exv10w1w2



 









Exhibit 10.1.2




EXECUTION COPY




AMENDED AND RESTATED SECURITY AND PLEDGE AGREEMENT




     AMENDED AND RESTATED SECURITY AND PLEDGE AGREEMENT (this “Agreement”), dated as of
February 23, 2006, by and among CALPINE CORPORATION, a Delaware corporation (the
“Borrower”), each of the direct and indirect domestic subsidiaries of the Borrower
signatory hereto (together with the Borrower, the “Grantors”), each a debtor and
debtor-in-possession under Chapter 11 of the Bankruptcy Code, and DEUTSCHE BANK TRUST COMPANY
AMERICAS (“DB”), as collateral agent (in such capacity and including any successors, the
“Collateral Agent”) for the financial institutions from time to time party to the Credit
Agreement (as hereinafter defined).



     WHEREAS, unless otherwise defined herein, terms defined in the Credit Agreement are used
herein as therein defined; and



     WHEREAS, contemporaneously with the execution and delivery of this Agreement, the
Administrative Agents, the Lenders and the Grantors, among others, are entering into an Amended and
Restated Revolving Credit, Term Loan and Guarantee Agreement dated as of the date hereof (as
amended, modified or supplemented from time to time, the “Credit Agreement”); and



     WHEREAS, in connection with the execution and delivery of the Existing Credit Agreement, the
Borrower executed and delivered to the Collateral Agent, for the benefit of the Existing Lenders,
the Security and Pledge Agreement dated as of December 22, 2005 (as heretofore amended,
supplemented or otherwise modified, the “Existing Security Agreement”), pursuant to which
the Borrower granted to the Collateral Agent, for the benefit of the Lenders, a security interest
in all the Collateral (as defined in the Existing Security Agreement) as collateral security for
the Obligations (as defined in the Credit Agreement); and



     WHEREAS, it is a condition precedent to the making of Extensions of Credit that the Grantors
shall have granted a security interest, pledge and lien on (x) all cash and cash equivalents
maintained in the L/C Cash Collateral Account pursuant to Section 364(c)(2) of the Bankruptcy Code
and (y) subject to the exclusions from Collateral (as defined herein) set forth herein,
substantially all of the Grantors’ assets and properties and the proceeds thereof pursuant to
Sections 364(c)(2) and 364(c)(3) of the Bankruptcy Code, in each case as more fully set forth in
the Orders; and



     WHEREAS, the grant of such security interest, pledge and lien has been authorized pursuant to
Sections 364(c)(2) and 364(c)(3) of the Bankruptcy Code by the Final Orders; and



     WHEREAS, to supplement the Final Orders without in any way diminishing or limiting the effect
of the Orders or the security interest, pledge and









 



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lien granted thereunder, the parties hereto desire to more fully set forth their respective
rights in connection with such security interest, pledge and lien; and




     WHEREAS, this Agreement has been approved by the Orders;



     NOW, THEREFORE, in consideration of the premises and in order to induce the Lenders to make
Extensions of Credit, the Grantors hereby agree with the Collateral Agent to amend and restate the
Existing Security Agreement in its entirety as follows:



     SECTION 1 . Grant of Security and Pledge. Each of the Grantors hereby grants and pledges to
the Collateral Agent for its benefit and the ratable benefit of the Agents and the Lenders a
perfected pledge and security interest in all of each Grantors’ right, title and interest in and to
the following (the “Collateral”), which pledge and security interest shall be subject to
the priorities set forth in Section 2.28 of the Credit Agreement and the Orders:




     (a) all present and future Accounts (as defined in the Uniform Commercial
Code from time to time in effect in the State of New York), including without limitation,
accounts receivable and other rights of each of the Grantors to payment for goods sold or
leased or for services rendered (except those evidenced by instruments or chattel paper),
whether now existing or hereafter arising and wherever arising, and whether or not they
have been earned by performance, and all rights now or hereafter existing in and to all
obligations and in and to all security agreements, mortgages, Liens, leases, letters of
credit and other contracts securing or otherwise relating to the foregoing property (in
each case, to the extent assignable by such Grantor under applicable law without the
consent of other parties thereunder) (any and all of such accounts, chattel paper,
instruments, deposit accounts, letter of credit rights, general intangibles and other
obligations, to the extent not referred to in clauses (d) and (f) below, collectively, the
“Accounts”);




     (b) all goods and merchandise now owned or hereafter acquired by each of
the Grantors wherever located, whether in the possession of a Grantor or of a bailee or
other person for sale, storage, transit, processing, use or otherwise consisting of whole
goods, components, supplies, materials, or consigned, returned or repossessed goods which
are held for sale or lease or to be furnished (or have been furnished) under any contract
of service or which are raw materials, work-in-process, finished goods or materials used
or consumed in such Grantor’s business or processed by or on behalf of any Grantor
(collectively, the “Inventory”);




     (c) all machinery, all manufacturing, distribution, selling, data
processing and office equipment, all furniture, furnishings, appliances,









 



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fixtures and trade fixtures, tools, tooling, vehicles, vessels, and all other goods
and equipment of every type and description (other than inventory) and all parts thereof
and all accessions thereto and all software related thereto, including, without
limitation, software that is embedded in and is a part of any of the foregoing, in each
instance whether now owned or hereafter acquired by each of the Grantors and wherever
located (collectively, the “Equipment”);




     (d) all rights, interests, choses in action, causes of action, claims and
all other intangible property of each of the Grantors of every kind and nature (other than
the Accounts, Trademarks, Patents and Copyrights), in each instance whether now owned or
hereafter acquired by such Grantor, including, without limitation, all general intangibles
and payment intangibles, but excluding avoidance causes of action under the Bankruptcy
Code; all corporate and other business records; all loans, royalties, and other
obligations receivable; all inventions, designs, trade secrets, computer programs,
software, printouts and other computer materials, goodwill, registrations, copyrights,
licenses, franchises, customer lists, credit files, correspondence, and advertising
materials (in each case, to the extent the same are assignable by such Grantor under
applicable law); all customer and supplier contracts, firm sale orders, rights under
license and franchise agreements (including all license agreements with any other Person
in connection with any of the Patents and Trademarks or such other Person’s names or
marks, whether such Grantor is a licensor or licensee under any such license agreement
but, in each case, only to the extent such license agreements are assignable by such
Grantor under applicable law without the consent of the licensor thereunder), and other
contracts and contract rights (to the extent assignable by such Grantor under applicable
law without the consent of other parties thereunder); all interests in partnerships and
joint ventures; all tax refunds and tax refund claims; all right, title and interest under
leases, subleases, licenses and concessions and other agreements relating to real or
personal property (in each case, to the extent assignable by such Grantor under applicable
law without the consent of other parties thereunder); all payments due or made to each of
the Grantors in connection with any requisition, confiscation, condemnation, seizure or
forfeiture of any property by any person or governmental authority; all commercial tort
claims, including, but not limited to, those commercial tort claims listed on Schedule 5;
all deposit accounts (general or special) with any bank or other financial institution
(other than payroll and trust accounts); all credits with and other claims against
carriers and shippers; all rights to indemnification; all reversionary interests in
pension and profit sharing plans and reversionary, beneficial and residual interest in
trusts; all proceeds of insurance of which each of the Grantors is beneficiary; and all
letters of credit, letter of credit rights, guaranties, liens, security interest and other
security held by or granted to each of the









 



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Grantors; and all other intangible property, whether or not similar to the foregoing
(collectively, the “General Intangibles”);




     (e) all chattel paper (including tangible paper and electronic chattel
paper), all documents, all instruments, all notes and debt instruments and all payments
thereunder and instruments and other property from time to time delivered in respect
thereof or in exchange therefor, and all bills of lading, warehouse receipts and other
documents of title and documents, in each instance whether now owned or hereafter acquired
by any of the Grantors;




     (f) all property or interests in property now or hereafter acquired by any
of the Grantors and all rights and interests of each of the Grantors, now existing or
hereafter arising and however and wherever arising, in respect of any and all (i) notes,
drafts, letters of credits, stocks, bonds, and debt and equity securities, whether or not
certificated (including, without limitation, all (A) securities, whether certificated or
uncertificated, (B) security entitlements, (C) securities and deposit accounts (including
without limitation, the Concentration Account), (D) commodity contracts and (E) commodity
accounts), warrants, options, puts and calls and other rights to acquire or otherwise
relating to the same; (ii) money (including all cash and cash equivalents held in the L/C
Cash Collateral Account and the Concentration Account); (iii) proceeds of loans,
including, without limitation, Loans made under the Credit Agreement; and (iv) insurance
proceeds and books and records relating to any of the property covered by this Agreement;
together, in each instance, with all accessions and additions thereto, substitutions
therefor, and replacements, proceeds and products thereof;




     (g) all trademarks, trade names, trade styles, service marks, prints and
labels on which said trademarks, trade names, trade styles and service marks have appeared
or appear, designs and general intangibles of like nature, now existing or hereafter
adopted or acquired, and all registrations and recordings thereof, including, without
limitation, applications, registrations and recordings in the United States Patent and
Trademark Office or in any similar office or agency of the United States, any State
thereof, or any other country or political subdivision thereof, all whether now owned or
hereafter acquired by each of the Grantors, including, but not limited to, those described
in Schedule 3 annexed hereto and made a part hereof, and all reissues, extensions or
renewals thereof and all licenses thereof (in each case, to the extent assignable by such
Grantor under applicable law without the consent of other parties thereunder) (together,
in each case, with the goodwill of the business connected with the use of, and symbolized
by each such trademark, service mark, trade name and trade dress, all of the foregoing
being herein referred to as the “Trademarks”);









 



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     (h) all (i) letters patent of the United States or any other country, and
all registrations and recordings thereof, including, without limitation, applications,
registrations and recordings in the United States Patent and Trademark Office or in any
similar office or agency of the United States, any State thereof or any other country or
any political subdivision thereof, all whether now owned or hereafter acquired by each of
the Grantors, including, but not limited to, those described in Schedule 3 annexed hereto
and made a part hereof; and (ii) all reissues, continuations, continuations-in-part or
extensions thereof and all licenses thereof (in each case, to the extent assignable by
such Grantor under applicable law without the consent of other parties thereunder) (all of
the foregoing being herein referred to as the “Patents”);




     (i) all copyrights of the United States, or any other country, and all
registrations and recordings thereof, including, without limitation, applications,
registrations and recordings in the United States Copyright Office or in any similar
office or agency of the United States, any State thereof, or any other country or
political subdivision thereof, all whether now owned or hereafter acquired by each of the
Grantors, including, but not limited to, those described in Schedule 3 hereto and all
renewals and extensions thereof and all licenses thereof (in each case, to the extent
assignable by such Grantor under applicable law without the consent of other parties
thereunder) (all of the foregoing being herein referred to as the “Copyrights”);




     (j) all books, records, ledger cards and other property at any time
evidencing or relating to the Collateral;




     (k) all investment property, including without limitation, (i) all of the shares of capital stock owned by each Grantor, as applicable, listed on Schedule 4 hereto
of the issuers listed thereon (individually, an “Issuer,” and collectively, the
“Issuers”) and all shares of capital stock or ownership interests of any Issuer
obtained in the future by such Grantor and the certificates representing or evidencing all
such shares or ownership interests (the “Pledged Shares”); (ii) all other property
which may be delivered to and held by the Collateral Agent in respect of the Pledged
Shares pursuant to the terms hereof; (iii) subject to Section 9 below, all dividends,
cash, instruments and other property from time to time received, receivable or otherwise
distributed, in respect of, in exchange for or upon the conversion of the securities
referred to in clauses (i) and (ii) above; and (iv) subject to Section 9 below, all rights
and privileges of each Grantor, as applicable, with respect to the securities and other
property referred to in clauses (i), (ii) and (iii) (the items referred to in clauses (i)
through (iv) being collectively called the “Pledged Collateral”);









 



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     (l) all other personal property of each of the Grantors, whether tangible
or intangible, and whether now owned or hereafter acquired;




     (m) all other investment property to the extent not otherwise referred to
in this Section 1 in which any of the Grantors has now, or acquires from time to time
hereafter, any right, title or interest in any manner, and the certificates or
instruments, if any, representing or evidencing such investment property, and all
dividends, distributions, return of capital, interest, distributions, value, cash,
instruments and other property from time to time received, receivable or otherwise
distributed in respect of or in exchange for any or all of such investment property and
all subscription warrants, rights or options issued thereon or with respect thereto; and




     (n) all proceeds and products of any of the foregoing, in any form,
including, without limitation, any claims against third parties for loss or damage to or
destruction of any or all of the foregoing and to the extent not otherwise included, all
(i) payments under insurance (whether or not the Collateral Agent is the loss payee
thereof), or any indemnity, warranty or guaranty, payable by reason of loss or damage to
or otherwise with respect to any of the foregoing Collateral; and (ii) cash;


; provided, however, no Grantor shall be required to pledge to the Collateral Agent
(i) in excess of 65% of the voting Capital Stock of its direct Foreign Subsidiaries or any of the
Capital Stock or interests of its indirect Foreign Subsidiaries if adverse tax consequences would
result to the Borrower from such pledge, (ii) the Capital Stock of Calpine Pasadena Cogeneration,
Inc. and Calpine Texas Cogeneration, Inc., to the extent the pledge thereof is prohibited by the
documents governing the leveraged lease transaction under which Pasadena Cogeneration L.P. is the
facility lessee, and such entities are not Debtors, (iii) the Capital Stock of Androscoggin Energy,
LLC, Bethpage Energy Center 3, LLC, Calpine Canada Energy Finance ULC, Calpine Canada Energy Ltd.,
Calpine Merchant Services Company, Inc., Calpine Newark, LLC, Calpine Parlin, LLC and CPN Insurance
Corporation or (iv) the stock of any Subsidiary that is not a Debtor owned by any Subsidiary that
becomes a Debtor after the Closing Date to the extent such pledge would constitute a default under
project documents, result in a right of refusal, call or put options being activated, or to the
extent such entity is a debtor in another bankruptcy case in another jurisdiction, or insurance
company or such grant of a security interest is prohibited by, or constitutes a breach or default
under or results in the termination of or requires any consent not obtained under, any contract,
license, agreement, instrument, other document or any applicable shareholder or similar agreement
relating thereto or conflicts with any applicable law.




     SECTION 2 . Security for Obligations. This Agreement and the Collateral secure the payment
of the Obligations.









 



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     SECTION 3 . Delivery of Pledged Collateral; Other Action. Promptly upon written request by
the Collateral Agent (and without further order of the Bankruptcy Court), all certificates or
instruments representing or evidencing the Pledged Collateral shall be delivered to and held by the
Collateral Agent pursuant hereto and shall be accompanied by duly executed instruments of transfer
or assignment in blank, all in form and substance reasonably satisfactory to the Collateral Agent.
Upon the occurrence and during the continuance of any Event of Default, the Collateral Agent shall
have the right (for its benefit and for the ratable benefit of Agents and the Lenders), at any time
in its discretion and without notice to the Grantors to transfer to or to register in the name of
the Collateral Agent or any of its nominees any or all of the Pledged Collateral; provided,
however, upon the cure or waiver of any and all such Events of Default, the Collateral Agent shall
(so long as no other Event of Default or event which with the passage of time would constitute an
Event of Default shall have in the interim occurred) at such Grantor’s sole expense, and within ten
(10) Business Days, register the Pledged Collateral in the applicable Grantor’s name.



     SECTION 4 . Representations and Warranties. Each Grantor, jointly and severally, represents
and warrants as follows:




     (a) All of the Inventory and/or Equipment which constitutes Collateral
having a book value greater than $1,000,000 is located in the United States. The chief
places of business and chief executive offices of each of the Grantors and the offices
where each Grantor keeps its records concerning any Accounts and all originals of all
chattel paper which evidence any Account are located at the places specified in Schedule 1
hereto.




     (b) Each Grantor’s exact legal name is that indicated on the signature
pages hereof. Each Grantor is an organization of the type and is organized under the laws
of the jurisdiction listed on Schedule 2 hereto. Schedule 2 hereto accurately sets forth
each Grantor’s organizational identification number (or accurately states that it has
none) and taxpayer identification number.




     (c) Each of the Grantors owns the Collateral free and clear of any Lien
except for the Lien created by this Agreement, the Interim Order and (when applicable) the
Final Order and except as permitted under Section 6.2 of the Credit Agreement. No
effective financing statement or other instrument similar in effect covering all or any
part of the Collateral is on file in any recording office, except (x) such as may have
been filed in favor of the Collateral Agent relating to this Agreement and (y) in favor of
any holder of a Lien permitted under Section 6.2 of the Credit Agreement.




     (d) No Grantor owns any material Trademarks, Patents or Copyrights or has
any material Trademarks, Patents or Copyrights









 



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registered in, or the subject of pending applications in, the United States Patent
and Trademark Office or any similar office or agency in any other country or any political
subdivision thereof, other than those described in Schedule 3 hereto. The registrations
for the Collateral disclosed on such Schedule 3 hereto are valid and subsisting and in
full force and effect to the extent they are material to the assets, properties, condition
(financial or otherwise) or operations of the Grantors taken as a whole. None of the
material Patents or Copyrights have been abandoned or dedicated to the extent they are
material to the assets, properties, condition (financial or otherwise) or operations of
the Grantors taken as a whole.




     (e) The Pledged Shares have been duly authorized and validly issued and, to
the extent applicable, are fully paid and non-assessable. None of the Pledged Shares have
been issued or transferred in violation of the securities registration, securities
disclosure or similar laws of any jurisdiction to which such issuance or transfer is
subject.




     (f) Each Grantor, as the case may be, is the legal and beneficial owner of
the Pledged Shares as described on Schedule 4, free and clear of any lien, security
interest, option or other charge or encumbrance, except for the security interest created
by this Agreement and the Interim Order and (when applicable) the Final Order.




     (g) Except as disclosed on Schedule 4, the Pledged Shares described in
Section l(k) hereof constitute all of the issued and outstanding shares of stock of each
of the Issuers held by such Grantor and no Issuer that is a Grantor (and, to such
Grantor’s knowledge, no Issuer that is not a Grantor) is under any contractual obligation
to issue any additional shares of stock or any other securities, rights or indebtedness.




     (h) Except for the Orders, no authorization, approval or other action by,
and no notice to or filing with, any governmental authority or regulatory body is required
either (i) for the grant and pledge by each of the Grantors of the security interests
granted hereby or for the execution, delivery or performance of this Agreement by each of
the Grantors or (ii) for the perfection of the security interests or the exercise by the
Collateral Agent of its rights and remedies hereunder except as may be required in
connection with the pledge of the capital stock or other ownership interests of any Person
that is not incorporated or organized in the United States and except with respect to
Collateral held by a Grantor outside of the United States.



     SECTION 5 . Further Assurances.



     (a) Each of the Grantors agrees that from time to time, at the expense of the
Grantors, it will promptly execute and deliver all further instruments and









 



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documents, and take all further action, that may be necessary, or that the Collateral Agent
may reasonably request, in order to perfect and protect any security interest granted or purported
to be granted hereby or to enable the Collateral Agent to exercise and enforce any of its rights
and remedies hereunder with respect to any Collateral in accordance with the terms hereof. Without
limiting the generality of the foregoing, and without further order of the Bankruptcy Court, each
of the Grantors (i) hereby authorizes the Collateral Agent to file such initial financing or
continuation statements, or amendments thereto, and (ii) will execute and file such other
instruments or notices, in each case, as may be necessary, or as the Collateral Agent may
reasonably request, in order to perfect and preserve the security interests granted or purported to
be granted hereby.




     (b) Each Grantor hereby authorizes the Collateral Agent to file one or more initial
financing or continuation statements (including the description of the Collateral as “all assets”
or “all personal property” of such Grantor), and amendments thereto, relative to all or any part of
the Collateral without the signature of such Grantor.



     (c) Each Grantor will furnish to the Collateral Agent from time to time statements
and schedules further identifying and describing the Collateral and such other reports in
connection with the Collateral as the Collateral Agent may reasonably request, all in reasonable
detail.



     (d) Each Grantor shall provide Collateral Agent with at least ten (10) Business
Days’ prior written notice of (i) any change in the name, organizational structure or jurisdiction
of organization of such Grantor or (ii) a change in the organizational identification number of
such Grantor. Each Grantor shall also promptly, but in any event within ten (10) days of receipt of
an organizational identification number, if such Grantor did not previously have one, notify the
Collateral Agent of the receipt thereof.



     SECTION 6 . As to Equipment and Inventory. Each Grantor shall:



     (a) Keep the Equipment and Inventory which constitute Collateral (other than
Inventory sold in the ordinary course of business and Equipment and Inventory in transit, out for
repair or maintained by an employee) at the places in jurisdictions where all action required by
Section 5 shall have been taken to assure the continuation of the perfection of the security
interest of the Collateral Agent (for its benefit and the ratable benefit of Agents and the
Lenders) with respect to such Equipment and Inventory.



     (b) Subject to provisions of the Credit Agreement, maintain or cause to be
maintained in good repair, working order and condition, excepting ordinary wear and tear and damage
due to casualty, all of the Equipment which constitutes Collateral, and make or cause to be made
all necessary repairs, renewals and









 



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replacements thereof, to the extent not obsolete, surplus, uneconomical or negligible and
consistent with past practice of such Grantor, as quickly as reasonably practicable after the
occurrence of any loss or damage thereto which are necessary or reasonably desirable to such end,
except where the failure to do any of the foregoing would not result in a material adverse effect
on the assets, properties, condition (financial or otherwise) or operations of the Grantors, taken
as a whole.




     (c) Until satisfaction in full of the Obligations (other than contingent
indemnification Obligations after the repayment of all other Obligations and the termination of the
Commitment), at any time when an Event of Default has occurred and is continuing upon prior notice
to the Borrower by the Collateral Agent in accordance with Section 7 of the Credit Agreement and
the Orders: (i) each Grantor will perform any and all reasonable actions requested by the
Collateral Agent to enforce the Collateral Agent’s security interest in the Inventory and/or
Equipment and all of the Collateral Agent’s rights hereunder, such as subleasing warehouses to the
Collateral Agent or its designee, placing and maintaining signs, appointing custodians,
transferring Inventory to warehouses, using best efforts to obtain acknowledgments of bailees and
delivering to the Collateral Agent warehouse receipts and documents of title in the Collateral
Agent’s name; (ii) if any material amount of Inventory and/or Equipment is in the possession or
control of any of the Grantors’ agents, contractors or processors or any other third party (other
than in connection with a temporary relocation of such Collateral for a limited time such that the
perfection of the security interests in such Collateral is not adversely affected thereby), each
such Grantor will notify the Collateral Agent thereof and will notify such agents, contractors or
processors or third party of the Collateral Agent’s security interest therein and use best efforts
to obtain their acknowledgment thereof and, upon request, instruct them to hold all such Collateral
for the Collateral Agent and such Grantor’s account, as their interests may appear, and subject to
the Collateral Agent’s instructions; (iii) the Collateral Agent shall have the right to hold all
Inventory and/or Equipment subject to the security interest granted hereunder; and (iv) the
Collateral Agent shall have the right to take possession of the Inventory and/or Equipment or any
part thereof and to maintain such possession on such Grantor’s premises or to remove any or all of
such Collateral to such other place or places as the Collateral Agent desires in its sole
discretion. If the Collateral Agent exercises its right to take possession of any or all of the
Inventory and/or Equipment, such Grantor, upon the Collateral Agent’s demand, will assemble such
Collateral to make it available to the Collateral Agent at such Grantor’s premises at which it is
located.



     SECTION 7 . As to Accounts.



     (a) Each Grantor will hold and preserve records concerning the Accounts and chattel
paper which evidence Accounts and will permit representatives of the Collateral Agent, at any time
during normal business hours









 



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and upon reasonable prior written notice, to inspect and make abstracts from such records and
chattel paper in accordance with Section 5.6 of the Credit Agreement.




     (b) Except as otherwise provided in this subsection (b), each Grantor shall continue
to collect in accordance with its customary practice, at its own expense, all amounts due or to
become due to such Grantor under the Accounts and, prior to the occurrence and continuance of an
Event of Default upon prior notice to the Borrower by the Collateral Agent in accordance with
Section 7 of the Credit Agreement and the Orders, such Grantor shall have the right to adjust,
settle or compromise the amount or payment of any Account, or release wholly or partly any account
debtor or obligor thereof, or allow any credit or discount thereon, all in accordance with its
customary practices. In connection with such collections, the Grantors may, upon the occurrence and
during the continuation of an Event of Default and upon prior notice by the Collateral Agent in
accordance with Section 7 of the Credit Agreement and the Orders, take (and at the direction of the
Collateral Agent shall take) such action as the Grantors or the Collateral Agent may reasonably
deem necessary or advisable to enforce collection of the Accounts; provided, that upon written
notice of its intention to do so by the Collateral Agent to any Grantor in accordance with Section
7 of the Credit Agreement and the Orders, following the occurrence and during the continuation of
an Event of Default, the Collateral Agent shall have the right to notify the account debtors or
obligors under any Accounts of the assignment of such Accounts to the Collateral Agent and to
direct such account debtors or obligors to make payment of all amounts due or to become due to such
Grantor thereunder directly to the Collateral Agent and, upon such notification and at the expense
of such Grantor, to enforce collection of any such Accounts, and to adjust, settle or compromise
the amount or payment thereof, in the same manner and to the same extent as such Grantor might have
done. After receipt by such Grantor of the notice referred to in the proviso to the preceding
sentence, and unless and until (x) such notice is rescinded by the Collateral Agent by written
notice to such Grantor or (y) an Event of Default shall no longer be continuing (i) all amounts and
proceeds (including instruments) received by such Grantor in respect of the Accounts shall be
received in trust for the benefit of the Collateral Agent (for its benefit and for the ratable
benefit of Agents and the Lenders) hereunder, shall be segregated from other funds of the Grantors
and shall be forthwith paid over to the Collateral Agent in the same form as so received (with any
necessary endorsement) to be held as cash collateral and either (A) if such Event of Default shall
have been cured or waived, released to the Grantors within ten (10) Business Days or (B) if such
Event of Default shall be continuing, applied as provided by Section 15, and (ii) the Grantors
shall not adjust, settle or compromise the amount or payment of any Account, or release wholly or
partly any account debtor or obligor thereof, or allow any credit or discount thereon without the
consent of the Collateral Agent.









 



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     SECTION 8 . As to Trademarks, Patents and Copyrights.



     (a) Each Grantor shall, either itself or through licensees, continue to use the
Trademarks as each is currently used in the Grantor’s business in order to maintain the Trademarks
in full force free from any claim of abandonment for nonuse and each such Grantor will not (and
will not permit any licensee thereof to) do any act or knowingly omit to do any act whereby any
Trademark may become invalidated, unless such failure to use a Trademark or invalidation is not
reasonably likely to have a material adverse effect on the assets, properties, condition (financial
or otherwise) or operations of the Grantors taken as a whole.



     (b) No Grantor will do any act, or omit to do any act, whereby the Patents or
Copyrights may become abandoned or dedicated and each such Grantor shall notify the Collateral
Agent immediately if it knows of any reason that any application or registration may become
abandoned or dedicated, unless such abandonment or dedication is not reasonably likely to have a
material adverse effect on the condition (financial or otherwise), operations or properties of the
Grantors taken as a whole.



     (c) Each Grantor will take all necessary steps in any proceeding before the United
States Patent and Trademark Office, the United States Copyright Office or any similar office or
agency in any other country or any political subdivision thereof, to maintain in all material
respects each application and registration of all material Trademarks, Patents and Copyrights,
including, without limitation, filing of renewals, affidavits of use, affidavits of
incontestability and opposition, interference and cancellation proceedings except where failure to
so maintain is not reasonably likely to have a material adverse effect on the condition (financial
or otherwise), operations or properties of the Grantors taken as a whole.



     (d) Each Grantor will, without further order of the Bankruptcy Court, perform all
acts and execute and deliver all further instruments and documents, including, without limitation,
assignments for security in form suitable for filing with the United States Patent and Trademark
Office, and the United States Copyright Office, respectively, reasonably requested by the
Collateral Agent at any time to evidence, perfect, maintain, record and enforce the Collateral
Agent’s interest in all material Trademarks, Patents and Copyrights or otherwise in furtherance of
the provisions of this Agreement, and each Grantor hereby authorizes the Collateral Agent to
execute and file one or more accurate financing statements (and similar documents) or copies
thereof or of this Agreement with respect to material Patents, Trademarks and Copyrights signed
only by the Collateral Agent.









 



13


     SECTION 9 . As to the Pledged Collateral; Voting Rights; Dividends; Etc.



     (a) So long as (i) no Event of Default shall have occurred and be continuing or (ii)
if an Event of Default has occurred and is continuing, the Collateral Agent shall not have
delivered prior notice to the Borrower in accordance with Section 7 of the Credit Agreement and the
Orders:




     (i) the Grantors (as applicable) shall be entitled to exercise any and all voting and
other consensual rights pertaining to the Pledged Collateral or any part thereof for any
purpose not inconsistent with the terms of this Agreement; provided, however, that no such
action may be taken that would be inconsistent with any Loan Document;




     (ii) notwithstanding the provisions of Section 1 hereof, such Grantors shall be
entitled to receive and retain any and all dividends and other distributions paid in
respect of the Pledged Collateral to the extent not in violation of the Credit Agreement;
provided, that any and all




     (A) dividends paid or payable other than in cash in respect of, and
instruments and other property received, receivable or otherwise distributed in
respect of, or in exchange for, any Pledged Collateral,




     (B) dividends and other distributions paid or payable in cash in respect of
any Pledged Collateral in connection with a partial or total liquidation or
dissolution or in connection with a reduction of capital, capital surplus or
paid-in-surplus, and




     (C) cash paid, payable or otherwise distributed in redemption of, or in
exchange for, any Pledged Shares;


shall be, and shall be forthwith delivered to the Collateral Agent to hold as Pledged Collateral
and shall, if received by any of the Grantors, be received in trust for the benefit of the
Collateral Agent, be segregated from the other property or funds of such Grantor, and be forthwith
delivered to the Collateral Agent as Pledged Collateral in the same form as so received (with any
necessary endorsement); and





     (iii) the Collateral Agent shall execute and deliver (or cause to be executed and
delivered) to the Grantors (as applicable) all such proxies and other instruments as the
Grantors (as applicable) may reasonably request for the purpose of enabling such Grantor
to exercise the voting and other rights which it is entitled to exercise pursuant to
paragraph (i) above and to receive the dividends which it is authorized to receive and
retain pursuant to paragraph (ii) above.









 



14


     (b) Upon the occurrence and during the continuance of an Event of Default and upon
prior notice to the Borrower by the Collateral Agent in accordance with Section 7 of the Credit
Agreement and the Orders:




     (i) upon written notice from the Collateral Agent to the Grantors (as applicable) to
such effect, all rights of such Grantors (as applicable) to exercise the voting and other
consensual rights which it would otherwise be entitled to exercise pursuant to Section
9(a)(i) and to receive the dividends which it would otherwise be authorized to receive and
retain pursuant to Section 9(a)(ii) shall cease, and all such rights shall thereupon
become vested in the Collateral Agent, who shall thereupon have the sole right to exercise
such voting and other consensual rights and to receive and hold as Pledged Collateral any
such dividends; and




     (ii) all dividends which are received by such Grantors contrary to the provisions of
paragraph (i) of this Section 9(b) shall be received in trust for the benefit of the
Collateral Agent, shall be segregated from other funds of the Grantors and shall be
forthwith paid over to the Collateral Agent as Pledged Collateral in the same form as so
received (with any necessary endorsement).


After any and all Events of Default have been cured or waived (provided that no event which would
with the passage of time constitute an Event of Default shall have in the interim occurred), (i)
each Grantor shall have the right to exercise the voting, managerial and other consensual rights
and powers that it would otherwise be entitled to pursuant to Section 9(a) hereof and receive the
payments, proceeds, dividends, distributions, monies, compensation, property, assets, instruments
or rights which it would have been authorized to receive and retain pursuant to Section 9(a) and
(ii) within ten (10) Business Days after such cure or waiver, the Collateral Agent shall repay and
deliver to each Grantor all cash and monies that such Grantor is entitled to retain pursuant to
Section 9(a) which was not applied in repayment of the Obligations.




     SECTION 10 . Insurance. Each Grantor will comply with all the applicable provisions of the
Credit Agreement with respect to the maintenance of insurance and proceeds thereof.



     SECTION 11 . Transfers to Others; Liens; Additional Shares. Each Grantor shall not:



     (a) Sell, assign (by operation of law or otherwise) or otherwise dispose of any of
the Collateral, except for sales, assignments or other dispositions otherwise permitted by the
Credit Agreement.



     (b) Create or suffer to exist any lien, security interest or other charge or
encumbrance upon or with respect to any of the Collateral to secure any









 



15

obligation of any person or entity, except for the security interest created by this
Agreement, the Credit Agreement, the Interim Order and (when applicable) Final Order, or except as
otherwise permitted by the Credit Agreement.




     (c) Each of the Grantors (as applicable) agrees that it will (i) cause each of the
Issuers that are Subsidiaries not to issue any stock or other securities in addition to or
substitution for the Pledged Shares issued by such Issuer, except to any Grantor and (ii) pledge
hereunder, promptly upon its receipt thereof, any and all such additional shares of stock or other
securities of each Issuer of the Pledged Shares, subject to the last sentence of Section 1 hereof.



     SECTION 12 . Collateral Agent Appointed Attorney-in-Fact. Each Grantor hereby irrevocably
appoints the Collateral Agent such Grantor’s attorney-in-fact (which appointment shall be
irrevocable and deemed coupled with an interest), with full authority in the place and stead of
such Grantor and in the name of such Grantor or otherwise, from time to time in the Collateral
Agent’s discretion, upon and during the occurrence and continuation of an Event of Default and upon
prior notice to the Borrower by the Collateral Agent in accordance with Section 7 of the Credit
Agreement and the Orders, to take any action and to execute any instrument which the Collateral
Agent may deem necessary or advisable to accomplish the purposes of this Agreement, including,
without limitation:




     (i) to obtain and adjust insurance required to be paid to the Collateral Agent
pursuant to Section 10,




     (ii) to ask, demand, collect, sue for, recover, compound, receive and give
acquittance and receipts for moneys due and to become due under or in respect of any of
the Collateral,




     (iii) to receive, endorse, and collect any drafts or other instruments, documents and
chattel paper, in connection with clause (i) or (ii) above,




     (iv) to receive, endorse and collect all instruments made payable to the Grantors
representing any dividend or other distribution in respect of the Pledged Collateral or
any part thereof and to give full discharge for the same,




     (v) to exercise on behalf of each Grantor any rights, privileges and remedies under
the Leveraged Lease Documents and to tender performance and take any other actions
incidental thereto; and




     (vi) to file any claims or take any action or institute any proceedings which the
Collateral Agent may deem necessary or desirable









 



16



for the collection of any of the Collateral or otherwise to enforce the rights of the
Collateral Agent with respect to any of the Collateral.



     SECTION 13 . Collateral Agent May Perform; Fees and Expenses. If any Grantor fails to
perform any agreement contained herein, upon notice to such Grantor, the Collateral Agent may
itself perform, or cause performance of, such agreement, and the reasonable fees and expenses of
the Collateral Agent and its Affiliates (including the reasonable fees, disbursements and other
charges of counsel to the Collateral Agent and its Affiliates, and of the Collateral Agent’s and
its Affiliates’ internal and third-party consultants) shall be payable by the Grantors promptly
upon written demand together with backup documentation supporting such reimbursement request.



     SECTION 14 . The Collateral Agent’s Duties. The powers conferred on the Collateral Agent
hereunder are solely to protect its interest and the interests of the Lenders in the Collateral
and, except as set forth in the following sentence, shall not impose any duty upon it to exercise
any such powers. Except for the safe custody of any Collateral in its possession and the accounting
for moneys actually received by it hereunder, the Collateral Agent shall have no duty as to any
Collateral or as to the taking of any necessary steps to preserve rights against prior parties or
any other rights pertaining to any Collateral, including, without limitation, ascertaining or
taking action with respect to calls, conversions, exchanges, maturities, tenders or other matters
relative to any Pledged Collateral, whether or not the Collateral Agent has or is deemed to have
knowledge of such matters.



     SECTION 15 . Remedies. If any Event of Default shall have occurred and be continuing, upon
prior notice to the Borrower by the Collateral Agent in accordance with Section 7 of the Credit
Agreement and the Orders, and subject to the provisions of Section 7 of the Credit Agreement and
the priorities and other terms set forth in Section 2.28 of the Credit Agreement, the Orders:



     (a) The Collateral Agent may exercise in respect of the Collateral, in addition to
other rights and remedies provided for herein or otherwise available to it, and without application
to or order of the Bankruptcy Court, all the rights and remedies of a secured party on default
under the Uniform Commercial Code and also may (i) require each Grantor to, and each Grantor hereby
agrees that it will at its expense and upon request of the Collateral Agent forthwith, assemble all
or part of the Collateral as directed by the Collateral Agent and make it available to the
Collateral Agent at a place to be designated by the Collateral Agent which is reasonably convenient
to all parties and (ii) without notice except as specified in the following sentence, sell the
Collateral or any part thereof in one or more parcels at public or private sale, at any of the
Collateral Agent’s offices or elsewhere, for cash, on credit or for future delivery, and at such
price or prices and upon such other terms as the Collateral Agent may deem commercially reasonable.
Each Grantor agrees that, to the extent notice of such sale shall be









 



17

required by law, at least ten (10) days’ notice to the Grantors of the time and place of any
public sale or the time after which any private sale is to be made shall constitute reasonable
notification. The Collateral Agent shall not be obligated to make any sale of Collateral regardless
of notice of sale having been given. The Collateral Agent may adjourn any public or private sale
from time to time by announcement at the time and place fixed therefor, and such sale may, without
further notice, be made at the time and place to which it was so adjourned.




     (b) The Collateral Agent may instruct the Grantors not to make any further use of
the Patents, Copyrights or Trademarks or any mark similar thereto for any purpose to the extent
that such use would be inconsistent with the exercise by the Collateral Agent of any other remedies
under this Section.



     (c) The Collateral Agent may license, to the extent such Grantor has a right to
issue such a license, whether general, special or otherwise, and whether on an exclusive or
nonexclusive basis, any of the Trademarks, Patents or Copyrights throughout the world for such term
or terms, on such conditions, and in such manner, as the Collateral Agent shall in its sole
discretion determine.



     (d) The Collateral Agent may (without assuming any obligations or liability
thereunder), at any time, enforce against any licensee or sublicensee all rights and remedies of
the Grantors in, to and under any one or more license agreements with respect to the Collateral,
and take or refrain from taking any action under any thereof, and each of the Grantors hereby
releases the Collateral Agent from, and agrees to hold the Collateral Agent free and harmless from
and against any claims arising out of, any action taken or omitted to be taken with respect to any
such license agreement except claims involving gross negligence, willful misconduct or bad faith of
the Collateral Agent.



     (e) In the event of any such license, assignment, sale or other disposition of the
Collateral, or any part of it, upon the request of the Collateral Agent, each Grantor shall supply
its know-how and expertise relating to the Trademarks, Patents or Copyrights, and its customer
lists and other records relating to the Trademarks, Patents or Copyrights to the Collateral Agent
or its designee.



     (f) In order to implement the assignment, sale or other disposal of any of the
Trademarks, Patents or Copyrights, the Collateral Agent may, in compliance with this section,
pursuant to the authority granted in Section 12 hereof, execute and deliver on behalf of the
Grantors, one or more instruments of assignment of the Trademarks, Patents or Copyrights (or any
application of registration thereof), in form suitable for filing, recording or registration in any
country.



     (g) All cash proceeds received by the Collateral Agent in respect of any sale of,
collection from, or other realization upon all or any part of the Collateral









 



18

shall be applied (after payment of any amounts payable to the Collateral Agent pursuant to
Section 16 hereof) as follows:





     (i) First, to pay or cash collateralize (in a manner reasonably satisfactory
to the relevant Administrative Agents or the Sub-Agent, as applicable) incurred and unpaid
fees and expenses of the Administrative Agents and the Sub-Agent under the Loan Documents
and any Cash Management Obligations;




     (ii) Second, to the First Priority Agent and the Sub-Agent, for application
by it towards payment or cash collateralization (in a manner reasonably satisfactory to
the First Priority Agent or the Sub-Agent) of Obligations in respect of the First Priority
Facility, pro rata among the First Priority Lenders holding such Obligations according to
the amounts of such Obligations held by such First Priority Lenders;




     (iii) Third, to the Second Priority Lenders, for application by it towards
prepayment of Obligations in respect of the Second Priority Term Facility, pro rata among
the Second Priority Term Lenders according to the amounts of such Obligations then held by
the Second Priority Term Lenders; and




     (iv) Fourth, to the payment or cash collateralization (in a manner reasonably
satisfactory to the respective holders thereof) of any remaining Obligations, pro rata
among the holders of such Obligations according to the amounts of such Obligations then
held by such holders.


Any surplus of such cash or cash proceeds held by the Collateral Agent and remaining after payment
in full of all outstanding Obligations shall be paid over to the Grantors or to whomsoever may be
lawfully entitled to receive such surplus.




     (h) If at any time when the Collateral Agent shall determine to exercise its right
to sell all or any part of the Pledged Collateral pursuant to this Section 15, such Pledged
Collateral or the part thereof to be sold shall not be effectively registered under the Securities
Act of 1933, as amended, and as from time to time in effect, and the rules and regulations
thereunder (the “Securities Act”), the Collateral Agent is hereby expressly authorized to
sell such Pledged Collateral or such part thereof by private sale in such manner and under such
circumstances as the Collateral Agent may deem necessary or advisable in order that such sale may
legally be effected without such registration. Without limiting the generality of the foregoing, in
any such event the Collateral Agent, in compliance with applicable securities laws, (a) may proceed
to make such private sale notwithstanding that a registration statement for the purpose of
registering such Pledged Collateral or such part thereof shall have been filed under such
Securities Act, (b) may approach and negotiate with a restricted number of potential









 



19

purchasers to effect such sale and (c) may restrict such sale to purchasers as to their
number, nature of business and investment intention including without limitation to purchasers each
of whom will represent and agree to the satisfaction of the Collateral Agent that such purchaser is
purchasing for its own account, for investment, and not with a view to the distribution or sale of
such Pledged Collateral, or part thereof, it being understood that the Collateral Agent may cause
or require each Grantor, and each Grantor hereby agrees upon the written request of the Collateral
Agent, to cause (i) a legend or legends to be placed on the certificates to be delivered to such
purchasers to the effect that the Pledged Collateral represented thereby have not been registered
under the Securities Act and setting forth or referring to restrictions on the transferability of
such securities; and (ii) the issuance of stop transfer instructions to such Issuer’s transfer
agent, if any, with respect to the Pledged Collateral, or, if such Issuer transfers its own
securities, a notation in the appropriate records of such Issuer. In the event of any such sale,
each Grantor does hereby consent and agree that the Collateral Agent shall incur no responsibility
or liability for selling all or any part of the Pledged Collateral at a price which the Collateral
Agent may deem reasonable under the circumstances, notwithstanding the possibility that a
substantially higher price might be realized if the sale were public and deferred until after
registration as aforesaid.




     SECTION 16 . Indemnity and Expenses.



     (a) Each Grantor, jointly and severally, agrees to indemnify the Collateral Agent
from and against any and all claims, losses and liabilities growing out of or resulting from this
Agreement (including, without limitation, enforcement of this Agreement), except claims, losses or
liabilities directly arising from the Collateral Agent’s own gross negligence, willful misconduct
or bad faith.



     (b) The Grantors will promptly upon written demand together, with backup
documentation supporting such reimbursement request, pay to the Collateral Agent the amount of any
and all reasonable fees and reasonable out-of-pocket expenses of the Collateral Agent and its
Affiliates (including the reasonable fees, disbursements and other charges of counsel to the
Collateral Agent and its Affiliates and of the Collateral Agent’s and its Affiliates’ internal and
third-party consultants) which the Collateral Agent and its Affiliates may incur in connection with
(i) the administration of this Agreement, (ii) the custody, preservation, use or operation of, or
the sale of, collection from, or other realization upon, any of the Collateral, (iii) the exercise
or enforcement of any of the rights of the Collateral Agent hereunder or (iv) the failure by any of
the Grantors to perform or observe any of the provisions hereof.



     (c) The Grantors assume all responsibility and liability arising from the use of the
Trademarks, Patents and Copyrights except to the extent such liability









 



20

is a direct result of the Collateral Agent’s own gross negligence, willful misconduct or bad
faith.




     (d) Each of the Grantors agrees that the Collateral Agent does not assume, and shall
have no responsibility for, the payment of any sums due or to become due under any agreement or
contract included in the Collateral or the performance of any obligations to be performed under or
with respect to any such agreement or contract by any of the Grantors, and except as the same may
have resulted directly from the gross negligence, willful misconduct or bad faith of the Collateral
Agent, each of the Grantors hereby jointly and severally agree to indemnify and hold the Collateral
Agent harmless with respect to any and all claims by any person relating thereto.



     SECTION 17. Additional Grantors. Each Global Entity that is required to become a party to
this Agreement pursuant to Section 5.11(b) of the Credit Agreement shall become a Grantor for all
purposes of this Agreement upon execution and delivery by such Subsidiary of an Assumption
Agreement in the form of Annex 1 hereto.



     SECTION 18 . Security Interest Absolute. All rights of the Collateral Agent and security
interests hereunder, and all obligations of each of the Grantors hereunder, shall be absolute and
unconditional, irrespective of any circumstance which might constitute a defense available to, or a
discharge of, any guarantor or other obligor in respect of the Obligations other than payment in
full of the Obligations after the repayment of all other Obligations and the termination of the
Commitments.



     SECTION 19 . Amendments; Etc. No amendment or waiver of any provision of this Agreement, nor
any consent to any departure by any of the Grantors herefrom, shall in any event be effective
unless the same shall be in writing and signed by each of the parties hereto, with the consent of
the requisite Lenders specified in Section 11.1 of the Credit Agreement, and then such waiver or
consent shall be effective only in the specific instance and for the specific purpose for which
given.



     SECTION 20 . Addresses for Notices. All notices and other communications provided for
hereunder shall be in writing and shall be given in accordance with the applicable provisions of
the Credit Agreement.



     SECTION 21 . Continuing Security Interest. This Agreement shall create a continuing security
interest in the Collateral and shall (i) remain in full force and effect until the permanent
termination of the Commitments, the cancellation or termination of all Letters of Credit (or cash
collateralization thereof at a rate of 105%) and payment in full in cash of the Obligations, (ii)
be binding upon each of the Grantors, their successors and assigns and (iii) inure, together with
the rights and remedies of the Collateral Agent hereunder, to the benefit of the Collateral









 



21

Agent, each Agent and each of the Lenders and their respective permitted successors,
transferees and assigns. Upon (x) any sale, assignment, disposition or other transfer by any of the
Grantors of any Collateral that is permitted under the Credit Agreement, (y) the rejection or
termination of any facility lease or surrender of any Designated Projects permitted under Section
6.5(a)(iii) of the Credit Agreement or, as to Clear Lake Cogeneration, L.P., the rejection or
termination of the long-term steam supply agreement (the “Clear Lake Steam Agreement”) with
Celanese Ltd. (“Celanese”) and Old World Industries, Inc. (“Old World”) or of the
ground lease with Celanese related to Clear Lake, or (z) the effectiveness of any written consent
to the release of the security interest granted by the Credit Agreement, the Orders or hereby in
any Collateral pursuant to Section 11.1 of the Credit Agreement, (A) the security interest in such
Collateral (but not any proceeds thereof) shall be automatically released, and (B) as to (1) the
rejection or termination of any facility lease in respect of, or the surrender of, any Designated
Project (as defined in the Cash Collateral Order) which is the sole facility owned or leased by a
Grantor, or (2) the rejection or termination of the ground lease with Celanese related to Clear
Lake or the Clear Lake Steam Agreement, the guarantee obligations of such Grantor or Guarantor
under the Credit Agreement and hereunder, and the security interests and the claims of the Lenders
(including the Superpriority Claims) in respect thereof, shall be automatically released. Upon a
surrender of a Designated Project permitted under Section 6.5(a)(iii) of the Credit Agreement
effected by way of foreclosure (consensual or otherwise) on the Capital Stock or assets of the
relevant project debtor, the security interest in the assets (and Capital Stock to the extent
necessary to permit a consensual surrender or foreclosure) of such project debtor, the guarantee
obligations of such project debtor under the Credit Agreement and hereunder, and the Superpriority
Claims of the Lenders in respect thereof, shall be automatically cancelled and released. Upon any
such termination, the Collateral Agent will, at the Grantor’s expense, execute and deliver to the
Grantors such documents as the Grantors shall reasonably request to evidence such termination, and
the Collateral Agent shall be entitled to rely conclusively on, without independent investigation,
a certificate of the applicable Grantor certifying that any specific sale, assignment, disposition
or other transfer of any Collateral is permitted under the Credit Agreement.




     SECTION 22 . CCFC Collateral. Notwithstanding anything to the contrary set forth in this
Agreement, at any time after CCFC Preferred Holdings, LLC and its Subsidiaries (the “CCFC
Entities”) become Grantors under this Agreement in accordance with Section 5.11(b) of the
Credit Agreement and grant Liens on all of their assets as Collateral hereunder (such Collateral of
the CCFC Entities, the “CCFC Collateral”), the Collateral Agent, and by becoming parties to
the Credit Agreement, the Lenders, agree that in the exercise of any rights and remedies under this
Agreement or any other Loan Document, the Collateral Agent shall use its commercially reasonable
efforts to exercise such rights and remedies first against Collateral other than the CCFC
Collateral before exercising any such rights and remedies against the CCFC Collateral.









 



22


     SECTION 23 . Governing Law. This Agreement shall be governed by and construed in accordance
with the laws of the State of New York, and, to the extent applicable, the Bankruptcy Code.



     SECTION 24 . Headings. Section headings in this Agreement are included herein for
convenience of reference only and shall not constitute a part of this Agreement for any other
purpose.



     SECTION 24. Execution in Counterparts. This Agreement may be executed in counterparts (and
by different parties hereto on different counterparts), each of which shall constitute an original,
but all of which when taken together shall constitute a single contract.



[Signature Pages Follow










 



 




     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of
the day and the year first written.



	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 
	 	 	BORROWER:	 	 
	 
	 	 	 	 	 	 
	 	 	CALPINE CORPORATION	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	/s/  Eric N. Pryor	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Name: Eric N. Pryor	 	 
	 

	 	 	 	Title:	 	 












 







GRANTORS:

Amelia Energy Center, LP

Anacapa Land Company, LLC

Anderson Springs Energy Company

Androscoggin Energy, Inc.

Auburndale Peaker Energy Center, LLC

Aviation Funding Corp.

Baytown Energy Center, LP

Baytown Power GP, LLC

Baytown Power, LP

Bellingham Cogen, Inc.

Bethpage Fuel Management Inc.

Blue Heron Energy Center, LLC

Blue Spruce Holdings, LLC

Broad River Energy LLC

Broad River Holdings, LLC

CalGen Equipment Finance Company, LLC

CalGen Equipment Finance Holdings, LLC

CalGen Expansion Company, LLC

CalGen Finance Corporation

CalGen Project Equipment Finance Company One, LLC

CalGen Project Equipment Finance Company Three, LLC

CalGen Project Equipment Finance Company Two, LLC

Calpine Acadia Holdings, LLC

Calpine Administrative Services Company, Inc.

Calpine Agnews, Inc.

Calpine Amelia Energy Center GP, LLC

Calpine Amelia Energy Center LP, LLC

Calpine Auburndale Holdings, LLC

Calpine Baytown Energy Center GP, LLC

Calpine Baytown Energy Center LP, LLC

Calpine Bethpage 3 Pipeline Construction Company, Inc.

Calpine Bethpage 3, LLC

Calpine c*Power, Inc.

Calpine CalGen Holdings, Inc.

Calpine California Development Company, LLC

Calpine California Energy Finance, LLC

Calpine California Equipment Finance Company, LLC

Calpine Calistoga Holdings, LLC

Calpine Central Texas GP, Inc.

Calpine Central, Inc.

Calpine Central, L.P.

Calpine Central-Texas, Inc.

Calpine Channel Energy Center GP, LLC

Calpine Channel Energy Center LP, LLC

Calpine Clear Lake Energy GP, LLC

Calpine Clear Lake Energy, LP

Calpine Cogeneration Corporation

Calpine Construction Management Company, Inc.

Calpine Corpus Christi Energy GP, LLC

Calpine Corpus Christi Energy, LP

Calpine Decatur Pipeline, Inc.

Calpine Decatur Pipeline, L.P.

Calpine Dighton, Inc.

Calpine East Fuels, Inc.

Calpine Eastern Corporation

Calpine Energy Services Holdings, Inc.

Calpine Energy Services, LP

Calpine Finance Company

Calpine Freestone Energy GP, LLC

Calpine Freestone Energy, LP

Calpine Freestone, LLC

Calpine Fuels Corporation

Calpine Gas Holdings, LLC

Calpine Generating Company, LLC

Calpine Gilroy 1, Inc.

Calpine Gilroy 2, Inc.

Calpine Gilroy Cogen, L.P.

Calpine Global Services Company, Inc.

Calpirie Gordonsville GP Holdings, LLC

Calpine Gordonsville LP Holdings, LLC

Calpine Gordonsville, LLC

Calpine Greenleaf Holdings, Inc.

Calpine Greenleaf, Inc.

Calpine Hidalgo Design, L.P.

Calpine Hidalgo Energy Center, L.P.

Calpine Hidalgo Holdings, Inc.

Calipne Hidalgo Power GP, LLC

Calpine Hidalgo Power, LP

Calpine Hidalgo, Inc.

Calpine International Holdings, Inc.

Calpine International, LLC

Calpine Investment Holdings, LLC

Calpine Kennedy Airport, Inc.

Calpine KIA, Inc.

Calpine Leasing Inc.

Calpine Long Island, Inc.

Catptne Lost Pines Operations, Inc.

Calpinc Louisiana Pipeline Company

Calpine Magic Valley Pipeline, Inc.

Calpine Monterey Cogeneration, Inc.

Calpine MVP, Inc.

Calpine NCTP GP, LLC

Calpine NCTP, LP

Calpine Northbrook Corporation of Maine, Inc.

Calpine Northbrook Energy Holding, LLC

Calpine Northbrook Energy, LLC

Calpine Northbrook Holdings Corporation

Calpine Northbrook Investors, LLC

Calpine Northbrook Project Holdings, LLC

Calpine Northbrook Southcoast Investors, LLC

Calpine NTC, LP

Calpine Oneta Power I, LLC

Calpine Oneta Power II LLC

Calpine Oneta Power, L.P.

Calpine Operating Services Company, Inc.

Calpine Operations Management Company, Inc.

Calpine Pastoria Holdings, LLC

Calpine Philadelphia, Inc.

Calpine Pittsburg, LLC

Calpine Power Company

Calpine Power Equipment LP

Calpine Power Management, Inc.

Calpine Power Management, LP

Calpine Power Services, Inc

Calpine Power, Inc.

Calpine PowerAmerica, Inc.

Calpine PowerAmerica - CA, LLC

Calpine PowerAmerica - CT, LLC

Calpine PowerAmerica - MA, LLC

Calpine PowerAmerica - ME, LLC

Calpine PowerAmerica - NH, LLC

Calpine PowerAmerica - NY, LLC

Calpine PowerAmerica - OR, LLC

Calpine PowerAmerica, LP

Calpine Producer Services, L.P.

Calpine Project Holdings, Inc.

Calpine Pryor, Inc.

Calpine Rumford I, Inc.

Calpine Rumford, Inc.

Calpine Schuylkill, Inc.

Calpine Siskiyou Geothermal Partners, L.P.

Calpine Stony Brook, Inc.

Calpine Stony Brook Operators, Inc.

Calpine Stony Brook Power Marketing, LLC

Calpine Sumas, Inc.

Calpine TCCL Holdings, Inc.

Calpine Texas Pipeline GP, Inc.

Calpine Texas Pipeline LP, Inc.

Calpine Texas Pipeline, L.P.

Calpine Tiverton 1, Inc.

Calpine Tiverton, Inc.

Calpine ULC I Holding, LLC

Calpine University Power, Inc.

Calpine Unrestricted Funding, LLC

Calpine Unrestricted Holdings, LLC

Calpine Vapor, Inc.

Carville Energy LLC

CCFC Development Company, LLC

CCFC Equipment Finance Company, LLC

CCFC Project Equipment Finance Company One, LLC

CES GP, LLC

CGC Dighton, LLC

Channel Energy Center, LP

Channel Power GP, LLC

Channel Power, LP

Clear Lake Cogeneration Limited Partnership

CogenAmerica Asia Inc.

CogenAmerica Parlin Supply Corp.

Columbia Energy LLC

Corpus Christi Cogeneration L.P.

CPN 3rd Turbine, Inc.

CPN Acadia, Inc.

CPN Berks Generation, Inc,

CPN Berks, LLC

CPN Bethpage 3rd Turbine, Inc.

CPN Cascade, Inc.

CPN Clear Lake, Inc.

CPN Decatur Pipeline, Inc.

CPN Energy Services GP, Inc.

CPN Energy Services LP, Inc.

CPN Freestone, LLC

CPN Funding, Inc.

CPN Morris, Inc.

CPN Oxford, Inc.

CPN Pipeline Company

CPN Pleasant Hill Operating, LLC

CPN Pleasant Hill, LLC

CPN Power Services GP, LLC

CPN Power Services, LP

CPN Pryor Funding Corporation

CPN Telephone Flat, Inc.

Decatur Energy Center, LLC

Deer Park Power GP, LLC

Deer Park Power, LP

Delta Energy Center, LLC

Dighton Power Associates Limited Partnership

East Altamont Energy Center, LLC

Fond du Lac Energy Center, LLC

Fontana Energy Center, LLC

Freestone Power Generation, LP

Freestone Power Generation, LP

GEC Bethpage Inc.

Geothermal Energy Partners LLC

Geysers Power Company II, LLC

Geysers Power Company, LLC

Geysers Power I Company

Goldendale Energy Center, LLC

Hammond Energy LLC

Hillabee Energy Center, LLC

Idelwild Fuel Management Corp.

JMC Bethpage, Inc.

KIAC Partners

Lake Wales Energy Center, LLC

Lawrence Energy Center, LLC

Lone Oak Energy Center, LLC

Los Esteros Critical Energy Facility, LLC

Los Medanos Energy Center LLC

Magic Valley Gas Pipeline GP, LLC

Magic Valley Gas Pipeline, LP

Magic Valley Pipeline, L.P.

MEP Pleasant Hill, LLC

Moapa Energy Center, LLC

Mobile Energy LLC

Modoc Power, Inc.

Morgan Energy Center, LLC

Mount Hoffman Geothermal Company, L.P.

Mt. Vernon Energy LLC

NewSouth Energy LLC

Nissequogue Cogen Partners

Northwest Cogeneration, Inc.

NTC Five, Inc.

NTC GP, LLC

Nueces Bay Energy LLC

O.L.S. Energy-Agnews, Inc.

Odyssey Land Acquisition Company

Pajaro Energy Center, LLC

Pastoria Energy Center, LLC

Pastoria Energy Facility, LLC

Philadelphia Biogas Supply, Inc.

Phipps Bend Energy Center, LLC

Pine Bluff Energy, LLC

Quintana Canada Holdings, LLC

RockGen Energy LLC

Rumford Power Associates Limited Partnership

Russell City Energy Center, LLC

San Joaquin Valley Energy Center, LLC

Silverado Geothermal Resources, Inc.

Skipanon Natural Gas, LLC

South Point Energy Center, LLC

South Point Holdings, LLC

Stony Brook Cogeneration, Inc.

Stony Brook Fuel Management Corp.

Sutter Dryers, Inc.

TBG Cogen Partners

Texas City Cogeneration, L.P.

Texas Cogeneration Company

Texas Cogeneration Five, Inc.

Texas Cogeneration One Company

Thermal Power Company

Thomassen Turbine Systems America, Inc.

Tiverton Power Associates Limited Partnership

Towantic Energy, L.L.C.

VEC Holdings, LLC

Venture Acquisition Company

Vineyard Energy Center, LLC

Wawayanda Energy Center, LLC

Whatcom Cogeneration Partners, L.P.

Zion Energy LLC




	 	 	 	 	 
	 	 	 
	 	By:  	                             /s/ Eric N. Pryor
 	 
	 	 	Name:  	Eric N. Pryor 	 
	 	 	Title:  	 	 
	 



Augusta Development Company, LLC

Calpine Kennedy Operators Inc.

Calpine Northbrook Services, LLC

Calpine Sonoran Pipeline LLC

Calpine Stony Brook, Inc.

CPN Freestone, LLC

Power Investors, L.L.C.

Power Systems MFG., LLC




	 	 	 	 	 
	 	 	 
	 	By:  	                          /s/ Lisa M. Bodensteiner
 	 
	 	 	Name:  	Lisa M. Bodensteiner 	 
	 	 	Title:  	 	 
	 











 



 


	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 
	 	 	COLLATERAL AGENT: 	 	 
	 
	 	 	 	 	 	 
	 	 	DEUTSCHE BANK TRUST

COMPANY AMERICAS	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	/s/  Mark B. Cohen	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Name: Mark B. Cohen	 	 
	 

	 	 	 	Title: Managing Director	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	/s/  Marcus M. Tarkington	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Name: Marcus M. Tarkington	 	 
	 

	 	 	 	Title: Director	 	 












 



 


ANNEX 1




          ASSUMPTION AGREEMENT, dated as of                                        , 200_, made by
                                                            (the “Additional Grantor”), in favor of Deutsche Bank Trust
Company Americas, as Collateral Agent (in such capacity, the “Collateral Agent”) for the
banks and other financial institutions or entities (the “Lenders”) parties to the Credit
Agreement referred to below. All capitalized terms not defined herein shall have the meaning
ascribed to them in such Credit Agreement.




W I T N E S S E T H:




          WHEREAS, Calpine Corporation (the “Borrower”), the Lenders and the Collateral Agent
have entered into a Credit Agreement, dated as of February 23, 2006 (as amended, supplemented or
otherwise modified from time to time, the “Credit Agreement”);




          WHEREAS, in connection with the Credit Agreement, the Borrower and the Guarantors (other than
the Additional Grantor) have entered into the Security and Pledge Agreement, dated as of February
23, 2006 (as amended, supplemented or otherwise modified from time to time, the “Security and
Pledge Agreement”) in favor of the Collateral Agent for its benefit and the ratable benefit of
the Agents and the Lenders;




          WHEREAS, the Credit Agreement requires the Additional Grantor to become a party to the
Security and Pledge Agreement; and




          WHEREAS, the Additional Grantor has agreed to execute and deliver this Assumption Agreement in
order to become a party to the Security and Pledge Agreement;




          NOW, THEREFORE, IT IS AGREED:




          1. Security and Pledge Agreement. By executing and delivering this Assumption
Agreement, the Additional Grantor, as provided in Section 17 of the Security and Pledge Agreement,
hereby becomes a party to the Security and Pledge Agreement as a Grantor thereunder with the same
force and effect as if originally named therein as a Grantor and, without limiting the generality
of the foregoing, hereby expressly assumes all obligations and liabilities of a Grantor thereunder.
The information set forth in Annex 1-A hereto is hereby added to the information set forth in the
Schedules to the Security and Pledge Agreement. The Additional Grantor hereby represents and
warrants that each of the representations and warranties contained in Section 4 of the Security and
Pledge Agreement is true and correct on and as the date hereof (after giving effect to this
Assumption Agreement) as if made on and as of such date.




          2. Governing Law. THIS ASSUMPTION AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED
AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.










 



2




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




	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 
	 	 	[ADDITIONAL GRANTOR]	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Name:	 	 
	 

	 	 	 	Title:	 	 












 



3


Annex 1-A to

Assumption Agreement




Supplement to Schedule 1




Supplement to Schedule 2




Supplement to Schedule 3




Supplement to Schedule 4




Supplement to Schedule 5




Supplement to Schedule 6