sinking fund obligation or
         otherwise, or is redeemable at the sole option of the holder thereof,
         in any case, on or prior to the 91st day after the Termination Date.

                  "Dollars" and the "$" sign each means lawful currency of the
         United States of America.

                  "Effective Date" means the date first written above.

                  "Events of Default" has the meaning specified in Section 6.01.

                  "Facility" has the meaning given such term in the Index Based
         Gas Sale and Power Purchase Agreement.

                  "Force Majeure" means an event or circumstance that prevents
         the Borrower or any of its Subsidiaries from performing its obligations
         under any of its transactions, which was not anticipated as of the date
         such transaction was agreed upon, which is not within the reasonable
         control of, or the result of the negligence of, the Borrower or its
         Subsidiaries, and which, by the exercise of due diligence, the Borrower
         and its Subsidiaries are unable to overcome or avoid or cause to be
         avoided.

                  "GAAP" has the meaning specified in Section 1.03.

                  "Goldendale Facility" means the natural gas-fired combined
         cycle power generation facility owned by a Subsidiary of the Borrower
         located in or about Goldendale, Washington and which is under
         construction on the date of this Agreement.

                  "Guarantee" means the guarantee set forth in Article VIII.

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                  "Hedge Agreements" means, with respect to any specified
         Person, the obligations of such Person under:

                           (a)      interest rate swap agreements (whether from
                  fixed to floating or from floating to fixed), interest rate
                  cap agreements and interest rate collar agreements;

                           (b)      other agreements or arrangements designed to
                  manage interest rate risk; and

                           (c)      other agreements or arrangements designed to
                  protect such Person against fluctuations in currency exchange
                  rates or commodity prices.

                  "Index Based Gas Sale and Power Purchase Agreement" means that
         certain Index Based Gas Sale and Power Purchase Agreement, entered into
         as of the date hereof, among the Borrower, certain of the Borrower's
         Subsidiaries from time to time party thereto, and Calpine Energy
         Services, L.P., as such agreement may be amended, modified, restated,
         replaced, or supplemented.

                  "Interest Period" means the period commencing on the date of
         the initial Loan under this Agreement and ending on the last day of the
         period selected by the Borrower pursuant to the provisions below and,
         thereafter, each subsequent period commencing on the last day of the
         immediately preceding Interest Period and ending on the last day of the
         period selected by the Borrower pursuant to the provisions below. The
         duration of each such Interest Period shall be one, two, three, six,
         nine or twelve months, as the Borrower may, upon notice received by the
         Lender not later than 11:00 A.M. (San Jose time) on the Business Day
         prior to the first day of such Interest Period, select; provided,
         however, that:

                           (a)      if the Borrower does not designate the
                  duration of any Interest Period in accordance with the
                  foregoing, such Interest Period shall be for one month;

                           (b)      whenever the last day of any Interest Period
                  would otherwise occur on a day other than a Business Day, the
                  last day of such Interest Period shall be extended to occur on
                  the next succeeding Business Day, provided, however, that, if
                  such extension would cause the last day of such Interest
                  Period to occur in the next following calendar month, the last
                  day of such Interest Period shall occur on the next preceding
                  Business Day; and

                           (c)      whenever the first day of any Interest
                  Period occurs on a day of an initial calendar month for which
                  there is no numerically corresponding day in the calendar
                  month that succeeds such initial calendar month by the number
                  of months in such Interest Period, such Interest Period shall
                  end on the last Business Day of such succeeding calendar
                  month.

                  "LIBO Rate" means, for each Interest Period during which any
         Loan is outstanding, the rate of interest (expressed as an annual rate
         and rounded upward, if necessary, to the nearest one sixteenth of 1%)
         equal to the British Bankers Association (the "BBA") interest
         settlement rate for deposits in United States Dollars for a period
         comparable to such Interest Period as reported by any generally
         recognized financial information service as of 11:00 a.m. London time
         two Business Days prior to the first day of such Interest Period (which
         shall be a Business Day); provided, however, that if no such BBA
         interest settlement rate for the relevant Interest Period is available
         to the Lender, the LIBO Rate for the relevant Interest Period shall
         instead be the rate at which any first-class bank chosen by the Lender
         offers to place deposits in U.S. dollars with other first-class banks
         in the London interbank market for a period comparable to the
         applicable Interest Period at approximately 11:00 a.m. London time two
         Business Days prior to the first day of such Interest Period (which
         shall be a Business Day), in amounts equal to $1.0 million.

                  "Lien" means any lien, security interest or other charge or
         encumbrance of any kind, including, without limitation, the lien or
         retained security title of a conditional vendor and any easement, right
         of way or other encumbrance on title to real property.

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                  "Material Adverse Effect" means a material adverse effect on
         (a) the current or reasonably anticipated business, condition
         (financial or otherwise) or operations of the Borrower and its
         Subsidiaries taken as a whole, (b) the rights and remedies of the
         Lender under this Agreement or the Note or (c) the ability of the
         Borrower to perform its obligations under this Agreement or the Note.

                  "Net Cash Proceeds" means, with respect to any Prepayment
         Event, the cash proceeds received in respect of such event, net of the
         sum of (a) all reasonable fees, discounts, commissions and
         out-of-pocket expenses (including any legal, title and recording tax
         expenses) paid by the Borrower and its Subsidiaries to third parties
         (other than Affiliates) in connection with such event and (b) the
         amount of all taxes paid (or reasonably estimated to be payable) by the
         Borrower and its Subsidiaries (including taxes required to be paid or
         withheld in respect of the transfer of amounts from the recipient
         thereof to the Borrower or its Subsidiaries) that are directly
         attributable to such event (as determined reasonably and in good faith
         by the chief financial officer of the Borrower). Notwithstanding the
         foregoing, amounts that would otherwise constitute Net Cash Proceeds
         shall not constitute Net Cash Proceeds to the extent that (i) such
         amounts are required to be applied to the payment of Senior Debt; or
         (ii) the recipient of such amounts is not a Wholly-Owned Subsidiary and
         the consent of any Person other than the Borrower or any Wholly-Owned
         Subsidiary is required by applicable law or the terms of any
         organizational document of such non-Wholly-Owned Subsidiary or other
         agreement of such Subsidiary or any Affiliate of such Subsidiary in
         order for such Subsidiary to transfer such amounts to the Borrower
         (whether by distribution, loan or advance, repayment of intercompany
         Debt or other commercially reasonable means) and the Borrower
         endeavored in good faith to obtain such consent and such consents shall
         not have been obtained to permit the transfer of such proceeds by any
         such means. The Net Cash Proceeds received by any non-Wholly-Owned
         Subsidiary shall be deemed to equal the amount determined as set forth
         above multiplied by the Borrower's aggregate direct or indirect
         percentage ownership of such Subsidiary.

                  "Note" means a promissory note of the Borrower payable to the
         order of the Lender, delivered pursuant to a request made under Section
         2.07 in substantially the form of Exhibit A hereto, evidencing the
         aggregate indebtedness of the Borrower to the Lender resulting from the
         Loans made by the Lender.

                  "On Peak Days" has the meaning given such term under the Index
         Based Gas Sale and Purchase Agreement.

                  "Pastoria Facility" means the natural gas-fired combined cycle
         power generation facility owned by a Subsidiary of the Borrower located
         in or about Kern County, California and which is under construction on
         the date of this Agreement.

                  "Person" means an individual, partnership, corporation
         (including a business trust), joint stock company, trust,
         unincorporated association, joint venture, limited liability company or
         other entity, or a government or any political subdivision or agency
         thereof.

                  "Prepayment Event" means recovery by the Borrower or its
         Subsidiaries under claims described in Section 3.01(c)(i) or (iii), in
         each case if and to the extent Loans were made hereunder in connection
         with such claims.

                  "Proceeding" means any (a) insolvency, bankruptcy,
         receivership, liquidation, reorganization, readjustment, composition or
         other similar proceeding of or against the Borrower, its property or
         its creditors as such, (b) proceeding for any liquidation, dissolution
         or other winding-up of the Borrower, voluntary or involuntary, whether
         or not involving insolvency or bankruptcy proceedings, (c) general
         assignment for the benefit of creditors of the Borrower or (d) other
         marshalling of the assets of the Borrower.

                  "Senior Debt" means, at any date, all Debt for Borrowed Money
         of the Borrower and its Subsidiaries other than liabilities or
         obligations of the Borrower and its Subsidiaries in respect of: (a)
         U.S. federal, state, local, non-U.S. or other taxes; (b) any Debt among
         or between the Borrower and any

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         Subsidiary or Affiliate of the Borrower; (c) any trade payables; (d)
         any Disqualified Capital Stock; or (e) any Debt that by its express
         terms is not senior in right of payment to the Loans or is subordinated
         in right of payment to any other Debt of the Borrower; provided that at
         all times "Senior Debt" shall include (i) the Borrower's $235,000,000
         aggregate principal amount of First Priority Secured Floating Rate
         Notes due 2009, $640,000,000 aggregate principal amount of Second
         Priority Secured Floating Rate Notes due 2010, $680,000,000 aggregate
         principal amount of Third Priority Secured Floating Rate Notes due
         2011, $150,000,000 aggregate principal amount of ll 1/2% Third Priority
         Secured Notes due 2011, $600,000,000 aggregate principal amount of
         First Priority Secured Term Loans due 2009 and $100,000,000 aggregate
         principal amount of Second Priority Secured Term Loans due 2010, and
         borrowings under the Borrower's $200,000,000 Amended and Restated
         Credit Agreement and (ii) all other Debt of the Borrower that is pari
         passu with or senior to such term loans, notes and revolving credit
         facility borrowings in right of payment or otherwise.

                  "Spark Spread Amount" means, with respect to any period, the
         sum of the Daily Spark Spread Amounts for all On Peak Days for each
         Facility during such period, in all cases without adjustment pursuant
         to Section 4.3 of the Index Based Gas Sale and Power Purchase
         Agreement.

                  "Subsidiary" of any Person means any corporation, partnership,
         joint venture, limited liability company, trust or estate of which (or
         in which) more than 50% of (a) the issued and outstanding capital stock
         having ordinary voting power to elect a majority of the Board of
         Directors of such corporation (irrespective of whether at the time
         capital stock of any other class or classes of such corporation shall
         or might have voting power upon the occurrence of any contingency), (b)
         the interest in the capital or profits of such limited liability
         company, partnership or joint venture or (c) the beneficial interest in
         such trust or estate is at the time directly or indirectly owned or
         controlled by such Person, by such Person and one or more of its other
         Subsidiaries or by one or more of such Person's other Subsidiaries.

                  "Termination Date" means the earlier of (a) June 1, 2019, and
         (b) the date of termination in whole of the Commitment (as defined in
         Section 2.01) pursuant to Section 6.01.

                  "Voting Stock" means capital stock issued by a corporation, or
         equivalent interests in any other Person, the holders of which are
         ordinarily, in the absence of contingencies, entitled to vote for the
         election of directors (or persons performing similar functions) of such
         Person, even if the right so to vote has been suspended by the
         happening of such a contingency.

                  "Wholly-Owned Subsidiary" of any Person means a Subsidiary of
         such Person all of the outstanding capital stock or other ownership
         interests of which (other than directors' qualifying shares) will at
         the time be owned by such Person or by one or more Wholly-Owned
         Subsidiaries of such Person.

                  SECTION 1.02. Computation of Time Periods. In this Agreement
in the computation of periods of time from a specified date to a later specified
date, the word "from" means "from and including" and the words "to" and "until"
each mean "to but excluding."

                  SECTION 1.03. Accounting Terms. All accounting terms not
specifically defined herein shall be construed in accordance with generally
accepted accounting principles consistent with those applied in the preparation
of the Borrower's financial statements ("GAAP").

                                   ARTICLE II

                         AMOUNTS AND TERMS OF THE LOANS

                  SECTION 2.01. Working Capital Loans. The Lender agrees, on the
terms and conditions hereinafter set forth, to make loans (the "Loans") to the
Borrower from time to time on any Business Day during the period from the date
of this Agreement until the Termination Date; provided, however, that the
aggregate principal amount of all Loans outstanding under this Agreement at any
time shall in no event exceed $750,000,000 (the

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"Commitment"). Within the limits set forth in this Section 2.01, the Borrower
may borrow under this Section 2.01, prepay pursuant to Section 2.05 and
re-borrow under this Section 2.01.

                  SECTION 2.02. Making the Loans. The Borrower shall give the
Lender at least one Business Days' notice of any Loans under this Agreement,
specifying the date, the amount thereof and the initial Interest Period with
respect thereto. Not later than 1:00 PM (San Jose time) on the date of such Loan
and upon fulfillment of the applicable conditions set forth in Article III, the
Lender will wire transfer in same day funds the amount of such Loan to the
Collateral Trust Revenue Account No. 65572-1 "CALGEN REV A/C SUB SEC INT of WTC
AS CA", or such other account of the Borrower that the Borrower identifies in
writing to the Lender, in accordance with wire instructions provided by Borrower
to Lender.

                  SECTION 2.03. Repayment of Loans. The Borrower shall repay to
the Lender on the Termination Date the aggregate principal amount of the Loans
then outstanding.

                  SECTION 2.04. Interest on Loans. The Borrower shall pay
interest to the Lender on the outstanding and unpaid principal amount of the
Loans made hereunder at a rate per annum equal to the LIBO Rate plus 4.00%.
Interest shall be payable in arrears annually, on the first day of each June,
and on the Termination Date.

                  SECTION 2.05. Prepayment of Loans.

                  (a)      Optional. The Borrower may, upon at least two
         Business Days' notice to the Lender, prepay the outstanding principal
         amount of the Loans in whole or in part, together with accrued interest
         to the date of such prepayment on the principal amount prepaid.

                  (b)      Mandatory. In the event and on each occasion that any
         Net Cash Proceeds are received by or on behalf of the Borrower or any
         Subsidiary in respect of any Prepayment Event, the Borrower shall, not
         later than the 10th Business Day after such Net Cash Proceeds are
         received, prepay such portion of the outstanding principal amount of
         the Loans that relate to such Net Cash Proceeds together with accrued
         interest therein to the date of such prepayment that in the aggregate
         equals the amount of such Net Cash Proceeds.

                  SECTION 2.06. Payments and Computations.

                  (a)      The Borrower shall make each payment hereunder,
         irrespective of any right of counterclaim or set-off, not later than
         11:00 A.M. (San Jose time) on the day when due by wire transfer of same
         day funds, in Dollars, to such account of the Lender as the Lender
         identifies to the Borrower in writing.

                  (b)      All computations of interest shall be made by the
         Lender on the basis of a year of 360 days, in each case for the actual
         number of days (including the first day but excluding the last day)
         occurring in the period for which such interest is payable. Each
         determination by the Lender of an interest rate hereunder shall be
         conclusive and binding for all purposes, absent manifest error.

                  (c)      Whenever any payment hereunder or under the Note
         shall be stated to be due on a day other than a Business Day, such
         payment shall be made on the next succeeding Business Day, and such
         extension of time shall in such case be included in the computation of
         payment of interest.

                  SECTION 2.07. Note. The Borrower agrees that upon notice by
the Lender to the Borrower to the effect that a Note is required or appropriate
in order for the Lender to evidence (whether for purposes of pledge, enforcement
or otherwise) the Loans owing to, or to be made by, it, the Borrower shall
promptly execute and deliver to the Lender a Note payable to the Lender's order
in a principal amount up to the Commitment.

                  SECTION 2.08. Use of Proceeds. The proceeds of the Loans shall
be available (and the Borrower agrees that it shall use such proceeds) solely
for general corporate purposes of the Borrower and its Subsidiaries.

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                                   ARTICLE III

                     CONDITIONS TO EFFECTIVENESS AND LENDING

                  SECTION 3.01. Conditions Precedent to Loans. The obligation of
the Lender to make each Loan (including any initial Loan) shall be subject to
the following conditions precedent that on the date of such Loan:

                  (a)      The representations and warranties of the Borrower
         contained in Section 4.01 shall be true and correct in all respects at
         and as of the date of such Loan as though made on and as of such date;

                  (b)      No event shall have occurred and be continuing, or
         result from the making of such Loan, that would constitutes a Default
         by the Borrower; and

                  (c)      Such Loan shall be limited to one or more of the
         following amounts, and in submitting a request for such Loan pursuant
         to Section 2.02, the Borrowers shall be deemed to have represented that
         such Loan shall comply with this Section 3.01(c):

                           (i)      the amount of any claims made by the
                  Borrower or its Subsidiaries under any all-risk insurance
                  policy of the Borrower or its Subsidiaries for (1) business
                  interruption with respect to any electric generation facility
                  of the Borrower or its Subsidiaries, or (2) delay in start up
                  of any of the Goldendale Facility, the Pastoria Facility, and
                  the Columbia Facility and any other Facility as may become
                  subject to the Index Based Gas Sale and Power Purchase
                  Agreement which has not achieved commercial operation as of
                  the time it becomes so subject, plus the amount of any
                  applicable deductible;

                           (ii)     the amount of losses incurred by the
                  Borrower or its Subsidiaries as a result of uninsured Force
                  Majeure events;

                           (iii)    the amount of any claims for liquidated
                  damages against third-party contractors with respect to any of
                  the Goldendale Facility, the Pastoria Facility, and the
                  Columbia Facility and any other Facility as may become subject
                  to the Index Based Gas Sale and Power Purchase Agreement which
                  has not achieved commercial operation as of the time it
                  becomes so subject; or

                           (iv)     if the Spark Spread Amount for any of the
                  periods set forth in the following table is less than the
                  "Minimum Spark Spread" for such period set forth in the
                  following table, an amount equal to the difference between the
                  Minimum Spark Spread and the Spark Spread Amount for such
                  period:

<TABLE>
<CAPTION>
                                                                           MINIMUM
PERIOD                                                                   SPARK SPREAD
------                                                                   ------------
<S>                                                                      <C>
March 29, 2007 through September 27, 2007................                $ 90,833,000
September 28, 2007 through March 28, 2008................                  93,399,000
March 29, 2008 through September 27, 2008................                  95,966,000
September 28, 2008 through March 28, 2009................                  99,835,000
March 29, 2009 through September 27, 2009................                 103,704,000
September 28, 2009 through March 28, 2010................                 115,595,000
March 29, 2010 through September 27, 2010................                 127,487,000
September 28, 2010 through March 28, 2011................                 128,355,000
</TABLE>

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                                   ARTICLE IV

                         REPRESENTATIONS AND WARRANTIES

                  SECTION 4.01. Representations and Warranties of the Borrower.
The Borrower represents and warrants as follows:

                  (a)      The Borrower is a limited liability company duly
         formed, validly existing and in good standing under the laws of the
         State of Delaware, and is properly qualified to do business and in good
         standing in, and where necessary to maintain its rights and privileges
         has complied with the fictitious name statute of, every jurisdiction
         where the failure to maintain such qualification, good standing or
         compliance could reasonably be expected to have a Material Adverse
         Effect.

                  (b)      The execution, delivery and performance by the
         Borrower of this Agreement and the Note, if any, to be delivered by it,
         and the consummation of the transactions contemplated hereby, are
         within the Borrower's limited liability company powers, have been duly
         authorized by all necessary action, and do not contravene (i) the
         Borrower's certificate of formation or LLC operating agreement or (ii)
         law or any material agreement binding on the Borrower or (iii) to the
         best of the Borrower's knowledge, any other agreement binding on the
         Borrower which could be reasonably expected to have a Material Adverse
         Effect.

                  (c)      No authorization or approval or other action by, and
         no notice to or filing with, any governmental authority or regulatory
         body is required for the due execution, delivery and performance by the
         Borrower of this Agreement or the Note, if any, to be delivered by it,
         other than those authorizations or approvals or actions that have been
         obtained or notices or filings that have been made, except to the
         extent that failure to obtain such authorization or approval or action
         or make such notice or filing could not reasonably be expected to have
         a Material Adverse Effect.

                  (d)      This Agreement has been, and any Note to be delivered
         by it when delivered hereunder will have been, duly executed and
         delivered by the Borrower. This Agreement is, and any Note when
         delivered hereunder will be, the legal, valid and binding obligation of
         the Borrower enforceable against the Borrower in accordance with their
         respective terms, subject to applicable bankruptcy, insolvency,
         reorganization, moratorium or other laws affecting creditors' rights
         generally and subject to general principles of equity, regardless of
         whether considered in a proceeding in equity or at law.

                                   ARTICLE V

                           COVENANTS OF THE BORROWER

                  SECTION 5.01. Covenants. So long as any Loans, or any interest
thereon, shall remain unpaid or the Lender shall have any Commitment hereunder,
the Borrower will:

                  (a)      Compliance with Laws, Etc. Comply, and cause each of
         its Subsidiaries to comply, with all applicable laws, rules,
         regulations and orders, except to the extent failure to so comply could
         not reasonably be expected to have a Material Adverse Effect.

                  (b)      Preservation of Corporate Existence, Etc. Preserve
         and maintain, and cause each of its Subsidiaries to preserve and
         maintain, its corporate existence, rights (charter and statutory) and
         franchises; provided, however, that the Borrower and its Subsidiaries
         may consummate any merger or consolidation; and provided further that
         neither the Borrower nor any of its Subsidiaries shall be required to
         preserve any right or franchise or, in the case of any Subsidiary,
         corporate existence, if the Board of Directors of the Borrower or such
         Subsidiary shall determine that the preservation thereof is no longer
         desirable in the conduct of the business of the Borrower or such
         Subsidiary, as the case may be, and that the loss thereof could not
         reasonably be expected to have a Material Adverse Effect.

                                       8
<PAGE>

                  (c)      Maintenance of Properties, Etc. Preserve and
         maintain, and cause each of its Subsidiaries to preserve and maintain,
         all of its properties that are used or useful in the conduct of its
         business in good working order and condition, ordinary wear and tear
         excepted, except to the extent the failure to do so could not
         reasonably be expected to have a Material Adverse Effect.

                  (d)      Maintenance of EWG or OF Status. Preserve and
         maintain the status of each Facility Owner (as defined in the Index
         Based Gas Sale and Power Purchase Agreement) as either (1) an exempt
         wholesale generator under the Public Utility Holding Company Act of
         1935, as amended or (2) a "qualifying facility" under the Public
         Utility Regulatory Act of 1978, as amended, except, in either case, to
         the extent loss of such status could not reasonably be expected to have
         a Material Adverse Effect.

                  (e)      Business Activities. Not, and will not permit any of
         its Subsidiaries to, engage in any business other than the business of
         owning, constructing, operating and maintaining electric-generating
         facilities in the United States, together with any related assets or
         facilities, including gas pipelines supplying natural gas to such
         generating facilities, electric transmission lines carrying energy
         generated from such generating facilities and any related gas or
         electric interconnection facilities, except to such extent as would not
         be material to the Borrower and its Subsidiaries taken as a whole.

                                   ARTICLE VI

                                EVENTS OF DEFAULT

                  SECTION 6.01. Events of Default. If any of the following
events ("Events of Default") shall occur:

                  (a)      The Borrower shall fail to pay any principal on the
         Loans when the same becomes due and payable; or the Borrower shall fail
         to pay any interest or make any other payment of other amounts payable
         under this Agreement or the Note within 30 days after the same becomes
         due and payable; or

                  (b)      The Borrower shall fail to perform or observe in any
         material respect any other representation, warranty or covenant
         contained in this Agreement on its part to be performed or observed if
         such failure shall remain unremedied for 30 days after written notice
         thereof shall have been given to the Borrower by the Lender; or

                  (c)      Any event or condition shall exist under any
         agreement or instrument relating to any Debt of the Borrower or any of
         its Subsidiaries that is outstanding in a principal or notional amount
         of at least $50,000,000 in the aggregate (but excluding Debt
         outstanding hereunder) and shall continue after the applicable grace
         period, if any, specified in such agreement or instrument, and, as a
         result thereof, such Debt is accelerated; or

                  (d)      Any foreclosure action is taken under any agreement
         or instrument relating to any Debt of the Borrower or any of its
         Subsidiaries that is outstanding in a principal or notional amount of
         at least $50,000,000 in the aggregate (but excluding Debt outstanding
         hereunder); or

                  (e)      A Proceeding shall be commenced with respect to the
         Borrower or any of its Subsidiaries and, in the case of any such
         Proceeding instituted against it (but not instituted by it), either
         such Proceeding shall remain undismissed or unstayed for a period of 60
         days, or any of the actions sought in such Proceeding (including,
         without limitation, the entry of an order for relief against, or the
         appointment of a receiver, trustee, custodian or other similar official
         for, it or for any substantial part of its property) shall occur;

then, if any such event occurs and is continuing, the Lender may (i) declare its
obligation to make Loans to be terminated, whereupon the same shall forthwith
terminate, and (ii) subject to Article VII hereof, by notice to the Borrower,
declare the Loans, all interest thereon and all other amounts payable under this
Agreement to be forthwith

                                       9
<PAGE>

due and payable, whereupon the Loans, all such interest and all such amounts
shall become and be forthwith due and payable, without presentment, demand,
protest or further notice of any kind, all of which are hereby expressly waived
by the Borrower; provided, however, that in the event of an actual or deemed
(pursuant to Section 301 of the Federal Bankruptcy Code) entry of an order for
relief with respect to the Borrower under the Federal Bankruptcy Code, (A) the
obligation of the Lender to make Loans shall automatically be terminated and (B)
the Loans, all such interest and all such amounts shall automatically become and
be due and payable, without presentment, demand, protest or any notice of any
kind, all of which are hereby expressly waived by the Borrower.

                                   ARTICLE VII

                                  SUBORDINATION

                  SECTION 7.01. Agreement to Subordinate. The Lender agrees that
any and all Loans outstanding under this Agreement at any time shall be
unsecured and shall be subordinated in right of payment, to the extent and in
the manner provided in this Article VII, to the prior payment in full in cash or
cash equivalents of all Senior Debt and that the subordination is for the
benefit of the holders of Senior Debt.

                  SECTION 7.02. Liquidation, Dissolution, Bankruptcy. Upon any
payment or distribution to creditors of the Borrower or any of its Subsidiaries
upon a total or partial liquidation or dissolution of the Borrower or any of its
Subsidiaries, in a bankruptcy, reorganization, insolvency, receivership or
similar proceeding, or any other Proceeding, relating to the Borrower, any of
its Subsidiaries or its or its Subsidiaries' property, an assignment by the
Borrower or any of its Subsidiaries for the benefit of its creditors or the
marshaling of the assets and liabilities of the Borrower or any of its
Subsidiaries:

                  (a)      Holders of Senior Debt shall be entitled to receive
         payment in full in cash or cash equivalents of all obligations due in
         respect thereof before the Lender shall be entitled to receive any
         payment of principal of, or premium or interest on, the Loans, or any
         other amounts due to the Lender hereunder; and

                  (b)      Until all Senior Debt is paid in full in cash or cash
         equivalents, any distribution to which the Lender would be entitled but
         for this Article VII shall be made to holders of Senior Debt as their
         interests may appear.

                  SECTION 7.03. Default on Senior Debt. If any default or event
of default occurs and is continuing with respect to any Senior Debt:

                  (a)      The Borrower may not pay the principal of, or premium
         or interest on the Loans, or any other amount due to the Lender
         hereunder, and may not repurchase, redeem or otherwise retire the
         Loans; and

                  (b)      The Lender may not exercise any rights or remedies
         available to the Lender under this Agreement or at law with respect to
         any Default or Event of Default hereunder, including, without
         limitation, the right to accelerate amounts due, institute legal
         proceedings against the Borrower for the payment of amounts due or
         cause the commencement of or join in any Proceeding against the
         Borrower or any other action or proceeding with respect to such Default
         or Event of Default; provided, however, that nothing herein shall limit
         the right or ability of the Lender to terminate its obligation to make
         Loans under Section 6.01, or to condition new Loans upon the conditions
         set forth in Section 3.01, in connection with any such Default or Event
         of Default.

                  SECTION 7.04. When Distribution Must Be Paid Over. If a
distribution or other payment is made to the Lender that because of this Article
VII should not have been made to it, the Lender shall hold such distribution in
trust for holders of Senior Debt and pay it over to them as their interests may
appear.

                                       10
<PAGE>

                  SECTION 7.05. Relative Rights. This Article VII defines the
relative rights of the Lender and holders of Senior Debt. Nothing in this
Agreement shall impair, as between the Borrower and the Lender, the obligation
of the Borrower to pay its obligations under this Agreement and the Loans in
accordance with their terms.

                  SECTION 7.06. Article VII Not to Prevent Events of Default.
The failure to make a payment pursuant to the Loans by reason of any provision
in this Article VII shall not be construed as preventing the occurrence of a
Default or an Event of Default.

                  SECTION 7.07. Reliance by Holders of Senior Debt on
Subordination Provisions. The Lender acknowledges and agrees that the foregoing
subordination provisions are, and are intended to be, an inducement and a
consideration to each holder of any Senior Debt, whether such Senior Debt was
created or acquired before or after the borrowing of any Loans, to acquire and
continue to hold, or to continue to hold, such Senior Debt and such holder of
such Senior Debt shall be deemed conclusively to have relied on such
subordination provisions in acquiring and continuing to hold, or in continuing
to hold, such Senior Debt.

                                  ARTICLE VIII

                                    GUARANTEE

                  SECTION 8.01. Obligations of Lender Guarantor.

                  (a)      The Lender Guarantor, as primary obligor and not
         merely as surety, hereby unconditionally and irrevocably guarantees to
         the Borrower the prompt and complete performance when due of Lender's
         obligation to make Loans under this Agreement. This Guarantee shall
         remain in full force and effect until the Termination Date. This
         Guarantee is a guarantee of performance and not of collectibility.

                  (b)      Notwithstanding anything to the contrary herein, the
         maximum liability of the Lender Guarantor hereunder shall in no event
         exceed the amount which can be guaranteed under applicable federal and
         state laws relating to the insolvency of debtors.

                  SECTION 8.02. Amendments, etc. with Respect to the Agreement.
The Lender Guarantor shall remain obligated hereunder notwithstanding that,
without any reservation of rights against it and without notice to or further
assent by it, the obligations of Lender hereunder may, from time to time, in
whole or in part, be renewed, extended, amended, modified, accelerated,
compromised, waived, surrendered or released by the Lender and the Borrower, and
this Agreement may be amended, modified, supplemented or terminated, in whole or
in part, as the Lender and the Borrower deem advisable from time to time;
provided, however, that any amendment, modification, supplement or termination
of this Article VIII shall require the written consent of the Lender Guarantor;
and provided, further, that in no event shall the amount of the Commitment be
increased without the written consent of the Lender Guarantor.

                  SECTION 8.03. Guarantee Absolute and Unconditional. The Lender
Guarantor waives any and all notice of the creation, renewal, extension or
accrual of the performance of the Lender's obligations hereunder and notice of
or proof of reliance by the Borrower upon the Guarantee or acceptance of the
Guarantee. The obligation of Lender to perform hereunder shall conclusively be
deemed to have been created, contracted or incurred, or renewed, extended,
amended or waived, as applicable, in reliance upon the Guarantee, and all
dealings between the Lender and the Lender Guarantor, on the one hand, and the
Borrower, on the other hand, likewise shall be conclusively presumed to have
been had or consummated in reliance upon the Guarantee. The Lender Guarantor
waives all rights and remedies accorded by applicable laws to sureties and
guarantors and agrees not to assert or take advantage of any such rights or
remedies, including diligence, presentment, protest, demand for performance and
notice of default to or upon the Lender with respect to the performance
obligations guaranteed hereunder. The Lender Guarantor understands and agrees
that the Guarantee shall be construed as a continuing, absolute and
unconditional guarantee of performance by the Lender of its obligation to make
Loans under this Agreement in accordance with the terms and conditions hereof.
When making any demand hereunder or otherwise pursuing its rights and remedies
hereunder against the Lender Guarantor, the Borrower may, but shall be under no
obligation to, make a similar

                                       11
<PAGE>

demand on or otherwise pursue such rights and remedies as it may have against
the Lender or any other Person, and any failure by the Borrower to make any such
demand, to pursue such other rights or remedies or to collect any payments from
the Lender or any other Person shall not relieve the Lender Guarantee of any
obligation or liability hereunder, and shall not impair or affect the rights and
remedies, whether express, implied or available as a matter of law, of the
Borrower against the Lender Guarantor. For the purposes hereof "demand" shall
include the commencement and continuance of any legal proceedings.

                                   ARTICLE IX

                                 MISCELLANEOUS

                  SECTION 9.01. Amendments, Waivers Etc. (a) No amendment,
modification, termination or waiver of any provision of this Agreement or the
Note, nor consent to any departure by the Borrower therefrom, shall in any event
be effective unless the same shall be in writing and signed by the Lender, and
then such waiver or consent shall be effective only in the specific instance and
for the specific purpose for which given. (b) No amendment, modification,
termination or waiver of any provision of Article VIII or Article IX of this
Agreement and no increase in the amount of the Commitment hereunder shall in any
event be effective unless the same shall be in writing and signed by all parties
hereto, including the Lender Guarantor, and then such waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given. (c) The Lender may not waive compliance with the condition precedent
contained in Section 3.01(c) in connection with any Loan requested by the
Borrower pursuant to Section 2.02.

                  SECTION 9.02. Notices, Etc. All notices and other
communications provided for hereunder shall be in writing (including telecopier,
facsimile, telegraphic or telex communication) and mailed, telecopied, faxed,
telegraphed, telexed or delivered, (a) if to the Borrower, at its address at 50
West San Fernando Street, San Jose, California 95113, Facsimile No.: (408)
995-0505, Attention: Chief Financial Officer, with a copy (other than in the
case of administrative notices) to Attention: General Counsel, Facsimile No.:
(408) 975 - 4648; (b) if to the Lender, at its address at 50 West San Fernando
Street, San Jose, California 95113, Facsimile No.: (408) 995-0505, Attention:
Chief Financial Officer; (c) if to the Lender Guarantor, 50 West San Fernando
Street, San Jose, California 95113, Facsimile No.: (408) 995-0505, Attention:
Chief Financial Officer; at its address at or at such other address as shall be
designated by such party in a written notice to the other party. All such
notices and communications shall, when mailed, telecopied, faxed, telegraphed or
telexed, be effective when deposited in the mails, telecopied, faxed, delivered
to the telegraph company or confirmed by telex answerback, respectively, except
that notices and communications to the Lender pursuant to Article II or Article
III shall not be effective until received by the Lender. Delivery by telecopier
or facsimile of an executed counterpart of any amendment or waiver of any
provision of this Agreement or the Note or of any Exhibit hereto to be executed
and delivered hereunder shall be effective as delivery of a manually executed
counterpart thereof.

                  SECTION 9.03. No Waiver; Remedies. No failure on the part of
the Lender to exercise, and no delay in exercising, any right hereunder or under
the Note shall operate as a waiver thereof; nor shall any single or partial
exercise of any such right preclude any other or further exercise thereof or the
exercise of any other right. The remedies herein provided are cumulative and not
exclusive of any remedies provided by law.

                  SECTION 9.04. Costs and Expenses.

                  (a)      The Borrower agrees to pay on demand all reasonable
         costs and expenses of the Lender in connection with the preparation,
         execution, delivery, modification and amendment of this Agreement, the
         Note and the other documents to be delivered hereunder, including,
         without limitation, the reasonable fees and expenses of counsel for the
         Lender with respect thereto and with respect to advising the Lender as
         to its rights and responsibilities under this Agreement. The Borrower
         further agrees to pay on demand all costs and expenses of the Lender
         (including, without limitation, reasonable counsel fees and expenses)
         in connection with the enforcement (whether through negotiations, legal
         proceedings or otherwise) of this Agreement, the Note and any other
         documents to be delivered hereunder, including, without limitation,
         reasonable fees and expenses of counsel for the Lender in connection
         with the enforcement of rights under this Section 9.04(a).

                                       12
<PAGE>

                  (b)      The Borrower agrees to indemnify and hold harmless
         the Lender and its Affiliates and their respective officers, directors,
         employees, agents and advisors (each, an "Indemnified Party") from and
         against any and all claims, damages, losses, liabilities and expenses
         (including, without limitation, reasonable fees and expenses of
         counsel) incurred by or asserted or awarded against any Indemnified
         Party, in each case arising out of or in connection with or by reason
         of any investigation, litigation or proceeding (or preparation of a
         defense in connection therewith) relating to the Note, this Agreement
         or any of the transactions contemplated therein or herein, except to
         the extent such claim, damage, loss, liability or expense is found in a
         final, non-appealable judgment by a court of competent jurisdiction to
         have resulted from such Indemnified Party's gross negligence or willful
         misconduct. In the case of an investigation, litigation or other
         proceeding to which the indemnity in this Section 9.04(b) applies, such
         indemnity shall be effective whether or not such investigation,
         litigation or proceeding is brought by the Borrower, its directors,
         equityholders or creditors or an Indemnified Party or any other Person,
         whether or not any Indemnified Party is otherwise a party thereto and
         whether or not the transactions contemplated hereby are consummated.
         The Borrower, to the extent permitted by applicable law, also agrees
         not to assert any claim for special, indirect, consequential or
         punitive damages against the Lender, any of its Affiliates, or any of
         their respective directors, officers, employees, attorneys and agents,
         on any theory of liability, arising out of or otherwise relating to the
         Note, this Agreement or any of the transactions contemplated therein or
         herein.

                  (c)      Without prejudice to the survival of any other
         agreement of the Borrower hereunder, the agreements and obligations of
         the Borrower contained in this Section 9.04 shall survive the payment
         in full of principal, interest and all other amounts payable hereunder
         and under the Note.

                  SECTION 9.05. Confidentiality. The Lender shall not disclose
any Confidential Information to any other Person without the prior written
consent of the Borrower, other than (a) to the Lender's Affiliates and their
officers, directors, employees, agents and advisors, and then only on a
confidential basis, (b) as required by any law, rule or regulation or judicial
process, and (c) in connection with the exercise of any remedies hereunder or
any suit, action or proceeding relating to this Agreement or the enforcement of
rights hereunder.

                  SECTION 9.06. Governing Law. This Agreement and the Note shall
be governed by, and construed in accordance with, the laws of the State of New
York.

                  SECTION 9.07. Execution in Counterparts. This Agreement may be
executed in any number of counterparts and by the parties hereto in separate
counterparts, each of which when so executed shall be deemed to be an original
and all of which taken together shall constitute one and the same agreement.
Delivery of an executed counterpart of a signature page to this Agreement by
telecopier or facsimile shall be effective as delivery of a manually executed
counterpart of this Agreement.

                  SECTION 9.08. Jurisdiction, Etc.

                  (a)      Each of the parties hereto hereby irrevocably and
         unconditionally submits, for itself and its property, to the
         nonexclusive jurisdiction of any New York State court or federal court
         of the United States of America sitting in New York City, and any
         appellate court from any thereof, in any action or proceeding arising
         out of or relating to this Agreement or the Note, or for recognition or
         enforcement of any judgment, and each of the parties hereto hereby
         irrevocably and unconditionally agrees that all claims in respect of
         any such action or proceeding may be heard and determined in any such
         New York State court or, to the extent permitted by law, in such
         federal court. Each party hereby irrevocably consents to the service of
         process in any action or proceeding in such courts by the mailing
         thereof by any parties hereto by registered or certified mail (return
         receipt requested), postage prepaid, to such party at its address
         specified pursuant to Section 8.02. Each of the parties hereto 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. Nothing in this
         Agreement shall affect any right that any party may otherwise have to
         bring any action or proceeding relating to this Agreement or the Note
         in the courts of any jurisdiction.

                  (b)      Each of the parties hereto irrevocably and
         unconditionally waives, to the fullest extent it may legally and
         effectively do so, any objection that it may now or hereafter have to
         the laying of venue of

                                       13
<PAGE>

         any suit, action or proceeding arising out of or relating to this
         Agreement or the Note in any New York State or federal court. Each of
         the parties hereto hereby irrevocably waives, to the fullest extent
         permitted by law, the defense of an inconvenient forum to the
         maintenance of such action or proceeding in any such court.

                  SECTION 9.09. Waiver of Jury Trial. Each of the Borrower and
the Lender hereby irrevocably waives all right to trial by jury in any action,
proceeding or counterclaim (whether based on contract, tort or otherwise)
arising out of or relating to this Agreement or the Note or the actions of the
Lender in the negotiation, administration, performance of enforcement thereof.

                  SECTION 9.10. Assignment. The provisions of this Agreement
shall be binding upon and inure to the benefit of the parties hereto, the
Indemnified Parties and their respective successors and assigns permitted
hereby. No party may sell, transfer, assign, delegate, pledge, or otherwise
dispose of, whether voluntarily, involuntarily, by operation of law or
otherwise, any of its rights or obligations hereunder without the prior written
consent of the other parties hereto, and any attempted sale, transfer,
assignment, delegation, pledge or other disposition without such consent shall
be null and void; provided, however, that notwithstanding the foregoing, the
Lender shall in all events have the right to sell, transfer, assign, pledge or
otherwise dispose of any of its rights hereunder (including any rights under or
evidenced by the Note) without the prior written consent of the Borrower.

                  SECTION 9.11. Limitation of Damages. In no event shall any
party hereunder be liable for consequential, incidental, punitive, exemplary or
indirect damages, lost profits, or other business interruption damages, whether
by statute, in tort or contract, under any indemnity provision or otherwise.

                  SECTION 9.12 Limitations on Recourse. The obligations of the
parties under this Agreement are obligations of the parties only, and no
recourse shall be available against any officer, director, employee, agent,
stockholder, member or partner of a party or its Affiliates. In addition,
recourse against Borrower with respect to this Agreement is limited to its
tangible and intangible assets, the revenue and income produced thereby and the
proceeds of any of the foregoing.

                                       14
<PAGE>

                  IN WITNESS WHEREOF, the parties, hereto have caused this
Agreement to be executed by their respective officers thereunto duly
authorized, as of the date first above written.

                                         CALPINE GENERATING COMPANY, LLC,
                                           as Borrower

                                         By: /s/ Zamir Rauf
                                             ------------------------------
                                             Name:  ZAMIR RAUF
                                             Title: Vice President

                                         CALPINE CALGEN HOLDINGS, INC.,
                                           as Lender

                                         By: /s/ Zamir Rauf
                                             ------------------------------
                                             Name:  ZAMIR RAUF
                                             Title: Vice President

Acknowledged and Agreed With Respect to Articles VIII and IX Only:

CALPINE CORPORATION,
   as Lender Guarantor

By: /s/ Zamir Rauf
    ------------------------------
    Name:  ZAMIR RAUF
    Title: Vice President

                                       15
<PAGE>

                                                               EXHIBIT A-FORM OF
                                                                REVOLVING CREDIT
                                                                 PROMISSORY NOTE

U.S.$_____________                       Dated: _____________, 200_

                  FOR VALUE RECEIVED, the undersigned, CALPINE GENERATING
COMPANY, LLC, a Delaware limited liability company (the "Borrower"), HEREBY
PROMISES TO PAY to the order of CALPINE CALGEN HOLDINGS, INC. (the "Lender") on
the Termination Date (as defined in the Working Capital Facility referred to
below) the principal sum of U.S. $750,000,000 or, if less, the aggregate
principal amount of the Loans made by the Lender to the Borrower pursuant to the
Working Capital Facility Agreement, dated as of March 23, 2004, among the
Borrower, the Lender and Calpine Corporation, as Lender Guarantor (as amended or
modified from time to time, the "Credit Agreement": the terms defined therein
being used herein as therein defined) outstanding on the Termination Date.

                  The Borrower promises to pay interest on the unpaid principal
amount of each Loan from the date of such Loan until such principal amount is
paid in full, at such interest rates, and payable at such times, as are
specified in the Credit Agreement.

                  Both principal and interest in respect of each Loan are
payable in lawful money of the United States of America to the Lender at the
account specified in writing to the Borrower in accordance with the provisions
of the Credit Agreement Each Loan owing to the Lender by the Borrower pursuant
to the Credit Agreement, and all payments made on account of principal thereof,
shall be recorded by the Lender and, prior to any transfer hereof, endorsed on
the grid attached hereto which is part of this Promissory Note.

                  This Promissory Note is the Note referred to in, and is
entitled to the benefits of, the Credit Agreement. The Credit Agreement, among
other things, (i) provides for the making of Loans by the Lender to the Borrower
from time to time in an aggregate amount not to exceed at any time outstanding
the U.S. dollar amount first above mentioned, the indebtedness of the Borrower
resulting from each such Loan being evidenced by this Promissory Note, and (ii)
contains provisions for acceleration of the maturity hereof upon the happening
of certain stated events and also for prepayments on account of principal hereof
prior to the maturity hereof upon the terms and conditions therein specified.

                                         CALPINE GENERATING COMPANY, LLC

                                         By_____________________________
                                           Name:
                                           Title:

<PAGE>

                         LOANS AND PAYMENTS OF PRINCIPAL

<TABLE>
<CAPTION>
                                     AMOUNT OF
                AMOUNT OF         PRINCIPAL PAID         UNPAID PRINCIPAL        NOTATION
DATE              LOAN              OR PREPAID               BALANCE              MADE BY
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<S>             <C>               <C>                    <C>                     <C>
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</TABLE>

                                       ii