Document:

exv4w22

 

Exhibit 4.22

 

THIRD AMENDED AND RESTATED

LIMITED LIABILITY COMPANY

OPERATING AGREEMENT

OF

METCALF ENERGY CENTER, LLC

Dated as of

June 20, 2005

 

 

 

TABLE OF CONTENTS

	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Page	 
	 
	 	 	 	 	 	 	 	 
	ARTICLE I. GENERAL TERMS	 	 	1	 
	 
	 	1.1	 	Limited Liability Company	 	 	1	 
	 
	 	1.2	 	Filing of Certificate	 	 	1	 
	 
	 	1.3	 	Name	 	 	1	 
	 
	 	1.4	 	Registered Agent and Office	 	 	1	 
	 
	 	1.5	 	Term	 	 	2	 
	 
	 	1.6	 	Purpose	 	 	2	 
	 
	 	1.7	 	Filings	 	 	2	 
	 
	 	1.8	 	Definitions and Interpretation	 	 	2	 
	 
	 	 	 	 	 	 	 	 
	ARTICLE II. MEMBERS AND INTERESTS	 	 	15	 
	 
	 	2.1	 	Members and Membership Interests	 	 	15	 
	 
	 	2.2	 	Meetings of Members	 	 	19	 
	 
	 	2.3	 	Certain Duties and Limitation of Liability	 	 	20	 
	 
	 	 	 	 	 	 	 	 
	ARTICLE III. CONTRIBUTIONS; PROFITS AND LOSSES	 	 	21	 
	 
	 	3.1	 	Capital Accounts	 	 	21	 
	 
	 	3.2	 	Contribution of Mandatory Redemption Capital	 	 	21	 
	 
	 	3.3	 	No Additional Capital Contributions	 	 	21	 
	 
	 	3.4	 	Loans	 	 	21	 
	 
	 	3.5	 	Allocation of Profits and Losses	 	 	21	 
	 
	 	 	 	 	 	 	 	 
	ARTICLE IV. DISTRIBUTIONS	 	 	21	 
	 
	 	4.1	 	General	 	 	21	 
	 
	 	4.2	 	Distributions to Common Member	 	 	22	 
	 
	 	4.3	 	Prior Payments to Predecessors in Interest	 	 	22	 
	 
	 	4.4	 	Withholding	 	 	23	 
	 
	 	4.5	 	Distributions in Kind	 	 	23	 
	 
	 	4.6	 	Other Distributions	 	 	23	 
	 
	 	4.7	 	Limitations on Distributions	 	 	23	 
	 
	 	 	 	 	 	 	 	 
	ARTICLE V. REDEMPTION OF REDEEMABLE PREFERRED SHARES	 	 	24	 
	 
	 	5.1	 	Optional Redemption of Redeemable Preferred	 	 	24	 
	 
	 	5.2	 	Change of Control Redemption	 	 	25	 
	 
	 	5.3	 	Mandatory Redemption	 	 	28	 
	 
	 	5.4	 	Excess Cash Flow Redemption	 	 	29	 
	 
	 	5.5	 	Complete Redemption on Maturity Date	 	 	31	 
	 
	 	5.6	 	Pro Rata Redemption	 	 	32	 
	 
	 	5.7	 	Delayed Redemption	 	 	32	 
	 
	 	 	 	 	 	 	 	 
	ARTICLE VI. MANAGEMENT	 	 	32	 
	 
	 	6.1	 	General	 	 	32	 
	 
	 	6.2	 	Composition of the Board; Election and Removal of Directors	 	 	33	 
	 
	 	6.3	 	Board Meeting and Approval Requirements	 	 	35	 
	 
	 	6.4	 	Conduct of Business; Credit Agreement Covenants	 	 	37	 

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TABLE OF CONTENTS, cont’d

	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Page	 
	 
	 	6.5	 	Matters Requiring Independent Director Approval	 	 	39	 
	 
	 	6.6	 	Officers; No Employees	 	 	39	 
	 
	 	6.7	 	Limitation of Director and Officer Liability	 	 	40	 
	 
	 	6.8	 	Company Funds and Disbursements	 	 	41	 
	 
	 	6.9	 	Company Opportunities; Fiduciary Duties; Non-Compete	 	 	41	 
	 
	 	6.10	 	Special Purpose Entity	 	 	42	 
	 
	 	 	 	 	 	 	 	 
	ARTICLE VII. DISSOLUTION AND TERMINATION	 	 	44	 
	 
	 	7.1	 	Events of Dissolution	 	 	45	 
	 
	 	7.2	 	Procedures Upon Dissolution	 	 	45	 
	 
	 	7.3	 	Termination of Company	 	 	46	 
	 
	 	7.4	 	Continuation of Company	 	 	46	 
	 
	 	 	 	 	 	 	 	 
	ARTICLE VIII. BOOKS, RECORDS AND INFORMATION; FINANCIAL MATTERS	 	 	46	 
	 
	 	8.1	 	Accounting and Fiscal Year	 	 	46	 
	 
	 	8.2	 	Books and Records	 	 	47	 
	 
	 	8.3	 	Financial Statements	 	 	47	 
	 
	 	8.4	 	Other Information	 	 	47	 
	 
	 	8.5	 	Confidentiality	 	 	47	 
	 
	 	8.6	 	Tax Matters	 	 	48	 
	 
	 	 	 	 	 	 	 	 
	ARTICLE IX. TRANSFER RESTRICTIONS	 	 	49	 
	 
	 	9.1	 	Transfers of Shares	 	 	49	 
	 
	 	9.2	 	Rights of Assignee	 	 	50	 
	 
	 	9.3	 	Admission of Assignees as Substitute Members; Registration of Transfer on Company’s Books and Records	 	 	51	 
	 
	 	9.4	 	Withdrawal of Members	 	 	52	 
	 
	 	9.5	 	Delivery of Information	 	 	53	 
	 
	 	9.6	 	Pledge of Common Shares in Connection with Credit Agreement	 	 	53	 
	 
	 	 	 	 	 	 	 	 
	ARTICLE X. MISCELLANEOUS PROVISIONS	 	 	53	 
	 
	 	10.1	 	Amendment	 	 	53	 
	 
	 	10.2	 	Disclaimer of Agency	 	 	53	 
	 
	 	10.3	 	Regulatory Status	 	 	53	 
	 
	 	10.4	 	Notices and Information	 	 	54	 
	 
	 	10.5	 	Consequential Damages	 	 	54	 
	 
	 	10.6	 	Counterparts	 	 	54	 
	 
	 	10.7	 	No Right to Partition	 	 	54	 
	 
	 	10.8	 	Additional Documents; Further Assurances	 	 	54	 
	 
	 	10.9	 	Governing Law	 	 	55	 
	 
	 	10.10	 	Binding Effect	 	 	55	 
	 
	 	10.11	 	Partial Invalidity	 	 	55	 
	 
	 	10.12	 	Captions	 	 	55	 
	 
	 	10.13	 	No Rights in Third Parties	 	 	55	 

ii

 

TABLE OF CONTENTS, cont’d

	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Page	 
	 
	 	10.14	 	No Title to Company Property	 	 	55	 
	 
	 	10.15	 	Persons Not Named	 	 	55	 

	 	 	 
	SCHEDULE 1

	 	Register of Members
	 
	 	 
	SCHEDULE 2

	 	Clause (i) Prohibited Transferees
	 
	 	 
	SCHEDULE 3

	 	Approved Documents
	 
	 	 
	EXHIBIT A

	 	Allocation Addendum
	 
	 	 
	EXHIBIT B

	 	Form of Common Share Certificate

iii

 

THIRD AMENDED AND RESTATED

LIMITED LIABILITY COMPANY

OPERATING AGREEMENT

OF

METCALF ENERGY CENTER, LLC

     THIS THIRD AMENDED AND RESTATED LIMITED LIABILITY COMPANY OPERATING AGREEMENT (the
“Agreement”) of METCALF ENERGY CENTER, LLC, a Delaware limited liability company (the “Company”),
dated as of June 20, 2005 is executed and entered into by and among METCALF HOLDINGS, LLC, a
Delaware limited liability company (the “Common Member”), and the parties listed on Schedule 1
hereto who either have executed as Redeemable Preferred Members a counterpart signature page to
this Agreement or who hereafter from time to time shall have been admitted as Redeemable Preferred
Members of this Company by executing a counterpart signature page to this Agreement. All
capitalized terms used but not otherwise defined herein shall have the meanings set forth in
Section 1.8 or, with respect to certain tax and accounting terms, the Allocation Addendum attached
hereto as Exhibit A.

     This Agreement completely restates and replaces the Company’s Second Amended and Restated
Limited Liability Company Operating Agreement dated as of December 27, 2004, entered into by
Calpine Development Holdings, Inc., a Delaware corporation. The current Common Member was assigned
all of the interests in the Company and was admitted to the Company as a member of the Company
prior to the Effective Time pursuant to a Contribution Agreement by and between Calpine Development
Holdings, Inc. and the Common Member.

ARTICLE I.

GENERAL TERMS

     1.1 Limited Liability Company. The Company has been formed as a limited liability company under the
LLC Act for the purposes, and subject to the other provisions, set forth herein.

     1.2 Filing of Certificate. A certificate of formation (the “Certificate”) for the Company was executed
and filed with the office of the Delaware Secretary of State in accordance with the LLC Act on July
26, 2004.

     1.3 Name. The name of the Company shall be “Metcalf Energy Center, LLC.”

     1.4 Registered Agent and Office. The Company shall maintain within the State of Delaware a registered
agent for service of process on the Company and a registered office in accordance with the
provisions of LLC Act.

 

 

     1.5 Term. The term of the Company began on the date of filing of the Certificate with the Secretary of
State of the State of Delaware (the “Formation Date”), and shall continue in perpetuity, unless the
Company is earlier dissolved in accordance with the provisions of Article 7.

     1.6 Purpose. The purpose (the “Purpose”) of the Company is to develop, construct, finance, improve,
operate, maintain and dispose of the Project, and to engage in any other activities related or
incidental thereto or in anticipation thereof.

     1.7 Filings. The Board shall cause to be filed all such certificates, notices, statements or other
instruments, and amendments thereto under the laws of the State of Delaware and other applicable
jurisdictions as the Board may from time to time deem necessary or advisable for the operation of
the Company. The Board may designate any person as an “authorized person” within the meaning of
the LLC Act to execute, deliver and file any certificates (and any amendments, restatements or
corrections thereto) permitted or required to be filed with the Secretary of State of the State of
Delaware under the LLC Act.

     1.8 Definitions and Interpretation.

          (a) Definitions. Unless otherwise required by the context in which any capitalized term
appears, or unless otherwise specifically defined elsewhere in this Agreement, capitalized terms
used in this Agreement shall have the meanings set forth below or set forth in the Allocation
Addendum attached hereto as Exhibit A.

     “Additional Redeemable Preferred Shares” means additional Redeemable Preferred Shares issued
in accordance with Section 2.1(c).

     “Administrative Agent” has the meaning given such term in Exhibit A to the Credit Agreement.

     “Affiliate” means, when used with reference to a specified Person, any other Person that
directly, or indirectly through one or more intermediaries, controls, is controlled by or is under
common control with the Person specified. For purposes of the foregoing, “control,” “controlled
by” and “under common control with” with respect to any Person shall mean the possession, directly
or indirectly, of the power to direct or cause the direction of the management and policies of such
Person, whether through the ownership of voting securities, partnership interests or other equity
interests, or by contract or otherwise.

     “Agreement” has the meaning set forth in the preamble to this Agreement, and includes all
schedules and addenda hereto.

     “Assignee” means any Person (a) which is the holder of an Economic Interest, and (b) which has
not been admitted as a Substitute Member.

     “Banking Day” means any day other than a Saturday, Sunday or other day on which banks are or
Administrative Agent is authorized or required to be closed in the State of California or the State
of New York.

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     “Bankruptcy” means, with respect to any Person, if such Person (i) makes an assignment for the
benefit of creditors, (ii) files a voluntary petition in bankruptcy or shall consent to an
involuntary bankruptcy against it, (iii) is adjudged a bankrupt or insolvent, or has entered
against it an order for relief, in any bankruptcy or insolvency proceedings, (iv) files a petition
or answer seeking for itself any reorganization, arrangement, composition, readjustment,
liquidation or similar relief under any statute, law or regulation, (v) files an answer or other
pleading admitting or failing to contest the material allegations of a petition filed against it in
any proceeding of this nature, (vi) seeks, consents to or acquiesces in the appointment of a
trustee, receiver or liquidator of the Person or of all or any substantial part of its properties,
or (vii) if 120 days after the commencement of any proceeding against the Person seeking
reorganization, arrangement, composition, readjustment, liquidation or similar relief under any
statute, law or regulation, if the proceeding has not been dismissed, or if within 90 days after
the appointment without such Person’s consent or acquiescence of a trustee, receiver or liquidator
of such Person or of all or any substantial part of its properties, the appointment is not vacated
or stayed, or within 90 days after the expiration of any such stay, the appointment is not vacated.
The foregoing definition of “Bankruptcy” is intended to replace and shall supersede and replace
the definition of “Bankruptcy” set forth in Sections 18-101(1) and 18-304 of the LLC Act.

     “Board” has the meaning set forth in Section 6.1(a).

     “Calpine” means Calpine Corporation, a Delaware corporation.

     “Certificate” has the meaning set forth in Section 1.2.

     “Change of Control” means (i) the consummation of any transaction as a result of which any
Person becomes the beneficial owner of more than 50% of the voting stock of the Common Member or of
the Common Shares of the Company, other than Calpine or any of its subsidiaries, or (ii) at any
time the individuals constituting a majority of the board of directors of the Common Member or the
Company in office at the Effective Time (together with any new directors whose election is
approved, or nomination recommended, by a majority of such board of directors and/or by Calpine and
its subsidiaries) cease to constitute a majority of the board of directors, in each case, other
than by reason of the appointment of the members of the Board by Members who are holders of the
Preferred Redeemable Shares due to a Voting Rights Trigger Event pursuant to Section 6.2(d) hereof.

     “Change of Control Redemption Acceptance Notice” has the meaning set forth in
Section 5.2(c)(i).

     “Change of Control Redemption Amount” has the meaning set forth in Section 5.2(e).

     “Change of Control Redemption Date” has the meaning set forth in Section 5.2(b).

     “Change of Control Redemption Notice” has the meaning set forth in Section 5.2(c).

     “Change of Control Redemption Offer” has the meaning set forth in Section 5.2(a).

     “Change of Control Redemption Offer Period” has the meaning set forth in Section 5.2(b).

3

 

     “Code” means the Internal Revenue Code of 1986, as amended from time to time (or any
corresponding provisions of succeeding law).

     “Common Member” has the meaning set forth in the Preamble, and shall include any other Person
who has been admitted to the Company as a Common Member in accordance with this Agreement and who
is identified as owning Common Shares on the Register of Members as such may be amended from time
to time, each in its capacity as a member of the Company.

     “Common Member Parties” has the meaning set forth in Section 6.4(e).

     “Common Share” means a Membership Interest having such rights, privileges and obligations as
are set forth in this Agreement as being appurtenant to a “Common Share” and representing such
fractional part of the Membership Interests relating to the Common Shares hereunder of all Common
Members as is equal to the quotient of one (1) divided by the total number of Common Shares.

     “Common Share Certificate” means a certificate in the form of Exhibit B attached
hereto, issued by the Company pursuant to Article 2, that evidences Common Shares.

     “Company” has the meaning set forth in the preamble to this Agreement.

     “Company Account” means the checking account of the Company maintained after the Credit
Agreement Termination Date in accordance with Section 6.4(b)(ii).

     “Complete Redemption” has the meaning set forth in Section 5.5(a).

     “Complete Redemption Amount” has the meaning set forth in Section 5.5(c).

     “Complete Redemption Notice” has the meaning set forth in Section 5.5(b).

     “Consent” means the prior written consent of the indicated Person or Persons, as more fully
described in Section 2.2(e) hereof. Unless otherwise expressly provided herein, but without
limiting the fiduciary duty of the Directors under Section 6.1(b) hereof, each Member may exercise
its Consent rights in its sole discretion in relation to its proprietary interests in the Company, and no Member shall have any duty (including any fiduciary duty) to the Company or to
any other Member in relation to such Consent determinations or otherwise in connection with their
rights and responsibilities hereunder or in connection with the Company and its Purpose, other than
the duty to act in accordance with the implied contractual covenant of good faith and fair dealing.

     “Credit Agreement” means the Amended and Restated Credit Agreement dated as of the Effective
Date by and among the Company, the financial institutions listed on Exhibit H to the Credit
Agreement or who later become a party thereto, and Credit Suisse, as lead arranger, as book runner,
as administrative agent, and as collateral agent for the Secured Parties.

     “Credit Agreement Termination Date” means the first date on which (i) all Obligations of the
Company (other than any unasserted contingent indemnity obligations) to the Secured Parties shall
have been paid in full in cash, (ii) each of the Interest Rate Agreements to which

4

 

any Secured
Party is a party shall have terminated or the Company shall cease to have any obligations
thereunder and (iii) all obligations of the Secured Parties under the Credit Documents have
terminated (other than any unasserted contingent indemnity obligations).

     “Credit Documents” has the meaning given such term in Exhibit A to the Credit Agreement.

     “Depositary Agent” has the meaning given such term in Exhibit A to the Credit Agreement.

     “Depositary Agreement” means the Amended and Restated Depositary Agreement dated as of the
Effective Date among the Company, Credit Suisse, New York Branch, and Depositary Agent.

     “Directors” has the meaning set forth in Section 6.1(a).

     “Economic Interest” means a Person’s limited liability company interest in the Company with
respect to a particular class of Shares, including the right to share in the Net Profits and Net
Losses or similar items of income, gain, loss, deduction and credit, and to receive distributions
from, the Company, and includes the priority of, and rate of return on, the particular class of
Shares held by such Person to which the Economic Interest is attributable, including, with respect
to any Redeemable Preferred Share, the Redeemable Preferred Dividends payable with respect to such
Redeemable Preferred Share, but does not include any other rights of a Member including, without
limitation, the right to vote or to participate in the management of the Company, or, except as
specifically provided in this Agreement or as required under the LLC Act, any right to information
concerning the business and affairs of the Company.

     “Effective Date” means June 20, 2005.

     “Effective Time” means the time on the Effective Date at which this Agreement was executed and
delivered by the Members.

     “ERISA” has the meaning given such term in Section 9.1(a)(vii).

     “Event of Default” has the meaning given such term in Exhibit A to the Credit Agreement.

     “Event of Eminent Domain” has the meaning given such term in Exhibit A of the Credit
Agreement.

     “Excess Cash Flow” means:

          (a) prior to the Credit Agreement Termination Date, amounts on deposit in the Excess Cash Flow
Redemption Account as set forth in Section 3.8 of the Depositary Agreement; and

          (b) from and after the Credit Agreement Termination Date, the amounts on deposit in the
Company Account on the applicable Excess Cash Flow Determination

5

 

Date, reduced by the sum, without
duplication, of (i) all O&M Costs and other costs or payments, if any, due to other parties
(including Subordinated Payments), then due or expected to become due within the next 30 days, (ii)
an amount sufficient to pay reasonably anticipated property taxes, insurance premiums and other
periodic finance charges and payments comprising O&M Costs due to other parties (including
Subordinated Payments) prior to the next Redeemable Preferred Dividend Date, or the Maturity Date,
whichever is earlier, (iii) an amount reasonably and prudently determined by the Board to account
for contingencies, (iv) an amount equal to the accrued and undistributed Redeemable Preferred
Dividends payable on such date, (v) an amount equal to the then applicable Major Maintenance
Reserve Requirement, and (vi) an amount comprising Insurance Proceeds and proceeds received by the
Company in respect of any Event of Eminent Domain sufficient for restoration or repair of the
Project, to the extent restoration is required or permitted pursuant to the terms of this
Agreement.

     “Excess Cash Flow Determination Date” means (i) on or prior to the Credit Agreement
Termination Date, each date upon which funds are deposited into the Excess Cash Flow Redemption
Account under Section 3.2.2(b)(ninth) of the Depositary Agreement, and (ii) after the Credit
Agreement Termination Date, each February 28 and August 31 through the Redeemable Preferred Shares
Redemption Date.

     “Excess Cash Flow Offer Amount” means (x) on each Excess Cash Flow Determination Date prior
to the Credit Agreement Termination Date, amounts on deposit in the Excess Cash Flow Redemption
Account on such date as set forth in Section 3.8 of the Depositary Agreement, determined after
taking into account the transfer of funds on such date to the Excess Cash Flow Redemption Account
pursuant to clause (i)(x) of clause ninth of Section 3.3.2(b) of the Depositary Agreement, and (y)
on each Excess Cash Flow Determination Date from and after the Credit Agreement Termination Date,
50% or, if a Voting Rights Trigger Event has occurred and is continuing, 100%, of the Excess Cash
Flow as of such date.

     “Excess Cash Flow Redemption Acceptance Notice” has the meaning set forth in Section
5.4(c)(i).

     “Excess Cash Flow Redemption Notice” has the meaning set forth in Section 5.4(a).

     “Excess Cash Flow Redemption Amount” has the meaning set forth in Section 5.4(e).

     “Excess Cash Flow Redemption Date” has the meaning set forth in Section 5.4(a).

     “Excess Cash Flow Redemption Offer” has the meaning set forth in Section 5.4(a).

     “Excess Cash Flow Redemption Offer Period” has the meaning set forth in Section 5.4(a).

     “Financial Payments Coverage Ratio” has the meaning given such term in Exhibit A to the Credit
Agreement.

     “Fiscal Year” has the meaning set forth in Section 8.1.

     “Formation Date” has the meaning set forth in Section 1.5.

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     “GAAP” means U.S. generally accepted accounting principles.

     “Governmental Authority” has the meaning given such term in Exhibit A to the Credit Agreement.

     “Incapacity” means, as to any Person, the Bankruptcy, death, disability, adjudication of
incompetence, dissolution or termination, as the case may be, of such Person.

     “Inchoate Default” has the meaning given such term in Exhibit A to the Credit Agreement.

     “Independent Director” means, with respect to the Company, any Director who is not, and within
the previous five years was not:

          (i) (a) a stockholder, member, partner, director, officer, employee, manager, Affiliate,
customer, supplier, creditor or independent contractor of, or (b) a Person that has received any
benefit in any form whatever from (other than in such Director’s capacity as a ratepayer or
customer of any Member or any of their respective Affiliates in the ordinary course of business)
from, or (c) a Person that has provided any service in any form whatsoever to, or (d) any major
creditor (or any Affiliate of any major creditor) any of the Company, any Member, or any of their
respective Affiliates, or

          (ii) (a) any Person owning beneficially, directly or indirectly, any outstanding shares of
common stock, any limited liability company interests or any partnership interests, as applicable,
of any of the Company, any Member or any of their respective Affiliates, or of any major creditor
(or any Affiliate of any major creditor) of any of the foregoing, or (b) a stockholder, member,
partner, director, officer, employee, manager, Affiliate, customer, supplier, creditor or
independent contractor of, or any Person that has received any benefit in any form whatever from
(other than in such Person’s capacity as a ratepayer or customer of any Member or any of their
respective Affiliates in the ordinary course of business), or any Person that has provided any service in any form whatever to, such beneficial owner or any of such beneficial
owner’s Affiliates, or

          (iii) a member of the immediate family of any Person described in paragraph (i) or (ii) above;

provided that,

          (x) for the purposes of paragraphs (i), (ii), and (iii) above, the indirect or beneficial
ownership of stock through a mutual fund or similar diversified investment vehicle with respect to
which the owner does not have discretion or control over the investments held by such diversified
investment vehicle shall not preclude such owner from being an Independent Director,

          (y) no Director shall be precluded from being considered an Independent Director solely by
virtue of such individual serving as, or being (1) an Affiliate of any other Person serving as an
independent director or manager or in a similar capacity, as applicable, of any Member or any
bankruptcy-remote special purpose entity that is an Affiliate of any Member

7

 

or the Company, or (2)
an independent director or manager or similar position provided by a corporate services company
that provides independent directors in the ordinary course of its business), and

          (z) all references to a “Member” in paragraphs (i) and (ii) above shall, during any Voting
Rights Period, be deemed a reference to “the Common Member” only.

     For purposes of this definition, “major creditor” shall mean a natural Person or business
entity to which the Company, any Member or any of their respective Affiliates has outstanding
indebtedness for borrowed money or credit on open account in a sum sufficiently large as would
reasonably be expected to influence the judgment of the proposed Independent Director adversely to
the interests of the Company when the interests of that Person are adverse to those of the Company.

     “Insurance Proceeds” means all amounts (including instruments) in respect of the proceeds of
any insurance policy maintained by the Company, other than business interruption insurance
proceeds.

     “Interest Rate Agreements” has the meaning given such term in Exhibit A to the Credit
Agreement.

     “Legal Requirements” has the meaning given such term in Exhibit A to the Credit Agreement.

     “Lenders” means the financial institutions that are party to the Credit Agreement and that
have made the Term Loans to the Company.

     “LIBO Rate” means, as of any date of determination, the rate per annum at approximately 11:00
a.m. (London time) on such date by reference to the British Bankers’ Association Interest Settlement Rates for deposits in Dollars (as set forth by any service
selected by the Company which has been nominated by the British Bankers’ Association as an
authorized information vendor for the purpose of displaying such rates) for 6 month (or, during the
period from the Effective Date to and including August 31, 2005, 2 month) LIBO based deposits;
provided that, to the extent that an interest rate is not ascertainable pursuant to the
foregoing provisions of this definition after the Effective Date, the “LIBO Rate” shall be the
interest rate per annum determined by the Company, under a procedure approved by a Majority In
Interest of the Redeemable Preferred Members, such consent not to be unreasonably withheld, to be
the average of the rates per annum at which deposits in Dollars are offered for 6 month periods to
major banks in the London interbank market in London, England at approximately 11:00 a.m. (London
time) on the date of determination.

     “Lien” means, with respect to any property or asset, any mortgage, deed of trust, lien,
pledge, charge, security interest, or encumbrance of any kind in respect of such asset, whether or
not filed, recorded or otherwise perfected or effective under applicable law, as well as the
interest of a vendor or lessor under any conditional sale agreement, capital lease or other title
retention agreement relating to such asset.

     “Liquidator” has the meaning set forth in Section 7.2(b).

8

 

     “LLC Act” means the Delaware Limited Liability Company Act, as amended from time to time;
provided, however, that if any amendment to the LLC Act, or any succeeding or successor law, is
applicable to the Company only if the Company has elected to be governed by the LLC Act as so
amended or by such succeeding or successor law, as the case may be, the term “LLC Act” shall refer
to the LLC Act as so amended or to such succeeding or successor law only after the appropriate
election by the Board.

     “Major Maintenance Reserve Requirement” means prudent reserves for reasonably anticipated
major maintenance of the Project as determined by the Board.

     “Majority In Interest” means the vote of the Members owning a majority of the outstanding
Common Shares and/or a majority of the outstanding Redeemable Preferred Shares, as the case may be,
each voting as a separate class; provided, however, that any Redeemable Preferred Shares owned by
an Affiliate of the Company (other than Redeemable Preferred Members that become Affiliates solely
by virtue of the occurrence of a Voting Rights Trigger Event) or of Calpine shall be disregarded
for purposes of determining the votes constituting a Majority In Interest.

     “Majority Vote of the Directors” means (i) for all matters and actions requiring a vote of
Directors other than those matters or actions described in Section 6.5, the vote of a majority in
number of votes cast by the Directors present at a meeting at which a quorum is present and (ii)
for matters and actions described in Section 6.5, the vote of (A) both Independent Directors, and
(B) a majority of Directors (other than Independent Directors) present at a meeting at which a
quorum is present.

     “Mandatory Redemption” has the meaning set forth in Section 5.3(a).

     “Mandatory Redemption Amount” has the meaning set forth in Section 5.3(d).

     “Mandatory Redemption Date” has the meaning set forth in Section 5.3(a).

     “Mandatory Redemption Capital” means an amount equal to:

          (i) the proceeds of any sale of assets by the Company (net of costs and expenses related
thereto), other than in the ordinary course of the Company’s business;

          (ii) the proceeds (net of costs and expenses related thereto) of any incurrence of
indebtedness (other than Permitted Debt) by the Common Member or any of its subsidiaries (other
than the Company);

          (iii) the proceeds (net of costs and expenses related thereto) of any incurrence of
indebtedness (other than Permitted Debt) by Calpine or any of its subsidiaries (other than the
Company), to the extent such proceeds are received by the Common Member or any of its subsidiaries
(other than the Company);

          (iv) the proceeds (net of any costs and expenses related thereto) of any issuance of equity
securities by the Common Member or any of its subsidiaries (other than the Company); and

9

 

          (v) the proceeds (net of any costs and expenses related thereto) of any issuance of equity
securities by Calpine or any of its subsidiaries (other than the Company), to the extent such
proceeds are received by the Common Member or any of its subsidiaries (other than the Company).

     “Mandatory Redemption Notice” has the meaning set forth in Section 5.3(c).

     “Maturity Date” means the five year and six month anniversary of the Effective Date.

     “Member” means each Person having a Membership Interest in the Company and admitted to the
Company as a member of the Company in accordance with this Agreement or the LLC Act, including the
Common Member and each Redeemable Preferred Member, now or hereafter existing, each in its capacity
as a member of the Company.

     “Membership Interest” means the entire ownership interest of a Member in the Company,
including the Member’s Economic Interest, any and all rights to vote and otherwise participate in
the affairs of the Company, as applicable, and the rights to any and all benefits to which a Member
may be entitled as provided in this Agreement, together with the obligations of such Member to
comply with all of the terms and provisions of this Agreement.

     “Moody’s” means Moody’s Investor Service, Inc. and its successors and assigns.

     “O&M Costs” has the meaning given such term on Exhibit A to the Credit Agreement.

     “Obligations” has the meaning given such term on Exhibit A to the Credit Agreement.

     “Officers” has the meaning set forth in Section 6.6(a).

     “Optional Redemption” means a redemption of the Redeemable Preferred Shares undertaken in
accordance with Section 5.1.

     “Optional Redemption Amount” has the meaning set forth in Section 5.1(c).

     “Optional Redemption Date” has the meaning set forth in Section 5.1(b).

     “Optional Redemption Notice” has the meaning set forth in Section 5.1(b).

     “Permitted Debt” has the meaning given such term in Exhibit A to the Credit Agreement.

     “Permitted Liens” has the meaning given such term in Exhibit A to the Credit Agreement;
provided that Permitted Liens shall not include any Lien described in clause (i) of such
definition.

     “Person” means any individual, partnership, corporation, association, business trust,
statutory trust, limited liability company, or other entity.

     “Prohibited Transferee” means any Person (i) set forth on Schedule 2 hereto or any Affiliate
thereof, or (ii) with whom Calpine, the Common Member, the Company or any of their

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Affiliates is at
the time involved in any material dispute.

     “Project” means Metcalf Energy Center, the approximately 554 megawatt base load and a 46
megawatt peaking capacity natural gas fired combined cycle electric generating facility located in
San Jose, California.

     “Project Documents” has the meaning given such term in Exhibit A to the Credit Agreement.

     “Project Revenues” has the meaning given such term in Exhibit A to the Credit Agreement.

     “PUHCA” means the Public Utility Holding Company Act of 1935, as amended.

     “Purpose” has the meaning set forth in Section 1.6.

     “Qualifying Power Purchase Agreement” has the meaning set forth in Exhibit A to the Credit
Agreement.

     “Redeemable Preferred Dividend” means a return which shall be paid as provided herein to the
Redeemable Preferred Members holding Redeemable Preferred Shares in the respective amounts of
Redeemable Preferred Paid-up Value from time to time attributable thereto at the Redeemable
Preferred Dividend Rate. The Redeemable Preferred Dividends shall be payable in cash on each
Redeemable Preferred Dividend Date in arrears, shall be cumulative, shall compound semi-annually and shall be determined based upon actual days elapsed in a
360-day year.

     “Redeemable Preferred Dividend Date” means each February 28 and August 31 after the Effective
Time or, if these days are not Banking Days, on the next Banking Day. The first Redeemable
Preferred Dividend Date shall be February 28, 2006 in respect of the period starting on the
Effective Date and ending on that date.

     “Redeemable Preferred Dividend Rate” means (i) for the period after the Effective Date to and
including August 31, 2005, a rate per annum equal to the LIBO Rate on the date two (2) Banking Days
prior to the Closing Date plus a margin of 900 basis points, and (ii) for each period thereafter
starting on the day after a Redeemable Preferred Dividend Date (or, in the case of the initial
period, after the Effective Date, starting on the day after August 31, 2005) to and including the
next Redeemable Preferred Dividend Date (or the Maturity Date, if earlier), a rate per annum equal
to the LIBO Rate on the date two (2) Banking Days prior to the respective Redeemable Preferred
Dividend Date, plus a margin of 900 basis points, provided that (a) the Redeemable Preferred
Dividend Rate for any Additional Redeemable Preferred Shares issued in accordance with Section
2.1(c) shall be determined by the Board in connection with the issuance of such Additional
Redeemable Preferred Shares, and (b) upon the occurrence and during the continuance of a Voting
Rights Trigger Event, the Redeemable Preferred Dividend Rate shall be increased by two percentage
points (2%) above the Redeemable Preferred Dividend Rate that would otherwise be in effect.

     “Redeemable Preferred Members” means the Persons who have been admitted to the

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Company as
Redeemable Preferred Members in accordance with this Agreement and who are identified as owning
Redeemable Preferred Shares on the Register of Members, as such may be amended from time to time,
each in its capacity as a member of the Company.

     “Redeemable Preferred Notice” means notice in writing given to the Company following the
occurrence of a Voting Rights Trigger Event (but not after such Voting Rights Trigger Event has
been cured or waived), and executed by or on behalf of a Majority In Interest of the Redeemable
Preferred Shares stating that a Voting Rights Trigger Event has occurred and its continuing and
identifying the Directors whose offices are to be vacated and the names of the individual(s) to be
appointed by the Redeemable Preferred Members to the Board; provided however, that the first
Redeemable Preferred Notice delivered to the Company shall take precedence over any subsequently
delivered Redeemable Preferred Notice until such time that all Voting Rights Trigger Events in
respect of all Redeemable Preferred Notices shall have been cured or waived by a Majority In
Interest of the Redeemable Preferred Shares.

     “Redeemable Preferred Paid-up Value” means One Thousand Dollars (US $1,000) per Redeemable
Preferred Share.

     “Redeemable Preferred Share” means a Membership Interest having such rights, privileges and
obligations as are set forth in this Agreement as being appurtenant to a “Redeemable Preferred
Share” and representing such fractional part of all Membership Interests relating to the series of
Redeemable Preferred Shares pursuant to which it was issued as is equal to the quotient of one (1) divided by the total number of Redeemable Preferred Shares of such
series.

     “Redeemable Preferred Shares Redemption Date” means the date on which the Company has redeemed
all Redeemable Preferred Shares.

     “Redemption Date” means an Optional Redemption Date, a Change of Control Redemption Date, a
Mandatory Redemption Date, an Excess Cash Flow Redemption Date or the Complete Redemption Date, as
the context requires.

     “Redemption Payments” means any amount required to be paid to the Redeemable Preferred Members
pursuant to an Optional Redemption, Change of Control Redemption Offer, Mandatory Redemption,
Excess Cash Flow Redemption Offer or a Complete Redemption.

     “Register of Members” means a schedule to be maintained by the Board (and updated from time to
time as provided herein) showing the names, addresses and Shares of the Members. The Register of
Members may include any additional information deemed appropriate by the Board.

     “Regulations” means the regulations promulgated under the Code, as such regulations may be
amended from time to time.

     “Revenue Account” has the meaning given such term in Section 1.1 of the Depositary Agreement.

     “Secretary” means the individual duly appointed as the secretary of the Company and

12

 

such
individual’s duly appointed and qualified successors.

     “Secured Parties” has the meaning given in Exhibit A to the Credit Agreement.

     “Securities Act” has the meaning set forth in Section 9.1(a)(ix).

     “Shares” means, collectively, the Redeemable Preferred Shares, the Common Shares and any other
Membership Interests designated as shares that may be issued from time to time pursuant to the
terms of this Agreement.

     “S&P” means Standard & Poor’s Corporation and its successors and assigns.

     “Secured Parties” has the meaning given such term in Exhibit A to the Credit Agreement.

     “Subordinated Payments” has the meaning given such term in Exhibit A to the Credit Agreement.

     “Substitute Member” means any Person (a) to whom a Member (or Assignee thereof) Transfers all
or any part of its Membership Interest in a manner permitted hereunder, and (b) which has been
admitted to the Company as a Substitute Member pursuant to Section 9.3.

     “Supermajority In Interest” means the vote of Redeemable Preferred Members owning at least 66
2/3% of the outstanding Redeemable Preferred Shares; provided, however, that any Redeemable
Preferred Shares owned by an Affiliate of the Company (other than Redeemable Preferred Members that
become Affiliates solely by virtue of the occurrence of a Voting Rights Trigger Event) or of
Calpine shall be disregarded for purposes of determining the votes constituting a Supermajority In
Interest.

     “Tax Matters Member” has the meaning set forth in Section 8.6(b)(iv).

     “Term Loans” and “Term Loan” have the meaning given such terms in Exhibit A to the Credit
Agreement.

     “Transfer” means any sale, assignment, conveyance, encumbrance, mortgage or pledge by a Member
or an Assignee of all or any portion of its Shares, whether occurring voluntarily or by operation
of law.

     “U.S.” means the United States of America.

     “Voting Rights Period” has meaning set forth in Section 6.2(d)(i).

     “Voting Rights Reinstatement Event” has meaning set forth in Section 6.2(d)(iii).

     “Voting Rights Trigger Event” means the occurrence of any one or more of the following events:

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	 	(a)	 	the failure of the Company to declare and pay Redeemable Preferred Dividends on
or within thirty (30) days following the respective Redeemable Preferred Dividend Date;
	 
	 	(b)	 	the failure of the Company to redeem the Redeemable Preferred Shares on a
Redemption Date (except for any failure that arises out of administrative or technical
errors and continues for three days or less following such error);
	 
	 	(c)	 	the occurrence and continuance of an Event of Default under the Credit
Agreement;
	 
	 	(d)	 	the occurrence and continuance of an event of default (after expiration of all
grace periods and cure rights) by the Common Member or the Company under any indenture,
credit agreement or other agreement (other than the Credit Agreement) evidencing
indebtedness of such party in excess of $2,500,000;
	 
	 	(e)	 	the breach of a covenant set forth in Section 6.4(a) or Section 6.4(b)(i) of
this Agreement, but only if such breach would have constituted an Event of Default
under Section 7.1.6 of the Credit Agreement, and, for purposes of this clause (e),
Section 7.1.6 of the Credit Agreement is hereby incorporated herein by reference as
though fully set forth herein, solely with respect to the underlying Credit Agreement
covenants to which Section 6.4(a) and Section 6.4(b)(i) apply, in the form such Section
7.1.6 exists as of the Effective Date and as it may hereafter be amended from time to time, but only to the extent such incorporation of any such
amendments into this Agreement has been consented to by the Company and a Majority
In Interest of the Redeemable Preferred Members (and no effect shall be given to any
waiver under the Credit Agreement); provided that any reference to the
Administrative Agent in such Section 7.1.6 shall instead, for this purpose, be
considered a reference to a Majority In Interest of the Redeemable Preferred
Members, or, in the case of the delivery of any information to the Administrative
Agent, to all Redeemable Preferred Members;
	 
	 	(f)	 	the breach of any other covenant by the Company or the Common Member set forth
in this Agreement and such breach shall continue unremedied for a period of 30 days
after the Company and the Common Member have actual knowledge thereof or receive
written notice thereof signed by a Majority In Interest of the Redeemable Preferred
Members; provided, however, that, if (i) such breach cannot be cured
within such 30 day period, (ii) such breach is susceptible of cure within 90 days,
(iii) the Company or the Common Member, as applicable, is proceeding with diligence and
in good faith to cure such breach, (iv) the existence of such breach has not had and
could not, after considering the nature of the cure, be reasonably expected to have a
material adverse effect on the Company, and (v) the Redeemable Preferred Members shall
have received an officer’s certificate signed by an officer of the Company to the
effect of clauses (i), (ii), (iii) and (iv) above and stating what action the Company
or the Common Member, as applicable, is taking to cure such breach, then such 30 day
cure period shall be extended to such date, not to exceed a total of 90 days, as shall
be necessary for the Company or the Common Member, as applicable, diligently to cure
such breach;

14

 

	 	(g)	 	this Agreement or any Credit Document has become and remains (at the time any right
is to be exercised pursuant to Section 6.2(d), whether temporarily or permanently and
for any reason whatsoever, including without limitation as a result of any law,
judgment or order of a court of competent jurisdiction, invalid, ineffective or
unenforceable, or any party thereto repudiates this Agreement or any Credit Document;
or
	 
	 	(h)	 	the occurrence of a Bankruptcy in relation to the Common Member or any
subsidiary of the Common Member.

     (b) Interpretation. Reference to a given Section or Schedule is a reference to a Section or
Schedule of this Agreement, unless otherwise specified. The terms “hereof,” “herein,” “hereto,”
“hereunder” and “herewith” refer to this Agreement as a whole. Except where otherwise expressly
provided or unless the context otherwise necessarily requires: (i) reference to a given agreement,
instrument, statute or regulation is a reference to that agreement, instrument, statute or
regulation as modified, amended, supplemented and restated from time to time, and, as to a statute
or regulation, any successor statute or regulation; provided that any reference to the Credit
Agreement or any other Credit Document herein, or incorporation of the Credit Agreement or any
other Credit Document by reference, means the Credit Agreement or such other Credit Document in
effect on the date hereof without giving effect to any amendment, modification, restatement,
expiration or termination thereof or any waiver thereunder other than any amendment, modification,
restatement or waiver approved by a Majority In Interest of the Redeemable Preferred Shares in
accordance with Section 6.4(d) hereof, (ii) accounting terms have the meanings given to them by
GAAP applied on a consistent basis by the accounting entity to which they refer, (iii) references
to “dollars” or “$” shall mean the lawful currency of the U.S., (iv) reference to a Person includes
its successors and permitted assigns, (v) references to any term in this Agreement when used in the
singular shall have the same meanings when used in the plural and vice versa, (vi) the masculine
shall include the feminine and neuter, and vice versa, and (vii) “includes” or “including” means
“including, for example and without limitation.”

ARTICLE II.

MEMBERS AND INTERESTS

     2.1 Members and Membership Interests.

          (a) Members. The names, addresses, and the number and type of Shares of the Members shall be
set forth on the Register of Members, as such may be amended, modified or supplemented at any time
and from time to time (as determined by the Board). The Common Member shall continue as a member
of the Company upon its execution of this Agreement, and the Company hereby issues 1000 Common
Shares to the Common Member on the date hereof, and two Officers of the Company on behalf of the
Company shall issue to the Common Member a Common Share Certificate pursuant to Section 2.1(d)
evidencing such Common Shares. A Person being issued Redeemable Preferred Shares by the Company
shall be admitted to the Company as a Redeemable Preferred Member and shall become bound by this
Agreement upon (i) the payment to the Company by such Person of the purchase price for Redeemable
Preferred

15

 

Shares purchased by such Person, (ii) the Company’s acceptance (which may be evidenced by the
Company’s execution of a counterpart thereof) of such Person’s completed and signed subscription
agreement or similar document for such Shares, (iv) the execution and delivery by or on behalf of
such Person of a counterpart of this Agreement, and (v) such Person being reflected as a Member on
the Register of Members. Upon the satisfaction of the conditions set forth in the immediately
preceding sentence and the number of Redeemable Preferred Shares of each Redeemable Preferred
Member being set forth opposite such Redeemable Preferred Member’s name on the Register of Members,
the 155,000 Redeemable Preferred Shares being issued on the date hereof shall be duly issued by the
Company.

               (i) Register of Members. The Board shall cause the Secretary to prepare and maintain a
Register of Members of the Company, which shall be kept with the official records of the Company at
the principal place of business of the Company. The register shall record the name and mailing
address of each Member, and the number and class of Shares and, if applicable, the Common Share
Certificate held by such Member. The initial register is attached hereto as Schedule 1,
and may be modified and updated by the Board from time to time to reflect changes in the identity
of the Members or other relevant information (and any such changes made in accordance with this
Agreement shall not be deemed to be amendments to this Agreement). The Company shall from time to
time, at the direction and in the discretion of the Board, distribute an updated version of the
Register of Members to all of the Members entitled to receive such updated Register of Members, and
such updated Register of Members shall be available at all times upon the written request of any
Member entitled to receive such updated Register of Members.

               (ii) Registered Owner. The Company shall be entitled to treat each Person listed on the
Register of Members (and in the case of a Common Member, only if such Person is also listed as the
registered owner of a Common Share Certificate) as the registered owner of such Membership Interest
and, if applicable, such Common Share Certificate for all purposes and, accordingly, shall not be
bound to recognize any equitable or other claim to or interest in such Shares, regardless of
whether it shall have actual or other notice thereof, by a Person other than the registered owner
of such Shares.

          (b) Membership Interests. The Company shall initially be authorized to issue two classes of
Shares, consisting of Common Shares and Redeemable Preferred Shares. The Company is authorized to
issue an unlimited number of Common Shares and 200,000 Redeemable Preferred Shares. Whenever the
capital of the Company is divided into different classes of Shares, the special rights attached to
that class may (unless otherwise provided by the terms of issues of the Shares of that class) be
varied or abrogated only with the Consent of a Majority In Interest of the Shares of that class.

               (i) Common Shares. The voting, dividend and other rights of the holders of the Common Shares
shall be set forth in this Agreement and shall be subject to and qualified by the rights of the
holders of any Redeemable Preferred Shares as may be more specifically designated by the Board upon
issuance of the Redeemable Preferred Shares as set forth in this Agreement, as it may be amended
from time to time.

16

 

               (ii) Redeemable Preferred Shares. Redeemable Preferred Shares may be issued from time to time
in one or more series on such terms as stated or expressed in this Agreement, as it may be amended
from time to time. All series of Redeemable Preferred Shares, now and hereafter existing, shall
have identical rights, preferences and privileges; provided however, that the Board
may establish a different Redeemable Preferred Dividend Rate for different series of Redeemable
Preferred Shares. Except as provided for in Section 2.1(c), the Company shall not issue Additional
Redeemable Preferred Shares or any other class of preferred shares in the Company.

               (iii) Shares Existing as of the Effective Date. All of the limited liability company
interests in the Company issued and outstanding prior to the date hereof are hereby cancelled. The
Common Member confirms that each certificate evidencing limited liability company interests in the
Company issued prior to the date hereof has been returned to the Company and has been cancelled.
The issued and outstanding Shares of the Company as of the Effective Date shall be (i) 1,000 Common
Shares and (ii) 155,000 Redeemable Preferred Shares. The Board may, from time to time, by
resolution issue additional Common Shares. The Company may issue fractions of Common Shares.

               (iv) Issuance of Shares in Contemplation of a Redemption. Notwithstanding anything to the
contrary contained in this Section 2.1(b) or in Section 6.4 hereof, but subject to Section 2.1(c)
hereof, the Board on behalf of the Company may create and issue further Shares, with such rights,
preferences and privileges as the Board may determine in its sole discretion which may be the same
or different than any other Shares, and may admit any Person to whom such Shares are issued to the
Company as a member of the Company, without the Consent of any of the Members, now or hereinafter
existing, if (A) the proceeds from such issuance will be used to redeem all of the existing
Redeemable Preferred Shares in full, and (B) the issuance of such additional Shares and the
redemption of existing Redeemable Preferred Shares occurs contemporaneously.

          (c) Issuance of Additional Redeemable Preferred Shares. From time to time after the Effective
Date, the Board may, without a Majority In Interest of the Common Shares or the Redeemable
Preferred Shares, cause the Company to issue additional Redeemable Preferred Shares so long as each
of the following requirements is satisfied:

               (i) no Voting Rights Trigger Event has occurred and remains uncured or would occur as a result
thereof;

               (ii) no Inchoate Default or Event of Default has occurred and is continuing or would occur as
a result of the issuance of Additional Redeemable Preferred Shares; and

               (iii) the Company is then a party to one or more Qualifying Power Purchase Agreements entered
into after the Effective Date;

               (iv) the aggregate Redeemable Preferred Shares issued by the Company, including any Additional
Redeemable Preferred Shares issued or to be issued pursuant
to this Section 2.1(c), shall in no event exceed, in the aggregate, 200,000 Redeemable
Preferred

17

 

Shares;

               (v) the projected Financial Payments Coverage Ratio is no less than 1.30 to 1.00 for each of
the two consecutive years ending on the later of (a) the fourth Redeemable Preferred Dividend Date
or (b) the second anniversary of the date of issuance of such Additional Redeemable Preferred
Shares;

               (vi) the issuance of such Additional Redeemable Preferred Shares will not result in the
violation of any Legal Requirements;

               (vii) the Board and the Redeemable Preferred Members have received a certificate signed by an
authorized officer of the Company certifying that the requirements of this Section 2.1(c) have been
satisfied; and

               (viii) the Company has received opinions from counsel which are usual and customary for
similar issuances of securities.

For purposes of calculating the projected Financial Payments Coverage Ratio as required by Section
2.1(c)(v), (x) all Redeemable Preferred Dividends with respect to the Redeemable Preferred Shares
(giving effect to the issuance of any applicable Additional Redeemable Preferred Shares) shall be
assumed paid in cash, regardless of any non-cash accrual feature, and (y) to the extent any energy
payments projected to be received by the Company are dependent on market projections, such
projected energy payments shall be determined based upon the average of four quotes from
established forward market participants or, if four quotes from established forward market
participants are not reasonably available, based upon comparable information obtained from sources
not affiliated with the Company.

          (d) Issuance of Common Share Certificate. The Common Shares owned by a Common Member shall be
evidenced by a Common Share Certificate, substantially in the form attached as Exhibit B
hereto, issued to such Common Member. Each Common Share Certificate shall state on its face (i)
that it is subject to the restrictions on Transfer set forth in this Agreement, and (ii) that it is
subject to all other terms and conditions of this Agreement. Each Common Share Certificate shall
be executed by two Officers on behalf of the Company and evidence of the issuance of each Common
Share Certificate shall be recorded in the Register of Members.

          (e) Membership Interests as “Securities”. The Shares shall constitute “securities” within the
meaning of (i) Article 8 of the Uniform Commercial Code (including Section 8-102(a)(15) thereof) as
in effect from time to time in the State of Delaware and in the State of New York and (ii) the law
of any other applicable jurisdiction that presently or hereafter is substantially similar to such
Article 8.

          (f) Issuance of Replacement Common Share Certificate. The Company shall issue a new Common
Share Certificate in place of any Common Share Certificate
previously issued if the registered owner of the Common Share Certificate, as reflected on the
books and records of the Company:

18

 

               (i) makes proof by affidavit, in form and substance satisfactory to the Board in its sole
discretion, that such previously issued Common Share Certificate has been lost, stolen or
destroyed;

               (ii) requests the issuance of a new Common Share Certificate before the Company has notice
that such previously issued Common Shares Certificate has been acquired by a protected purchaser;

               (iii) if requested by the Board in its sole discretion, delivers to the Company a bond, in
form and substance satisfactory to the Board in its sole discretion, with such surety or sureties
as the Board in its sole discretion may direct, to indemnify the Company against any claim that may
be made on account of the alleged loss, destruction or theft of the previously issued Common Share
Certificate; and

               (iv) satisfies any other reasonable requirements imposed by the Board.

     2.2 Meetings of Members.

          (a) Special Meetings. A special meeting of the Members, for any purpose, may be called by the
Board, and shall be called by the Board upon its receipt of a written request from any two Members.
Any such request shall state the purpose of the proposed meeting.

          (b) Place and Conduct of Meetings. Meetings of the Members for any purpose shall be held at
such time and place, either within or without the State of Delaware, as shall be designated from
time to time by the Board and stated in the notice of the meeting. Such meetings may be held in
person, by teleconference or by any other reasonable means, as directed by the Board.

          (c) Notice of Meetings. Written notice of all meetings stating the place, date, and hour of
the meeting (and in the case of a special meeting, also the purpose for which the meeting is
called) shall be given not less than 10 days nor more than 30 days before the date of such meeting.

          (d) Voting. Except as otherwise provided herein, any matter submitted for the vote, approval
or Consent of the Members shall be decided by a Majority In Interest of Common Shares and
Redeemable Preferred Shares entitled to vote thereon, each voting as a separate class.

          (e) Action by Consent. Any Consent required herein or action that may be or is required to be
taken at any meeting of the Members, may be taken without a meeting, without prior notice, and
without a vote, (i) if a Consent is signed by all Members or (ii) except for matters requiring
unanimous Member approval, if a Consent is signed by the Majority in Interest of the Shares
entitled to vote after five Banking Days prior written notice of the subject matter of the Consent
to each Member. All Consents signed by the Members shall be filed in the
minute book of the Company with copies of the Consents provided to all Members. Unless
otherwise expressly provided herein, but without limiting the fiduciary duty of the Directors under
Section 6.1(b) hereof, each Member may exercise its Consent rights or other voting or approval
rights in its sole discretion in relation to its proprietary interests in the Company, and no

19

 

Member shall have any duty (including any fiduciary duty) to the Company or to any other Member in
relation to such Consent determinations or otherwise in connection with their rights and
responsibilities hereunder or in connection with the Company and its Purpose, other than the duty
to act in accordance with the implied contractual covenant of good faith and fair dealing.

     2.3 Certain Duties and Limitation of Liability.

          (a) No Power of Members to Bind the Company. Except as otherwise expressly provided herein,
and notwithstanding Section 18-402 of the LLC Act, no Member has the authority or power to act for
or on behalf of the Company, to do any act that would be binding on the Company, or to incur any
liability or make any expenditures on behalf of the Company.

          (b) Liability of Members. Except as provided in the LLC Act, no Member (nor any of its
Affiliates or their respective officers, directors, employees, trustees, members, partners,
representatives or agents, nor any of their heirs, executors, successors and assigns) shall be
responsible or liable for any debt, liability or any other obligation of another Member or the
Company. Unless otherwise agreed to in writing by such Member in accordance with the provisions of
Section 18-303(b) of the LLC Act, except as provided in the LLC Act, no Member (nor any former
Member), by reason of its status as a Member (or former Member) shall have any liability for the
debts, duties, or other obligations of the Company or for the repayment of any capital contribution
of any other Member, including any liability of the Company pursuant to a judgment, decree or order
of any Governmental Authority. Except as specifically provided herein, the Members have no duties
or liabilities relating to the Company, the Board or to any other Member. The Board shall not
cause a Member to be responsible or liable for any debt, liability or any other obligation of any
Member, the Board or the Company without the Consent of such Member.

          (c) Liability of the Company. The Company shall not be responsible or liable for any debt,
liability or any other obligation of any Member incurred either before or after the execution and
delivery of this Agreement by such Member, except as to those responsibilities, liabilities, debt
or any other obligations incurred pursuant to and as limited by the terms of this Agreement and the
LLC Act.

          (d) Participation in Management. Except as specifically provided herein, no Member shall have
any right to participate in or to control, manage, direct or operate the business and affairs of
the Company. The exercise by a Member of any right or power conferred on it under this Agreement
shall not be construed to constitute the participation by such Member in, or the control,
management, direction or operation by it of, the business or affairs of the Company. To the
fullest extent permitted by law, no Member shall be liable for the exercise by it of any right or
power conferred on it under this Agreement, which rights or powers may be
exercised by such Member in its sole and absolute discretion. No such exercise shall give
rise to any claim that such Member has acted as the manager of the Company.

20

 

ARTICLE III.

CONTRIBUTIONS; PROFITS AND LOSSES

     3.1 Capital Accounts. The Company shall establish and maintain a capital account for each
Member as set forth in the Allocation Addendum.

     3.2 Contribution of Mandatory Redemption Capital. The Common Member shall contribute, or cause
its subsidiary to contribute, to the Company any of the amounts described in clause (ii), (iii),
(iv) or (v) of the definition of Mandatory Redemption Capital.

     3.3 No Additional Capital Contributions. Except as otherwise expressly set forth herein, no Member
shall be required to make any capital contribution to the Company, whether on liquidation of the
Company or otherwise.

     3.4 Loans. No Member shall be required to lend any money to or for the benefit of the Company without
such Member’s Consent.

     3.5 Allocation of Profits and Losses. The allocation of profits and losses as well as the allocation
of other items of Company income, gain, loss, deduction and credit are set forth in the Allocation
Addendum attached hereto as Exhibit A.

ARTICLE IV.

DISTRIBUTIONS 

     4.1 General. Except as otherwise provided in Section 7.2(d), and subject to the redemption provisions
set forth in Article V, the Company shall distribute amounts (other than Mandatory Redemption
Capital) to its Members as follows:

          (a) Redeemable Preferred Dividend Dates. In order to pay Redeemable Preferred Dividends to
the Redeemable Preferred Members, and to distribute to the Common
Member funds not required to be offered to redeem a portion of the Redeemable Preferred Shares in
accordance with Section 5.4 below:

               (i) On each Redeemable Preferred Dividend Date prior to the Credit Agreement Termination Date,
(x) first, to the Redeemable Preferred Members in proportion to, and to the extent of, their
accrued and undistributed Redeemable Preferred Dividends, the amount released from the Revenue
Account pursuant to clause sixth of Section 3.2.2(b) of the Depositary Agreement, and (y) second,
as long as no Event of Default or Voting Rights Trigger Event has occurred and is continuing, to
the Common Member, the amount released from the Revenue Account pursuant to clause (i)(y) of clause
ninth of Section 3.2.2(b) of the Depositary Agreement; and

               (ii) On each Redeemable Preferred Dividend Date from and after the Credit Agreement
Termination Date, (x) first, to the Redeemable Preferred Members in proportion to, and to the
extent of, their accrued and undistributed Redeemable Preferred Dividends, such amount in the
Company Account (after reserving for the amounts set forth in

21

 

clauses (i), (ii), (iii) and (vi) of
clause (b) of the definition of Excess Cash Flow) that is necessary to pay the same, and (y)
second, as long as no Voting Rights Trigger Event has occurred and is continuing, to the Common
Member, an amount in the Company Account equal to 50% of the Excess Cash Flow; provided, however,
that nothing in this Section 4.1(a)(ii) shall affect the existence of a Voting Rights Trigger Event
caused by the failure of the Company to pay in full all Redeemable Preferred Dividends due and
payable on any Redeemable Preferred Dividend Date within thirty (30) days following such Redeemable
Preferred Dividend Date as provided in the definition of Voting Rights Trigger Event.

          (b) Excess Cash Flow Redemption Dates. In order to distribute to the Common Member those
funds which were offered to redeem a portion of the Redeemable Preferred Shares in accordance with
Section 5.4 below, but which were not so elected to be received in redemption by the Redeemable
Preferred Members:

               (i) On each Excess Cash Flow Redemption Date prior to the Credit Agreement Termination Date,
as long as no Event of Default or Voting Rights Trigger Event has occurred and is continuing, to
the Common Member, the amount described in clause (b) of Section 3.8 of the Depositary Agreement;
and

               (ii) On each Excess Cash Flow Redemption Date from and after the Credit Agreement Termination
Date, as long as no Voting Rights Trigger Event has occurred and is continuing, to the Common
Member, an amount equal to (x) the Excess Cash Flow Offer Amount corresponding to the immediately
preceding Excess Cash Flow Determination Date minus (y) the aggregate Excess Cash Flow Redemption
Amount payable to the Redeemable Preferred Members on such Excess Cash Flow Redemption Date.

     4.2 Distributions to Common Member. The Company shall distribute directly to the Common Member upon
receipt each of the following amounts, as further described below:

          (a) any amounts which are available to be paid to Persons or accounts specified by the Company
to the Collateral Agent and Depositary Agent under Section 3.7.2 of the Depositary Agreement,
relating to the Distribution Suspense Account;

          (b) any amounts which are available to be paid to Persons or accounts specified by the Company
to the Collateral Agent and Depositary Agent under Section 3.1.3 of the Depositary Agreement,
relating to the Pre-Funded Project Closeout Account and final completion of the Project; and

          (c) the net proceeds received by the Company upon the issuance of any Redeemable Preferred
Shares, including those Redeemable Preferred Shares issued at or about the Effective Time, and any
Additional Redeemable Preferred Shares issued pursuant to Section 2.1(c).

     4.3 Prior Payments to Predecessors in Interest. For the avoidance of doubt, in determining amounts
payable or distributable to any Redeemable Preferred Member under this Agreement, each Redeemable
Preferred Member shall be treated as having received all amounts received by its predecessors in
interest as a Redeemable Preferred Member.

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     4.4 Withholding. Notwithstanding any other provision of this Agreement, the Company is authorized to
take any action that it determines to be necessary or appropriate to cause the Company to comply
with any foreign or U.S. federal, state or local withholding requirement with respect to any
allocation, payment or distribution by the Company to any Member or other Person. To the extent
the Company is required to withhold and pay over any amount to any taxing authority with respect to
any payment, distribution, or allocation to any Member, the amount withheld shall be treated as
paid or distributed, as the case may be, to the Member with respect to which such amount was
withheld pursuant to this Section 4.3 for all purposes under this Agreement. In the event of any
claimed over withholding, a Member shall have no right against the Company or any other Member. If
the amount of any withholding due with respect to a payment, distribution or allocation to a Member
is not withheld from actual distributions or other payments due to such Member, the Company may ,
at its option (i) require the Member to contribute the amount of such required withholding to the
Company by a date reasonably in advance of the Company’s deadline for timely complying with the
applicable withholding requirement, or (ii) if the Company has paid the required withholding, (a)
require the Member to reimburse the Company for the amount of such withholding within ten (10) days
after the written demand by the Company after payment by the Company thereof, or (b) reduce any
subsequent distributions or payments to such Member by the amount of such withholding. Each Member
agrees to furnish the Company with any representations and forms as shall reasonably be requested
by the Company to assist it in determining the extent of, and in fulfilling, its withholding
obligations. Each Member agrees to indemnify and hold harmless the Company and all other Members
from and against any and all liabilities, obligations, damages, deficiencies and expenses resulting
from any tax liability incurred by any Member attributable to the failure of the Company to
withhold taxes on distributions or allocations to such Member, unless such failure to withhold was the
result of willful malfeasance or gross negligence on the part of the Company.

     4.5 Distributions in Kind. No Member may demand or receive property other than cash as provided in
this Agreement. To the extent not prohibited by applicable law, a Majority In Interest of the
Shares may determine to make distributions in kind of Company assets provided that such Company
assets shall be distributed in such a fashion as to ensure that the fair market value thereof is
distributed in accordance with this Article 4.

     4.6 Other Distributions. Except as provided in this Article 4 or otherwise in this Agreement, no other
distribution (including any distribution of property) shall be made by the Company without the
Consent of all Members.

     4.7 Limitations on Distributions. Notwithstanding any provision to the contrary contained in this
Agreement, neither the Company nor the Board, on behalf of the Company, shall make a distribution
to any Member or the holder of any Shares (as applicable) in violation of Sections 18-607 or 18-804
of the LLC Act or other applicable law.

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ARTICLE V.

REDEMPTION OF REDEEMABLE PREFERRED SHARES

5.1 Optional Redemption of Redeemable Preferred.

          (a) General. The Company may not voluntarily redeem the Redeemable Preferred Shares except as
provided in this Section 5.1. After the thirty (30) month anniversary of the Effective Date, the
Board, at its option, to the extent not prohibited by the LLC Act or applicable law, may cause the
Company to redeem all, or any part of, the Redeemable Preferred Shares on any Banking Day, to the
extent not prohibited by applicable law, in an aggregate minimum amount of 5,000 Redeemable
Preferred Shares and integral multiples of 1,000 in excess of that amount (or the remaining
Redeemable Preferred Shares outstanding if less than 5,000).

          (b) Notice. All such redemptions shall be made upon not less than thirty (30) Banking Days’
prior written, email or telephonic notice (each such notice, an “Optional Redemption Notice”) to
each Redeemable Preferred Member and, if given by telephone, promptly confirmed in writing to each
Redeemable Preferred Member. Upon the giving of any such notice, the aggregate amount of
Redeemable Preferred Shares specified in such notice shall become due and payable on the redemption
date specified therein (the “Optional Redemption Date”). In addition to the Optional Redemption
Date, the Optional Redemption Notice shall specify the following:

               (i) that the Optional Redemption is being made pursuant to this Section 5.1;

               (ii) the Redeemable Preferred Shares to be redeemed; and

               (iii) a request for details of the account to which each Redeemable Preferred Member desires
the Optional Redemption Amount to be paid.

          (c) Optional Redemption Amount. The amount (the “Optional Redemption Amount”) to be paid to
each Redeemable Preferred Member with respect to each Redeemable Preferred Share redeemed pursuant
to this Section 5.1 shall be as follows:

               (i) If such Optional Redemption is after the thirty (30) month anniversary, but on or before
the forty-two (42) month anniversary, of the Effective Date, the sum of the following shall be paid
with respect to each Redeemable Preferred Share to be redeemed:

                    (1) all Redeemable Preferred Dividends that have accrued but are unpaid with respect to such
Redeemable Preferred Share, with such accruals to be calculated up to and including the Optional
Redemption Date;

                    (2) the Redeemable Preferred Paid-up Value of such Redeemable Preferred Share; and

24

 

                    (3) an amount equal to two percent (2%) of the Redeemable Preferred Paid-up Value of such
Redeemable Preferred Share.

               (ii) If such Optional Redemption is after the forty-two (42) month anniversary, but on or
before the fifty-four (54) month anniversary, of the Effective Date, the sum of the following shall
be paid with respect to each Redeemable Preferred Share to be redeemed:

                    (1) all Redeemable Preferred Dividends that have accrued but are unpaid with respect to such
Redeemable Preferred Share, with such accruals to be calculated up to and including the Optional
Redemption Date;

                    (2) the Redeemable Preferred Paid-up Value of such Redeemable Preferred Share; and

                    (3) an amount equal to one percent (1%) of the Redeemable Preferred Paid-up Value of such
Redeemable Preferred Share.

               (iii) If such Optional Redemption is after the fifty-four (54) month anniversary of the
Effective Date, the sum of the following shall be paid with respect to each Redeemable Preferred
Share to be redeemed:

                    (1) all Redeemable Preferred Dividends which have accrued but are unpaid with respect to such
Redeemable Preferred Share, with such accruals to be calculated up to and including the Optional
Redemption Date; and

                    (2) the Redeemable Preferred Paid-up Value of such Redeemable Preferred Share.

          (d) Time and Manner of Payment. On the Optional Redemption Date, the Company shall pay to
each Redeemable Preferred Member the Optional Redemption Amount due to it. The Company shall make
an appropriate notation on its Register of Members reflecting such Optional Redemption and reducing
such Redeemable Preferred Member’s Shares. The Optional Redemption Amount shall be paid on the
Optional Redemption Date to the Redeemable Preferred Member by wire transfer of immediately
available funds to the account specified by the relevant Redeemable Preferred Member in written
wire transfer instructions or if the relevant Redeemable Preferred Member has not provided written
wire transfer instructions, a check dispatched to the address of such Redeemable Preferred Member
as shown on the Register of Members, at the Redeemable Preferred Member’s risk, within three
Banking Days of the Optional Redemption Date.

          (e) Cessation of Dividends on Optional Redemption Date. As of the Optional Redemption Date,
the Redeemable Preferred Dividend shall cease to accrue with respect to all redeemed Redeemable
Preferred Shares unless the payment of the Optional Redemption Amount is not made in accordance
with this Section 5.1.

     5.2 Change of Control Redemption.

25

 

          (a) General. In the event that a Change of Control occurs, the Company, to the extent not
prohibited by the LLC Act or applicable law, shall be required to offer to redeem the Redeemable
Preferred Shares (a “Change of Control Redemption Offer”). The Company shall make the Change of
Control Offer to each Redeemable Preferred Member in accordance with this Section 5.2.

          (b) Change in Control Redemption Offer. The Company shall make a Change of Control Redemption
Offer under this Section 5.2 within 30 Banking Days following the occurrence of the Change of
Control transaction and shall keep such Change of Control Redemption Offer open until the close of
business on the Banking Day preceding the date on which the Change of Control Redemption is to be
consummated (the “Change of Control Redemption Date”), which date shall be no earlier than 30 days
and no later than 60 days from the date such Change of Control Redemption Offer was made, except to
the extent that a longer period is required by applicable law (the “Change of Control Redemption
Offer Period”);

          (c) Notice. The Company shall make the Change of Control Redemption Offer by sending written
notice (the “Change of Control Redemption Notice”) to each Redeemable Preferred Member. The Change
of Control Redemption Notice shall contain a description of the transaction or transactions that
constitute the Change of Control and state:

               (i) that the Change of Control Redemption is being conducted pursuant to this Section 5.2 and
that all Redeemable Preferred Shares tendered pursuant to written notice (a “Change of Control
Redemption Acceptance Notice”) delivered to the Company prior to the Change of Control Redemption
Date will be accepted for redemption;

               (ii) the Change of Control Redemption Amount, assuming the Change of Control Offer is
accepted, and the Change of Control Redemption Date;

               (iii) that any Redeemable Preferred Share not tendered will continue to accrue Redeemable
Preferred Dividends;

               (iv) that, unless the Company defaults in making the payment of the Change of Control
Redemption Amount, all Redeemable Preferred Shares with respect to which a Redeemable Preferred
Member accepts the Change of Control Redemption Offer shall cease to accrue Redeemable Preferred
Dividends from and after the Change of Control Redemption Date;

               (v) that the Redeemable Preferred Members shall be entitled to withdraw their Change of
Control Redemption Acceptance Notice if the Company receives, not later than the close of business
on the Banking Day preceding the Change of Control Redemption Date, a written or facsimile notice
setting forth the name of the Redeemable Preferred Member, the aggregate number of Redeemable
Preferred Shares for which the Redeemable Preferred Member previously accepted such Change of
Control Redemption Offer and a statement that such Redeemable Preferred Member is rescinding its
acceptance of such Change of Control Redemption Offer; and

               (vi) a request for details of the account to which each Redeemable Preferred Member desires
the Change of Control Redemption Amount to be paid.

26

 

          (d) Acceptance of Change of Control Redemption Offer. On the Change of Control Redemption
Date, the Company shall accept for redemption all Redeemable Preferred Shares properly tendered
pursuant to the Change of Control Redemption Offer, and thereafter, in accordance with Section
5.2(e), pay to each Redeemable Preferred Member the Change of Control Redemption Amount due to it.

          (e) Change of Control Redemption Amount. The amount (the “Change of Control Redemption
Amount”) to be paid to each Redeemable Preferred Member with respect to each Redeemable Preferred
Share redeemed pursuant to this Section 5.2 shall be calculated as follows:

               (i) If such Change of Control occurs before the third anniversary of the Effective Date, the
sum of the following shall be paid with respect to each Redeemable Preferred Share to be redeemed:

                    (1) all Redeemable Preferred Dividends that have accrued but are unpaid with respect to such
Redeemable Preferred Share, with such accruals to be calculated up to and including the Change of
Control Redemption Date;

                    (2) the Redeemable Preferred Paid-up Value of such Redeemable Preferred Share; and

                    (3) an amount equal to two percent (2%) of the Redeemable Preferred Paid-up Value of such
Redeemable Preferred Share.

               (ii) If such Change of Control occurs after the third anniversary of the Effective Date, the
sum of the following shall be paid with respect to each Redeemable Preferred Share to be redeemed:

                    (1) all Redeemable Preferred Dividends that have accrued but are unpaid with respect to such
Redeemable Preferred Share, with such accruals to be calculated up to and including the Optional
Redemption Date;

                    (2) the Redeemable Preferred Paid-up Value of such Redeemable Preferred Share; and

                    (3) an amount equal to one percent (1%) of the Redeemable Preferred Paid-up Value of such
Redeemable Preferred Share.

          (f) Time and Manner of Payment. On the Change of Control Redemption Date, the Company shall
make an appropriate notation on its Register of Members reflecting such Change in Control
Redemption and reducing such Redeemable Preferred Member’s Shares. The Company shall pay to each
Redeemable Preferred Member the Change of Control Redemption Amount due to it on the Change of
Control Redemption Date by wire transfer of immediately available funds to the account specified by
the relevant Redeemable Preferred Member in written wire transfer instructions or if the relevant
Redeemable Preferred Member has not provided written wire transfer instructions, a check dispatched
to the address of such

27

 

Redeemable Preferred Member as shown on the Register of Members, at the
Redeemable Preferred Member’s risk, within three Banking Days of the Change of Control Redemption
Date.

          (g) Cessation of Dividends on Change of Control Redemption Date. As of the Change of Control
Redemption Date, the Redeemable Preferred Dividend shall cease to accrue with respect to all
redeemed Redeemable Preferred Shares unless the payment of the Change of Control Redemption Amount
is not made in accordance with this Section 5.2.

          (h) Third Party Change of Control Offer. Notwithstanding the foregoing provisions of Section
5.2 or anything else to the contrary in this Agreement, the Company shall not be required to make a
Change of Control Redemption Offer upon a Change of Control if a third party makes the Change of
Control Redemption Offer in the manner and at the times and otherwise in compliance with the
requirements of this Agreement and redeems all Redeemable Preferred Shares as required by this
Section 5.2.

     5.3 Mandatory Redemption.

          (a) General. In the event that the Company has Mandatory Redemption Capital and the Term
Loans have been fully repaid, the Company, to the extent not prohibited by
the LLC Act or applicable law, shall be required to redeem the Redeemable Preferred Shares (a
“Mandatory Redemption”). The Company shall make a Mandatory Redemption under this Section 5.3 no
later than 60 days from the date such Mandatory Redemption Capital was received by the Company (the
“Mandatory Redemption Date”);

          (b) Number of Shares. The number of Redeemable Preferred Shares to be redeemed on a Mandatory
Redemption Date shall be equal to the amount of Mandatory Redemption Capital available to effect
the applicable Mandatory Redemption divided by the relevant Mandatory Redemption Amount, properly
adjusted for the full payment of accrued and unpaid dividends in accordance with Section 5.3(d)(i)
below.

          (c) Notice. Within 30 days after the receipt of Mandatory Redemption Capital, the Company
shall send written notice (the “Mandatory Redemption Notice”) of the Mandatory Redemption to each
Redeemable Preferred Member. The Mandatory Redemption Notice shall contain a description of the
Mandatory Redemption and the Mandatory Redemption Capital available therefore and state:

               (i) that the Mandatory Redemption is being made pursuant to this Section 5.3;

               (ii) the Mandatory Redemption Amount and the Mandatory Redemption Date; and

               (iii) a request for details of the account to which each Redeemable Preferred Member desires
the Mandatory Redemption Amount to be paid.

          (d) Mandatory Redemption Payment Amount. The amount (the “Mandatory Redemption Amount”) to be
paid to each Redeemable Preferred Member with

28

 

respect to each Redeemable Preferred Share redeemed
pursuant to this Section 5.3 shall be the sum of the following:

               (i) all Redeemable Preferred Dividends that have accrued but are unpaid with respect to such
Redeemable Preferred Share, with such accruals to be calculated up to and including the Mandatory
Redemption Date; and

               (ii) the Redeemable Preferred Paid-up Value of such Redeemable Preferred Share.

          (e) Timing and Manner of Payment. On the Mandatory Redemption Date, the Company shall pay to
the Redeemable Preferred Member the Mandatory Redemption Amount due to it by wire transfer of
immediately available funds to the account specified by the relevant Redeemable Preferred Member in
written wire transfer instructions or if the relevant Redeemable Preferred Member has not provided
written wire transfer instructions, a check dispatched to the address of such Redeemable Preferred
Member as shown on the Register of Members, at the Redeemable Preferred Member’s risk, within three
Banking Days of the Mandatory Redemption Payment Date.

          (f) Cessation of Dividends on Mandatory Redemption Date. As of the Mandatory Redemption Date,
the Redeemable Preferred Dividend shall cease to accrue with respect to redeemed Redeemable
Preferred Shares unless the payment of the Mandatory Redemption Amount is not made in accordance
with this Section 5.3.

     5.4 Excess Cash Flow Redemption.

          (a) General. So long as no Default or Event of Default has occurred and is continuing under
the Credit Documents, the Company, to the extent not prohibited by the LLC Act or applicable law,
shall be required to offer to redeem the Redeemable Preferred Shares in accordance with this
Section 5.4 (each such offer, an “Excess Cash Flow Redemption Offer”). The Company shall make an
Excess Cash Flow Redemption Offer under this Section 5.4 by providing written notice (each such
notice, an “Excess Cash Flow Redemption Notice”) thereof to each Redeemable Preferred Member within
10 Banking Days following each Excess Cash Flow Determination Date that the Company has Excess Cash
Flow. The Company shall keep such Excess Cash Flow Redemption Offer open until the close of
business on the Banking Day preceding the date on which the Excess Cash Flow Redemption is to be
consummated (the “Excess Cash Flow Redemption Date”), which date shall be no earlier than 30 days
and no later than 60 days from the date such Excess Cash Flow Redemption Offer was made (the
“Excess Cash Flow Redemption Offer Period”).

          (b) Amount of Offer. The amount to be offered to the Redeemable Preferred Members pursuant to
an Excess Cash Flow Offer in accordance with this Section 5.4 shall be an amount equal to the
Excess Cash Flow Offer Amount available on the corresponding Excess Cash Flow Determination Date.
Excess Cash Flow not required to be paid to the Redeemable Preferred Members shall be available for
distribution to the Common Member in accordance with Section 4.1(b).

          (c) Notice. The Excess Cash Flow Redemption Notice shall state:

29

 

               (i) that the Excess Cash Flow Offer is being made pursuant to this Section 5.4 and that all
Redeemable Preferred Shares tendered pursuant to written notice (an “Excess Cash Flow Redemption
Acceptance Notice”) delivered to the Company prior to the Excess Cash Flow Redemption Date will be
accepted for redemption up to an amount determined in accordance with Section 5.4(d);

               (ii) the aggregate Excess Cash Flow available for redemption of Redeemable Preferred Shares
pursuant to the Excess Cash Flow Redemption Offer;

               (iii) the Excess Cash Flow Redemption Amount and the Excess Cash Flow Redemption Date;

               (iv) that any Redeemable Preferred Share not tendered will continue to accrue Redeemable
Preferred Dividends;

               (v) that, unless the Company defaults in making the payment of the Excess Cash Flow Redemption
Amount, all Redeemable Preferred Shares with respect to which
a Redeemable Preferred Member accepts the Excess Cash Flow Redemption Offer shall cease to
accrue Redeemable Preferred Dividends from and after the Excess Cash Flow Redemption Date;

               (vi) that any Excess Cash Flow not paid to the Redeemable Preferred Members pursuant to the
Excess Cash Flow Offer may be distributed to the Common Member in accordance with the provisions of
Section 4.1(b);

               (vii) that the Redeemable Preferred Members shall be entitled to withdraw their Excess Cash
Flow Redemption Acceptance Notice if the Company receives, not later than the close of business on
the Banking Day preceding the Excess Cash Flow Redemption Date, a written or facsimile notice
setting forth the name of the Redeemable Preferred Member, the aggregate number of Redeemable
Preferred Shares for which the Redeemable Preferred Member previously accepted such Excess Cash
Flow Redemption Offer and a statement that such Redeemable Preferred Member is rescinding its
acceptance of such Excess Cash Flow Redemption Offer; and

               (viii) a request for details of the account to which each Redeemable Preferred Member desires
the Excess Cash Flow Redemption Amount to be paid.

          (d) Pro Rata Treatment. Each Redeemable Preferred Member that elects to participate in any
Excess Cash Flow Redemption Offer shall participate in such Excess Cash Flow Redemption Offer on a
pro rata basis based on the proportionate amount of outstanding Redeemable Preferred Shares held by
all Redeemable Preferred Members that have elected to participate in such Excess Cash Flow
Redemption Offer, properly adjusted for the full payment of accrued and unpaid dividends in
accordance with Section 5.4(e)(i) below.

          (e) Excess Cash Flow Redemption Payment Amount. On the Excess Cash Flow Redemption Date, the
Company shall accept for redemption all Redeemable Preferred Shares properly tendered pursuant to
the Excess Cash Flow Redemption Offer, and thereafter, in accordance with Section 5.4(e), pay to
each Redeemable Preferred Member the Excess Cash Flow Redemption Amount due to it. The amount (the
“Excess Cash Flow Redemption

30

 

Amount”) to be paid to each Redeemable Preferred Member with respect
to each Redeemable Preferred Share redeemed pursuant to this Section 5.4 shall be the sum of the
following:

               (i) All Redeemable Preferred Dividends that have accrued but are unpaid with respect to such
Redeemable Preferred Share, with such accruals to be calculated up to and including the Excess Cash
Flow Redemption Date; and

               (ii) The Redeemable Preferred Paid-up Value of such Redeemable Preferred Share.

          (f) Timing and Manner of Payment. On the Excess Cash Flow Redemption Date, the Company shall
pay to the Redeemable Preferred Member the Excess Cash Flow Redemption Amount due to it by wire
transfer of immediately available funds to the account specified by the relevant Redeemable
Preferred Member in written wire transfer instructions or if the relevant Redeemable Preferred
Member has not provided written wire
transfer instructions, a check dispatched to the address of such Redeemable Preferred Member
as shown on the Register of Members, at the Redeemable Preferred Member’s risk, within three
Banking Days of the Excess Cash Flow Redemption Date.

          (g) Cessation of Dividends on Excess Cash Flow Redemption Date. As of the Excess Cash Flow
Redemption Date, the Redeemable Preferred Dividend shall cease to accrue with respect to redeemed
Redeemable Preferred Shares unless the payment of the Excess Cash Flow Redemption Amount is not
made in accordance with this Section 5.4. The amount of any Excess Cash Flow not distributed to
the Redeemable Preferred Members pursuant to an Excess Cash Flow Offer consummated in accordance
with the provisions of this Section 5.4 shall be available for distribution to the Common Member in
accordance with Section 4.1(b).

     5.5 Complete Redemption on Maturity Date.

          (a) General. On the Maturity Date, the Company, to the extent not prohibited by the LLC Act
or applicable law, shall redeem all issued and outstanding Redeemable Preferred Shares (a
“Complete Redemption”) in accordance with this Section 5.5.

          (b) Notice. The Company, not less than 5 Banking Days prior to the Maturity Date, shall send
written notice (the “Complete Redemption Notice”) to each Redeemable Preferred Member of the
Complete Redemption to be effected on the Maturity Date. The Complete Redemption Notice shall
contain a description of the Complete Redemption of all issued and outstanding Redeemable Preferred
Shares pursuant to this Section 5.5 and state:

               (i) the Complete Redemption Amount and the Maturity Date; and

               (ii) a request for details of the account to which each Redeemable Preferred Member desires
the Complete Redemption Amount to be paid.

          (c) Complete Redemption Payment Amount. The amount (the “Complete Redemption Amount”) to be
paid to each Redeemable Preferred Member with respect to each Redeemable Preferred Share redeemed
pursuant to this Section 5.5 shall be the sum of the following:

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               (i) all Redeemable Preferred Dividends which have accrued but are unpaid with respect to such
Redeemable Preferred Share, with such accruals to be calculated up to and including the Maturity
Date; and

               (ii) the Redeemable Preferred Paid-up Value of such Redeemable Preferred Share.

          (d) Timing and Manner of Payment. On the Maturity Date, the Company shall pay to the
Redeemable Preferred Member the Complete Redemption Amount due to it. The Complete Redemption
Amount shall be paid on the Maturity Date to the Redeemable Preferred Member by wire transfer of
immediately available funds to the account specified by the relevant Redeemable Preferred Member in
written wire transfer instructions or if the relevant Redeemable Preferred Member has not provided
written wire transfer instructions, a check dispatched to the
address of such Redeemable Preferred Member as shown on the Register of Members, at the
Redeemable Preferred Member’s risk, within three Banking Days of the Maturity Date.

          (e) Cessation of Dividends on Maturity Date. As of the Maturity Date, the Redeemable
Preferred Dividend shall cease to accrue with respect to redeemed Redeemable Preferred Shares
unless the payment of the Complete Redemption Amount is not made in accordance with this Section
5.5.

     5.6 Pro Rata Redemption. When some, but not all, of the Redeemable Preferred Shares are to be redeemed
on any Optional Redemption Date, Mandatory Redemption Date or Excess Cash Flow Redemption Date, the
Company shall redeem the Redeemable Preferred Shares of each Redeemable Preferred Member pro rata
(or as nearly as may be possible without giving rise to fractions of Redeemable Preferred Shares,
and taking into account any adjustment for the payment of accrued and unpaid dividends as provided
in this Article V) according to the number of Redeemable Preferred Shares held by each such
Redeemable Preferred Member, or participating Redeemable Preferred Member where participation in
the redemption is elective at the option of the Redeemable Preferred Member.

     5.7 Delayed Redemption. Any redemption of Redeemable Preferred Shares which cannot be effected, and
any Redeemable Preferred Dividend which cannot be paid, in each case due to prohibitions under the
LLC Act or applicable law, shall be effected or paid on the first date following such prohibited
payment that such payment is not so prohibited.

ARTICLE VI.

MANAGEMENT

6.1 General.

          (a) Establishment of Board of Directors. There is hereby established a committee (the
“Board”) comprised of five (5) natural persons (the “Directors”) having the authority and duties
set forth in this Agreement. Each Director shall be entitled to one (1) vote, and at all times, at
least two Directors shall be Independent Directors. Subject to the requirements of Section 6.5
below or as otherwise set forth herein, any decisions to be made by the Board shall require a
Majority Vote of the Directors. Except as provided in the immediately

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preceding sentence, no
Director acting alone, or with any other Director or Directors, shall have the power to act for or
on behalf of, or to bind the Company (including as a result of each Director being a “manager” (as
that term is defined in the LLC Act) of the Company as further provided in this Section 6.1). Each
Director shall be a “manager” (as that term is defined in the LLC Act) of the Company, but,
notwithstanding the foregoing, no Director shall have any rights or powers beyond the rights and
powers granted to such Director in this Agreement. Directors need not be residents of the State of
Delaware or a Member of the Company.

          (b) Operation of the Company. The business and affairs of the Company shall be managed by or
under the direction of the Board, except for situations that specifically require the approval of
the Members pursuant to the LLC Act or this Agreement, and such business and affairs shall not be
managed by or under the direction of any Member or any of its Affiliates. In this regard, the
Company shall be operated in such a manner as its Directors deem reasonable and necessary or
appropriate to preserve the bankruptcy-remote status of the Company as a separate entity from each
Member and its Affiliates until one year and one day after the Redeemable Preferred Shares
Redemption Date. In exercising their rights and performing their duties under this Agreement,
except as otherwise provided in this Agreement, each Director shall have a fiduciary duty of
loyalty and care identical to that of a director of a business corporation organized under the
General Corporation Law of the State of Delaware.

          (c) Independent Directors. Each Independent Director shall, to the fullest extent permitted
by law, including Section 18-1101(c) of the LLC Act, consider only the interests of the Company,
including its creditors, in acting or otherwise voting on the matters referred to in Section 6.5.
Independent Directors shall have no voting rights other than those expressly set forth in Section
6.5. For their services, the Independent Directors shall receive a yearly fee. No resignation of
an Independent Director, and no appointment of a successor Independent Director, shall be effective
until such successor has accepted his or her appointment as an Independent Director by a written
instrument In exercising its rights and performing its duties under this Agreement, each
Independent Director shall have a fiduciary duty of loyalty and care identical to that of a
director of a business corporation organized under the General Corporation Law of the State of
Delaware. No Independent Director shall at any time serve as trustee in bankruptcy for any
Affiliate of the Company.

     6.2 Composition of the Board; Election and Removal of Directors.

          (a) Term. Each Director shall hold office until his or her death, disability, resignation or
removal, except as provided in Section 6.1(c) above.

          (b) Designation of Directors by Common Member. Subject to Sections 6.2(c) and (d), the Common
Member shall have the right to designate each Director and their replacements. The initial
designees of the Common Member pursuant to this Section 6.2(b) are Peter Cartright, Ann B. Curtis,
Robert D. Kelly, Cheryl A. Tussie and Carrie L. Tillman. Except as provided in Sections 6.2(c) and
(d), any such Director (and any successor thereto) shall be removed from time to time upon the
determination of the Common Member, and any vacancy created by any such Director (or a successor)
ceasing to be a Director for any reason will be filled by a designee selected by the Common Member;
provided however, that if such vacancy results from the death, disability,
resignation or removal of the Independent Director designee

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approved by the Redeemable Preferred
Members under Section 6.2(c) hereof, the Common Member shall promptly nominate a replacement for
such Independent Director and the Redeemable Preferred Members shall be entitled to approve the
successor of such Independent Director in the manner provided for in Section 6.2(c).

          (c) Approval of Independent Director by Redeemable Preferred Members. Notwithstanding Section
6.1(b), a Majority In Interest of the Redeemable Preferred Shares will have the right to approve the designation by the Common Member of one Independent
Director and his or her replacement. The initial Independent Director designee approved by the
Redeemable Preferred Members pursuant to this Section 6.2(c) is Cheryl A. Tussie. Any such
Independent Director (and any successor thereto) shall be removed from time to time only with the
Consent of a Majority In Interest of the Redeemable Preferred Shares, and any vacancy created by
any such Independent Director (or a successor) ceasing to be a Director for any reason shall be
filled by a designee approved by a Majority In Interest of the Redeemable Preferred Shares.

          (d) Voting Rights Trigger Event.

               (i) Replacement of Directors by Redeemable Preferred Members. Upon the occurrence of a Voting
Rights Trigger Event and until the occurrence of a Voting Rights Reinstatement Event (such period
referred to herein as the “Voting Rights Period”), a Majority In Interest of the Redeemable
Preferred Shares may deliver a Redeemable Preferred Notice to the Company and, thereupon, the
Common Member’s rights to appoint, remove and/or replace Directors pursuant to Section 6.2(b) shall
terminate, the Directors appointed by the Common Member currently in office shall be removed and
the individuals specified in the Redeemable Preferred Notice shall fill such vacancy(ies) and
become Directors.

               (ii) Conduct of Board and Company After Director Replacement. During the Voting Rights
Period, the Redeemable Preferred Members, acting through the Board, shall have the right to cause
the Company to take any action in the conduct of its business consistent with the Purpose which
would otherwise require the Consent or approval of the Common Member, or the unanimous approval of
all Members, herein, provided that (a) any such actions must be taken in good faith and in
accordance with the LLC Act, and (b) the Board must act in a commercially reasonable manner in
selecting the terms and conditions of the action to be taken, taking into account all relevant
facts and circumstances.

               (iii) Voting Rights Reinstatement Event. Notwithstanding Section 6.2(d)(i) and 6.2(d)(ii)
above, at any time during the Voting Rights Period, if (a) the respective Voting Rights Trigger
Event has been waived by a Majority In Interest of the Redeemable Preferred Shares, or (b) the
consequences of a Voting Rights Trigger Event to the Company have been fully cured (either such
result referred to herein as “Voting Rights Reinstatement Event”), the Directors in office
immediately prior to the Voting Rights Trigger Event shall be re-appointed to the Board, and all
individuals specified in the Redeemable Preferred Notice (and their successors during the Voting
Rights Period) to fill the vacancies of the removed Directors shall themselves be removed and no
longer serve as Directors. The Board and the Redeemable Preferred Members shall not unreasonably
withhold its and their consent to any actions of the Company which would cure the events giving
rise to the Voting Rights Trigger Event which are

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proposed by the Common Member within one hundred
eighty (180) days after the occurrence of the Voting Rights Trigger Event.

               (iv) Purchase Rights. At any time during the Voting Rights Period, the Common Member shall
have the option to purchase or designate a third party to purchase all, but not less than all, of
the Redeemable Preferred Shares held by the Redeemable Preferred
Members by giving written notice to the Redeemable Preferred Members of such election. The
purchase and sale of the Redeemable Preferred Shares shall, subject to the provisions set forth
below, occur within, but no later than, a date specified by the Common Member which is no later
than forty-five (45) days after the date on which such notice is delivered to the Redeemable
Preferred Members. The purchase price for each Redeemable Preferred Share shall be the sum of (i)
all Redeemable Preferred Dividends that have accrued but are unpaid with respect to such Redeemable
Preferred Share, with such accruals to be calculated up to and including the date of purchase and
(ii) the Redeemable Preferred Paid-up Value of such Redeemable Preferred Share and; provided if the
Voting Rights Trigger Event giving rise to such purchase right results from any willful action (or
inaction) taken (or not taken) by or on behalf of the Company or the Common Member with the
intention of avoiding payment of any premium that the Redeemable Preferred Members would have been
entitled to if the Redeemable Preferred Shares were then redeemed pursuant to the other provisions
of this Agreement, an equivalent premium will also be added to the Redeemable Preferred Paid-up
Value of each Redeemable Preferred Share being purchased. The Members shall use their reasonable
efforts to obtain all Governmental Approvals and other third-party approvals, if any, required to
effect the purchase and sale of the Redeemable Preferred Shares. If the Common Member and the
Redeemable Preferred Members obtain all required Governmental Approvals and other third-party
approvals necessary to transfer the Redeemable Preferred Shares, the closing of the purchase and
sale pursuant to this Section 6.2(d)(iv) shall occur within, but not later than, 45 days after the
date on which the Common Member delivered notice to the Redeemable Preferred Members electing to
purchase the Redeemable Preferred Shares, except that such period shall be extended as necessary to
comply with any applicable law. If the Common Member and Redeemable Preferred Members fail to
obtain all required Governmental Approvals and other third-party approvals within such 45 day
period, the Common Member and Redeemable Preferred Members shall continue their reasonable efforts
to obtain such approvals, and upon obtaining the required approvals, shall proceed to close the
purchase and sale transaction within five Banking Days thereafter. At such closing, (i) each
selling Redeemable Preferred Member shall convey to the Common Member, or its designee, all of the
Redeemable Preferred Shares held by such Redeemable Preferred Member, free and clear of any liens,
claims, encumbrances or security interests arising through such Redeemable Preferred Member, and
(ii) the Common Member shall pay, or cause its designee to pay, the purchase price in cash to such
selling Redeemable Preferred Member.

     6.3 Board Meeting and Approval Requirements.

          (a) Regular Meetings. The Board shall meet at least once annually, and such annual meetings,
and other regular meetings, of the Board shall be held as the Board, by Majority Vote of the
Directors, may determine and, if so determined, no notice thereof need be given. Special meetings
of the Board shall be held at the written request of any three Directors. All minutes of meetings
of the Board shall be filed in the minute book of the Company with copies of such minutes provided
to each Director.

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          (b) Telephonic Meetings. Any meeting of the Board may be held by conference telephone call or
through similar communications equipment, including videography, by means of which all persons
participating in the meeting are able to hear each other. Participation in a telephonic or
videographic meeting held pursuant to this section shall constitute presence in person at such meeting. Minutes of telephonic or videographic meetings
of the Board shall be filed in the minute book of the Company with copies of such minutes provided
to each Director.

          (c) Notices. Notices of regularly scheduled meetings of the Board shall not be required
unless the time or place of a particular regular meeting is other than as set forth in the schedule
of annual meetings previously approved by the Board. Notices of special meetings shall be given
only to those Directors who are entitled to vote on a matter proposed and shall state the place,
date and hour of the meeting and the purpose or purposes for which the meeting is called. Special
meetings shall be held at the address specified in the notice of such meeting or at such other
place as shall be agreed by the Directors. Notice of a special meeting shall be given to each
Director not less than two nor more than 15 days before the date of the meeting. Directors may
waive in writing the requirements for notice before, at or after the special meeting involved. The
presence of a Director at a meeting shall constitute waiver of notice of such meeting unless said
Director expressly states otherwise at the outset of such meeting.

          (d) Quorum. At each meeting of the Board, the presence in person or by electronic means, as
the case may be, of a majority of the Directors (excluding the Independent Directors) shall be
necessary to constitute a quorum for the transaction of business by the Board; provided however,
that if any action proposed to be taken at such meeting by the Board requires the approval of the
Independent Directors under Section 6.5, the presence of both Independent Directors and a majority
of all other Directors shall be necessary to constitute a quorum.

          (e) Approval Requirements. The Board may act either through the presence of Directors voting
at a meeting or by Consent. All actions of the Board must be approved by a Majority Vote of the
Directors.

          (f) Written Consents. Any Board vote or approval required herein or action that may be or is
required to be taken at any meeting of the Board may be taken without a meeting and without a vote
if Directors constituting a Majority Vote of the Directors sign a Consent after five Banking Days
prior written notice of the subject matter of the Consent to each Director. All Consents signed by
the Directors shall be filed in the minute book of the Company with copies of the Consents provided
to all Directors.

          (g) Company Documents. The Company is authorized to enter into, deliver and perform its
obligations under, and any Officer on behalf of the Company is authorized to enter into and
deliver, the documents, agreements, certificates, or financing statements listed on Schedule 3
hereto, without any further act, vote or approval of any other Person notwithstanding any other
provision of this Agreement, the LLC Act or applicable law, rule or regulation.

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     6.4 Conduct of Business; Credit Agreement Covenants

          (a) Credit Agreement Affirmative Covenants. Until the Redeemable Preferred Shares Redemption
Date and unless compliance shall be waived by a Majority In Interest or Supermajority in Interest,
as applicable, of the Redeemable Preferred Shares, the Common Member shall cause the Company to,
and the Company shall for the benefit of the
Redeemable Preferred Members, observe and perform each of the affirmative covenants of the
Company contained Article 5 of the Credit Agreement (in the form of such covenants exist as of the
Effective Time and as they may hereafter be amended from time to time, but only to the extent such
incorporation of any such amendments into this Agreement has been consented to by the Company and a
Majority In Interest or Supermajority In Interest of the Redeemable Preferred Members, as
applicable), each of which is hereby (i) incorporated and made applicable by reference as if set
forth in its entirety in this Agreement (together with the applicable cure periods, standards of
materiality, notification requirements, and consent and approval rights, if applicable), and (ii)
deemed to be modified as incorporated herein to refer to the Redeemable Preferred Members rather
than to the Administrative Agent, Collateral Agent, Lenders, the Supermajority Lenders or the
Majority Lenders, as the case may be. Any affirmative covenant contained in Article 5 of the
Credit Agreement (i) which requires the delivery of notice or other information to the
Administrative Agent or the Collateral Agent, shall, for purposes of this Section 6.4(a), be deemed
to require delivery of such notice or other information to the Redeemable Preferred Members, (ii)
which references the approval or consent of the Supermajority Lenders, shall, for purposes of this
Section 6.4(a), be deemed to require the approval or consent of a Supermajority In Interest of the
Redeemable Preferred Members, and (iii) which references the approval or consent of the Majority
Lenders, shall, for purposes of this Section 6.4(a), be deemed to require the approval or consent
of a Majority In Interest of the Redeemable Preferred Members. Notwithstanding anything to the
contrary contained herein, prior to the Credit Agreement Termination Date only the Administrative
Agent (and not the Redeemable Preferred Members) shall be permitted to approve the form of the
reports and other deliverables required under Sections 5.5, 5.14 and 5.15 of the Credit Agreement.

          (b) Credit Agreement Negative Covenants. Until the Redeemable Preferred Shares Redemption
Date, the Common Member shall cause the Company not to, and the Company shall not:

               (i) unless compliance shall be waived by a Majority In Interest or Supermajority In Interest
of the Redeemable Preferred Shares, as applicable, take or fail to take any action, fail to
observe, or perform or fail to perform any action the effect of which would constitute a material
violation or breach of any of the negative covenants of the Company contained Article 6 of the
Credit Agreement, other than Sections 6.23, 6.24 and 6.25 thereof (in the form of such covenants
exist as of the Effective Time and as they may hereafter be amended from time to time, but only to
the extent such incorporation of any such amendments into this Agreement has been consented to by
the Company and a Majority In Interest or Supermajority In Interest of the Redeemable Preferred
Members, as applicable), each of which is hereby incorporated and made applicable by reference as
if set forth at length in this Agreement (together with the applicable cure periods and standards
of materiality, notification requirements, and consent and approval rights, if applicable), and
(ii) deemed to be modified as incorporated herein to refer to the Redeemable Preferred Members
rather than to the Administrative Agent,

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Collateral Agent, Lenders, the Supermajority Lenders or
the Majority Lenders, as the case may be;

               (ii) after the Credit Agreement Termination Date, open or maintain a bank account at any
financial institution other than the Company’s primary bank account
established by the Board into which funds of the Company are deposited (the “Company Account”)
unless a Majority In Interest of the Redeemable Preferred Members Consents to such action;

               (iii) without the Consent of a Majority In Interest of the Redeemable Preferred Members,
create, assume or suffer to exist any Lien, securing a charge or obligation on the Project or on
any of the Collateral, real or personal, whether now owned or hereafter acquired, except Permitted
Liens; and

               (iv) without the Consent of a Majority In Interest of the Redeemable Preferred Members, incur,
create, assume or permit to exist any Debt except Permitted Debt, or refinance any term Debt,
including the Term Loans.

Any negative covenant contained in Article 6 of the Credit Agreement (i) which requires the
delivery of notice or other information to the Administrative Agent or the Collateral Agent, shall,
for purposes of this Section 6.4(b), be deemed to require delivery of such notice or other
information to the Redeemable Preferred Members, (ii) which references the waiver of compliance,
approval or consent of the Supermajority Lenders, shall, for purposes of this Section 6.4(b), be
deemed to require the waiver of compliance, approval or consent of a Supermajority In Interest of
the Redeemable Preferred Members, and (iii) which references the waiver of compliance, approval or
consent of the Majority Lenders, shall, for purposes of this Section 6.4(b), be deemed to require
the waiver of compliance, approval or consent of a Majority In Interest of the Redeemable Preferred
Members.

          (c) Survival of Covenants. Notwithstanding anything to the contrary contained herein or in
the Credit Agreement and notwithstanding the occurrence of the Credit Agreement Termination Date
(and related termination of the Company’s obligations thereunder), the Common Member and Redeemable
Preferred Members agree that the Company’s obligations under this Section 6.4 shall continue as
though the Credit Agreement remained in full force and effect until the Redeemable Preferred Shares
Redemption Date.

          (d) No Material Modification of Credit Agreement. Until the Redeemable Preferred Shares
Redemption Date and unless compliance shall have been waived by a Majority In Interest of the
Redeemable Preferred Shares, the Common Member shall cause the Company not to enter into any
agreement to materially amend or make any material modifications to the Credit Agreement.

          (e) Limitation on Liability. During a Voting Rights Period, the obligations of the Common
Member to comply with its covenants set forth in this Article VI shall immediately terminate and
the Common Member shall have no liability to the Company, any Member or any other Person bound by
this Agreement for any failure to satisfy any such obligations during such period. Notwithstanding
any other provision of this Agreement, the

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Common Member and its respective officers, directors,
trustees, members, partners, employees or agents, and any of their heirs, executors, successors and
assigns (the “Common Member Parties”), shall not be liable to the Company, any Member or any other
Person bound by this Agreement for any breach of the covenants set forth in this Section 6.4, or
for any act or omission by such Person in connection with the conduct of affairs of the Company, in each case
unless such act or omission was finally determined by a court of competent jurisdiction to be the
result of fraud, willful misconduct or bad faith of any of the respective Common Member Parties
with respect to the Common Member.

     6.5 Matters Requiring Independent Director Approval. Notwithstanding any other provision of this
Agreement and any provision of law that so empowers the Company, none of the Company, the Members,
the Board, or any other Person shall have authority to cause the Company to, and the Company shall
not, without the affirmative vote or prior written Consent of both Independent Directors:

          (a) institute proceedings to have the Company adjudicated bankrupt or insolvent;

          (b) consent to the institution of bankruptcy or insolvency proceedings against the Company;

          (c) file a petition seeking, or consent to, for or on behalf of the Company, reorganization or
relief under any applicable federal or state law relating to bankruptcy or insolvency;

          (d) consent to the appointment of a receiver, liquidator, assignee, trustee, sequestrator (or
other similar official) of the Company or a substantial part of its property;

          (e) make any assignment for the benefit of the Company’s creditors;

          (f) admit in writing the Company’s inability to pay its debts generally as they become due;

          (g) take any corporate or limited liability company action in furtherance of any such action
described in clauses (a) through (f) above;

          (h) to the fullest extent permitted by law, dissolve or liquidate the Company; or

          (i) amend the definition of Independent Director or any of Sections 6.1, 6.2(a), 6.2(c), 6.3,
6.5, 6.7, 7.1, 10.1, 10.9 or 10.13 hereof.

     6.6 Officers; No Employees.

          (a) Designation of Officers. The Board may, from time to time, designate one or more officers
of the Company (“Officers”) with such titles as may be designated by the Board to act in the name
of the Company with such authority under Section 6.1 as may be delegated to such Officer by the
Board. All Officers shall be subject to the supervision and

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direction of the Board. The
authority, duties or responsibilities of any Officer may be suspended by the Board with or without
cause. Unless otherwise specified by the Board or this Agreement,
Officers shall have the rights, duties and obligations of officers with comparable titles of
corporations organized under the General Corporation Law of the State of Delaware.

          (b) Removal of Officers. Any Officer may be removed, with or without cause at any time, and
immediately by the Board.

          (c) Transition. Each Officer so removed shall cooperate with the Board or other Officers not
removed from time to time, as may be reasonably requested of him or her, with respect to the
management of the Company.

          (d) No Employees. The Company shall have no employees.

     6.7 Limitation of Director and Officer Liability.

          (a) General. Notwithstanding any provision herein, the Directors and Officers shall not be
liable to the Company or any Member for any act or omission by such Person in connection with the
conduct of affairs of the Company or otherwise incurred in connection with the Company or this
Agreement or the matters contemplated herein, in each case unless such act or omission was the
result of fraud, willful misconduct or breach of the fiduciary duties (as modified by this
Agreement) described in Section 6.1(b) or 6.6(a).

          (b) Indemnification. The Company shall, solely from assets of the Company and without
recourse to any Member, indemnify, defend and hold harmless each Director and Officer for any and
all claims or threats thereof, expenses and liabilities or threats thereof (including attorneys’
fees and costs of investigation and defense relating to the Company) which such Director or Officer
may incur by reason of being a Director or Officer (regardless of the disclosure or lack of
disclosure of such status) or by virtue of taking any action pursuant to this Agreement in such
capacity unless such claim, expense or liability is caused by an act or omission performed or
omitted by the Director or Officer that is the result of fraud, willful misconduct or breach of the
fiduciary duty (as modified by this Agreement) described in Section 6.1(b) or Section 6.6(a)
hereof. Expenses incurred by a Director or Officer in defense or settlement of any claim that may
be subject to indemnification shall be advanced by the Company prior to the final disposition
thereof upon (i) receipt of an undertaking by or on behalf of such Director or Officer to repay
such amount to the extent that it shall be determined ultimately that such Director or Officer is
not entitled to indemnification and (ii) a reasonable determination by the Board that such Director
or Officer, or someone on his or her behalf, is able to repay such amounts under such
circumstances. The Company shall use commercially reasonable efforts to maintain director and
officer liability insurance coverage for each of its Directors if such insurance is available at a
commercially reasonable cost in the marketplace.

          (c) Limitation of Duties. The provisions of this Agreement, to the extent that they expand or
restrict the duties and liabilities of the Directors otherwise existing at law or in equity, are
agreed by each of the Members and the Directors to modify, to that extent, such duties and
liabilities. To the fullest extent permitted by law, the Directors’ duties are limited to

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those set forth in this Agreement and do not include any fiduciary duties to the Members or the Company
that are not expressly set forth herein.

     6.8 Company Funds and Disbursements. The Board shall establish the Company Account for the Company and
cause the funds of the Company to be deposited in the Company Account, or invested in
interest-bearing or non-interest-bearing investments in each case approved by the Board, all
subject to the requirements of this Agreement and the Depositary Agreement.

     6.9 Company Opportunities; Fiduciary Duties; Non-Compete.

          (a) Intention of Parties. In anticipation that the Company, the Members, the Directors and
their respective Affiliates may engage in the same or similar activities or lines of business and
have an interest in the same areas of business opportunities, and in recognition of the benefits to
be derived by the Company through its continued contractual, limited liability company or corporate
and business relations with the Directors, the provisions of this Section 6.9 are set forth to
regulate and define the conduct of certain affairs of the Company as they may involve the Directors
and the Members and the powers, rights, duties and liabilities of the Company, the Directors and
the Members, in all cases except as otherwise expressly limited by this Agreement.

          (b) Definitions. For purposes of this Section 6.9 only: (i) the term “Company” means the
Company and all its Affiliates and (ii) the term “Member” means a Member and all its Affiliates.

          (c) No Corporate Opportunity or Similar Duty. The Members shall have no duty (fiduciary or
otherwise) to refrain from engaging in the same or similar activities or lines of business as the
Company, and a Member shall not be liable to the Company, any Director or the other Members by
reason of any such activities of such Member. In the event that a Member acquires knowledge of a
potential transaction or matter which may be a business opportunity for both such Member and the
Company, such Member shall have no duty (fiduciary or otherwise) to communicate or offer such
business opportunity to the Company and shall not be liable to the Company, any Director or any
other Member by reason of the fact that such Member pursues or acquires such business opportunity
for itself, directs such opportunity to another Person, or does not communicate information
regarding such opportunity to the Company. The foregoing provisions of this Section 6.9(c) apply
in like manner to each Director and his or her relations with the Company and the Members.

          (d) Continuance of Provisions. Neither the alteration, amendment or repeal of this Section 6.9 nor the
adoption of any provision inconsistent with this Section 6.9 shall eliminate or reduce the effect
of this Section 6.9 in respect of any matter occurring, or any cause of action, suit or claim that,
but for this Section 6.9, would accrue or arise, prior to such alteration, amendment, repeal or
adoption.

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     6.10 Special Purpose Entity

The Company shall at all times:

          (a) not commingle its assets with the assets of its Members, Affiliates or any other Person
and not maintain any assets in such a manner that it will be costly or difficult to segregate,
ascertain or identify its individual assets from those of its Members or their Affiliates or any
other Person;

          (b) practice and adhere to organizational formalities, such as maintaining appropriate books,
records and accounts separate from those of any other Person;

          (c) observe all procedures required by the Certificate, this Agreement and the LLC Act;

          (d) act solely in its name and through its duly authorized Directors, Officers or agents in
the conduct of its business;

          (e) manage its business and affairs by or under the direction of the Board;

          (f) ensure that Directors, Officers or Members (where required) duly authorize all of its
actions;

          (g) own or lease all office furniture and equipment necessary to operate its business in its
own name;

          (h) ensure that title to all real and personal property acquired by the Company be acquired,
held and conveyed in the name of the Company;

          (i) maintain at least two Independent Directors;

          (j) preserve and maintain its material rights, privileges, licenses and franchises;

          (k) not engage in any activity other than those activities expressly permitted under this
Agreement and not enter into any agreement other than the agreements that are approved by the
Directors or Members (where required);

          (l) comply with the requirements of all applicable laws, rules, regulations and orders of
Governmental Authorities if failure to comply with such requirements could (either individually or
in the aggregate) have a material adverse effect on the Company;

          (m) pay and discharge all taxes, assessments and governmental charges or levies imposed on it
or on its income or profits or on any of its assets prior to the date on which penalties attach
thereto, except for any such tax, assessment, charge or levy the payment of which is being
contested in good faith and by proper proceedings and against which adequate reserves are being
maintained;

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          (n) maintain all of its assets used or useful in its business in good working order and
condition, ordinary wear and tear excepted;

          (o) comply with GAAP in all financial statements and reports required of the Company and such
financial statements and reports will be issued separately from, but may be consolidated with, any
financial statements or reports prepared for, any Member or its Affiliates; provided that such
financial statements or reports may be consolidated if the separate existence of the Company and
its assets are clearly noted therein;

          (p) keep adequate records and books of account, in which complete entries will be made in
accordance with GAAP consistently applied and maintain such records and books of account separate
from those of the Members or their Affiliates and maintain telephone numbers, mailing addresses,
stationery, checks and invoices and other business forms that are separate and distinct from those
of the Members and their Affiliates;

          (q) be adequately capitalized to engage in the transactions contemplated in this Agreement,
provided the foregoing shall not be construed as imposing an obligation on any Member to contribute
or loan additional capital, property or services to the Company;

          (r) maintain its assets in a manner that facilitates their identification and segregation from
those of the Members and their Affiliates;

          (s) conduct its affairs strictly in accordance with this Agreement and strictly observe all
necessary, appropriate and customary company formalities in its dealings with, the Members or their
Affiliates, and no funds or other assets of the Company will be commingled or pooled with those of
the Members or their Affiliates. Except as in accordance with the Depositary Agreement, the
Company will not maintain joint bank accounts or other depository accounts with the Members or
their Affiliates;

          (t) make all decisions with respect to its business and daily operations independently, though
the Directors or Officers making any particular decision may also be employees, officers, directors
or managers of the Members or their Affiliates;

          (u) ensure that its funds will not be diverted to the Members or their Affiliates without
consent and authority of the Board of Directors and that such funds will not be commingled with the
funds of the Members or their Affiliates;

          (v) fairly compensate the Directors and Officers from its own funds for time spent working on
the business or affairs of the Company;

          (w) ensure that all material transactions between the Company or the Common Member, on the one
hand, and their Affiliates, on the other hand, whether currently existing or hereafter entered
into, will be only on an arm’s length basis;

          (x) maintain office space separate from the office space of its Affiliates (but which may be
located at the same address);

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          (y) not have any liabilities assumed or guaranteed by any Member or its Affiliates and not
hold itself out as being responsible for the debts of another Person;

          (z) take, or refrain from taking, as the case may be, all other actions that are necessary to
be taken or not to be taken in order to ensure that the Company is operated in such a manner that
the separate legal existence of the Company would not be disregarded in the event of the bankruptcy
or insolvency of the Company and its Affiliates, other than the Common Member;

          (aa) account for and manage all of its liabilities separately from those of its Affiliates,
other than the Common Member and pay its own liabilities out of its own funds;

          (bb) allocate, fairly and on an arm’s length basis, all shared operating services, leases and
expenses, including, without limitation, those associated with the services of shared consultants
and agents and shared computer and other office equipment and software; and otherwise maintain an
arm’s length relationship with its Affiliates, other than the Common Member;

          (cc) refrain (to the extent permitted by law) from filing or otherwise initiating or
supporting the filing of a motion in any bankruptcy or other insolvency proceeding involving the
Company and its Affiliates, other than the Common Member to substantively consolidate any Affiliate
of the Company (other than the Common Member) with the Company;

          (dd) remain solvent, provided the foregoing shall not be construed as imposing an obligation
on any Member to contribute or loan additional capital, property or services to the Company;

          (ee) not acquire, directly or indirectly, obligations or securities of the Members or their
Affiliates;

          (ff) hold itself out as a separate legal Person and correct any known misunderstanding
regarding its separate identity; and

          (gg) not borrow any money or accept any credit or direct or indirect financial assistance
from, or lend any money or extend any credit or direct or indirect financial assistance to, its
Affiliates, other than the Common Member, any Member, other than the Common Member, or their
Affiliates except amounts payable or receivable under arm’s length contracts for goods or services,
provided that such amounts are paid monthly and except for dividends or other distributions paid to
Members as contemplated by this Agreement.

     The failure of the Company to comply with any of the foregoing provisions of this Section 6.10
shall not affect the status of the Company as a separate legal Person or the limited liability of
the Members, their Affiliates or the Directors or Officers.

ARTICLE VII.

DISSOLUTION AND TERMINATION

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     7.1 Events of Dissolution. The Company shall be dissolved upon the first to occur of the following:

          (a) for so long as any Redeemable Preferred Shares are issued and outstanding, the affirmative
vote to dissolve of a Majority In Interest of the Common Shares and the Redeemable Preferred
Shares, with the Consent of both Independent Directors;

          (b) entry of a decree of judicial dissolution under the LLC Act; or

          (c) any other event that causes a dissolution of the Company because the LLC Act mandates
dissolution upon the occurrence of such other event, notwithstanding any agreement to the contrary,
unless the Company is continued without dissolution in accordance with this Agreement or the LLC
Act. Upon the occurrence of any event that causes the last remaining member of the Company to
cease to be a member of the Company, to the fullest extent permitted by law, the personal
representative of such member is hereby authorized to, and shall, within 90 days after the
occurrence of the event that terminated the continued membership of such member in the Company,
agree in writing (i) to continue the Company and (ii) to the admission of the personal
representative or its nominee or designee, as the case may be, as a substitute member of the
Company, effective as of the occurrence of the event that terminated the continued membership of
such member in the Company.

     7.2 Procedures Upon Dissolution.

          (a) General. If the Company dissolves, the Company shall commence winding up pursuant to the
appropriate provisions of the LLC Act and the procedures set forth in this Section 7.2.
Notwithstanding the dissolution of the Company, prior to the termination of the Company, the
business of the Company shall continue to be governed by this Agreement.

          (b) Control of Winding Up. The winding up of the Company shall be conducted under the
direction of the Board (the Board in such capacity hereinafter referred to as the “Liquidator”);
provided, however, that if the dissolution is caused by entry of a decree of judicial dissolution
pursuant to Section 7.1(b), the winding up shall be carried out in accordance with such decree.

          (c) Manner of Winding Up. The Company shall engage in no further business following
dissolution other than that necessary for the orderly winding up of the business and distribution
of assets. The maintenance of offices shall not be deemed a continuation of the business for
purposes of this Section 7.2(c). Upon dissolution of the Company, the Liquidator shall determine
the time, manner and terms of any sale or sales of Company property pursuant to such winding up,
consistent with its fiduciary responsibility (as modified by this Agreement) and having due regard
to the activity and condition of the relevant market and general financial and economic conditions.
Upon completion of winding up of the Company, the Liquidator shall cause to be filed a certificate
of cancellation in accordance with the LLC Act.

          (d) Application of Assets. In the case of a dissolution, liquidation, winding up or other
return of capital of the Company, the Company’s assets shall be applied as follows:

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               (i) First, to satisfaction of the liabilities of the Company owing to third parties (excluding
Subordinated Payments but including all other liabilities owed to Affiliates of the Members) to the
extent permitted by law, whether by payment or reasonable provision for payment. The Liquidator is
authorized to set up such reserves as are reasonably necessary for any contingent, conditional or
unmatured liabilities or obligations of the Company. Such reserves may be paid over by the
Liquidator to an escrow holder or trustee, to be held in escrow or trust for the purpose of paying
any such contingent, conditional or unmatured liabilities or obligations, and, at the expiration of
such period as the Liquidator may deem advisable, such reserves shall be distributed to the Members
or their assigns in the manner set forth in Section 7.2(d)(ii), (iii) and (iv) below;.

               (ii) Second, proportionately to the Redeemable Preferred Members to the extent of any accrued
but unpaid Redeemable Preferred Dividends;

               (iii) Third, proportionately to the Redeemable Preferred Members to the extent of their
respective amounts of Redeemable Preferred Paid-up Value;

               (iv) Fourth, to the satisfaction of Subordinated Payments; and

               (v) Fifth, to the Common Member.

     7.3 Termination of Company. Upon the completion of the liquidation of the Company and the distribution
of all Company assets, the Company’s affairs shall terminate and the Liquidator shall cause to be
executed and filed an appropriate certificate, if required, to such effect in the proper
governmental office or offices, as well as any and all other documents required to effectuate the
termination of the Company. The existence of the Company as a separate legal entity shall continue
until the cancellation of the Certificate as provided for in the LLC Act.

     7.4 Continuation of Company. Notwithstanding anything to the contrary set forth in this Agreement, the
Company shall not in and of itself dissolve upon the Bankruptcy, dissolution or dissociation of any
Member. Notwithstanding any other provision of this Agreement, the Bankruptcy of a Member shall
not cause such Member to cease to be a member of the Company and upon the occurrence of such an
event, the Company shall continue without dissolution.

ARTICLE VIII.

BOOKS, RECORDS AND INFORMATION; FINANCIAL MATTERS

     8.1 Accounting and Fiscal Year. The fiscal year of the Company (the “Fiscal Year”) shall be the calendar year or such other year
selected by the Board and permitted by the Code or the Regulations. Unless otherwise provided
herein, the Company’s books of account shall be maintained in accordance with GAAP; provided,
however, that for purposes of making allocations and distributions hereunder, Capital Accounts and
Net Profits, Net Losses and other items shall be determined in accordance with federal income tax
accounting principles utilizing the accrual method of accounting, with the adjustments required by
Regulations section 1.704-1(b) to properly maintain Capital Accounts. Each Member acknowledges
that the Capital

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Account balances of the Members for
the purposes described in the preceding sentence are not computed in accordance with GAAP.

     8.2 Books and Records. At all times until the dissolution and termination of the Company, the
Company shall maintain proper and complete books of account which show a true and accurate record
of all costs and expenses incurred, all charges made, all credits made and received and all income
derived in connection with the conduct of the business of the Company. In addition, the Company
shall keep and maintain in its principal office all records required to be kept and maintained in
accordance with all applicable laws. Without limiting the rights of either the Company and its
representatives, or the Members, under Section 18-305 of the LLC Act, the Company shall make
historical information available for inspection and copying upon reasonable notice by any Member or
its representative at any reasonable time during business hours and at such Member’s expense for
any purpose reasonably related to the Member’s interest in the Company.

     8.3 Financial Statements. The Members acknowledge the obligation of the Company to deliver
financial statements and related information concerning the Company as provided in Section 6.4(a).

     8.4 Other Information. The Company shall use its reasonable efforts to cause to be delivered to
any Member such other information as such Member may reasonably request for the purpose of enabling
it to comply in a timely manner with any reporting or filing requirements imposed by any statute,
rule, regulation or otherwise by any Governmental Authority.

     8.5 Confidentiality. Each Member shall hold all non-public information regarding the Company and
its business confidential, it being understood and agreed that, in any event, a Member may make:

          (i) disclosures of such information to Affiliates of such Member and to their agents and
advisors, provided that such Affiliates, agents and advisors agree to keep such information
confidential in accordance with the requirements of this Section 8.5;

          (ii) disclosures of such information reasonably required by any bona fide or potential
assignee or transferee of a Membership Interest in connection with the contemplated assignment or
transfer by such Member of any its Membership Interests herein, provided that such assignees or
transferees agree to keep such information confidential in accordance with the requirements of this
Section 8.5;

          (iii) disclosures required or requested by any Governmental Authority or representative
thereof or pursuant to legal or judicial process; provided that, unless specifically prohibited by
applicable law or court order, each such Member shall make reasonable efforts to notify the Company
of any request by any Governmental Authority or representative thereof (other than any such request
in connection with any examination of the financial condition or other routine examination of such
Member by such Governmental Authority) for disclosure of any such non-public information prior to
disclosure of such information; and

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          (iv) disclosures of information that is generally known to the public at the time of
disclosure or becomes generally known to the public other than as a result of a disclosure by the
Member or its representatives.

     8.6 Tax Matters.

          (a) Status of the Company. The Company and each Member acknowledge that, as of the Effective
Time, the Company is a partnership for U.S. federal and state income and franchise tax purposes and
hereby agree not to make any election, or take any other action, that would cause the Company to be
treated as other than a partnership for federal, state or local tax purposes, including any action
that would result in the Company being treated as a “publicly traded partnership” within the
meaning of Section 7704 of the Code and the Regulations. Each Member further agrees not to elect
for the Company to be excluded from the application of
Subchapter K of Chapter 1 of Subtitle A of the Code or any similar state statute. Neither
this Agreement nor the treatment of the Company as a partnership under the Code shall be deemed to
create a partnership among the Members for any other purpose whatsoever.

          (b) Tax Elections and Reporting.

               (i) Generally. The Board shall cause the Company to make all such elections under the Code or
Regulations as the Board may choose in its reasonable discretion.

               (ii) Tax Information. No later than the due date for the Company’s U.S. federal income tax
returns (determined with regard to extensions) for such Fiscal Year, each Person who was a Member
at any time during the Fiscal Year shall be provided with an information letter (containing such
Member’s Form K-1 or comparable information) with respect to its distributive share of income,
gains, deductions, losses and credits for income tax reporting purposes for such Fiscal Year,
together with any other information concerning the Company necessary for the preparation of a
Member’s U.S. federal income tax return(s).

               (iii) Company Tax Returns. A firm of certified public accountants selected by the Board
shall, if the Board so determines, be retained to prepare or review the necessary federal income
tax returns and information returns for the Company. Any such tax returns not prepared or reviewed
by the firm of certified public accountants, and all other tax returns, shall be prepared in a
manner directed by the Board. Each Member shall provide such information, if any, as may be needed
by the Company for purposes of preparing such tax and information returns, provided that such
information is readily available from regularly maintained accounting records.

               (iv) Tax Audits. The Common Member shall be the “tax matters partner,” as that term is
defined in Code section 6231(a)(7) (the “Tax Matters Member”) with all of the rights, duties and
powers provided for in sections 6221 through 6234, inclusive, of the Code. The Tax Matters Member
shall promptly deliver to each Member a copy of all notices and communications with respect to
income or similar taxes received from the Internal Revenue Service or other taxing authority
relating to the Company which might materially adversely affect such Members, and shall keep such
Members advised of all significant developments in such matters coming to the attention of the Tax
Matters Member. All costs incurred by the Tax

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Matters Member and its Affiliates in performing the
Tax Matters Member’s obligations (including reasonable allocable internal personnel costs and
reasonable disbursements, subject to a right of audit of such costs and disbursements at the
direction of a Majority In Interest of the Redeemable Preferred Shares with the costs and expenses
for such audit to be paid by the holders of Redeemable Preferred Shares in proportion to the
proportions in which they hold Redeemable Preferred Shares, unless the audit discloses a 10%
overstatement of such costs and disbursements in which event the Tax Matters Member shall bear the
costs and expenses of such audit), and all fees and expenses incurred in connection with directing
the defense of any claims made by the Internal Revenue Service or other taxing authority (to the
extent that such claims relate to the adjustment of Company items), shall be borne by the Company.
Neither the Tax Matters Member nor the Company shall be liable for any additional tax, interest or
penalties payable by a Member or any costs of separate counsel chosen by such Member to represent
the Member with respect to any aspect of any challenge by a taxing authority.

ARTICLE IX.

TRANSFER RESTRICTIONS

     9.1 Transfers of Shares.

          (a) General. Subject to Section 9.2, a Member (including a Substitute Member) may Transfer
all or any portion of its Shares in the Company, but only if the following conditions to Transfer
have been satisfied:

               (i) such Transfer is not to a Prohibited Transferee;

               (ii) with respect to any Redeemable Preferred Member, such Transfer shall be of not less than
1,000 Redeemable Preferred Shares, or if lesser, all of such Redeemable Preferred Member’s
remaining Redeemable Preferred Shares;

               (iii) the instrument of Transfer has been delivered to the principal office of the Company or
such other place designated by the Board;

               (iv) the Transferor has held the Company and non-transferring Members harmless from all costs,
expenses or liabilities (including reasonable attorneys’ fees and disbursements) incurred by the
Company and non-transferring Members in connection with the Transfer;

               (v) the Transfer shall not result in the Company being treated as a “publicly traded limited
liability company” within the meaning of Section 7704 of the Code and the Treasury Regulations;

               (vi) the Transfer shall not result in the Company, any Member or any of their Affiliates being
subject to regulation as a “holding company” or a “subsidiary company” or an “affiliate” of a
“holding company” or a “public-utility company” under PUHCA;

               (vii) such Transfer, under laws specifically applicable to the distribution of securities in
the public markets, in the written opinion of legal counsel in the relevant

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jurisdiction, shall not
require the Company to issue a prospectus or registration statement in respect of such Redeemable
Preferred Shares;

               (viii) such Transfer shall not be to a Person who is (i) an employee benefit plan (as defined
in Section 3(3) of the U.S. Employee Retirement Income Security Act of 1974, as amended (“ERISA”)),
(ii) a plan described in Section 4975(e)(1) of the Code, including individual retirement accounts
and Keogh plans, (iii) a plan, individual retirement account or other arrangement subject to
provisions of federal, state, local, non-United Sates or other laws, rules and regulations that are
similar to fiduciary and prohibited transaction provisions of ERISA and the Code, or (iv) an entity
whose underlying assets include assets of any of the foregoing by reason of a plan’s direct or
indirect investment in such entity;

               (ix) such Transfer shall not cause any Independent Director to cease being qualified as such;
and

               (x) with regard to the securities laws of the United States of America, including without
limitation, the Securities Act of 1933, as amended, and the rules and regulations promulgated
thereunder (the “Securities Act”), such Transfer shall meet one of the following criteria:

                    (1) be to a Person who the transferor reasonably believes is a “qualified institutional buyer”
within the meaning of Rule 144A under the Securities Act purchasing for its own account or for the
account of a “qualified institutional buyer” in a transaction meeting the requirements of Rule
144A;

                    (2) be an “offshore transaction” complying with Rule 904 of Regulation S under the Securities
Act (if available);

                    (3) be pursuant to an exemption from registration under the Securities Act provided by Rule
144 thereunder (if available and upon delivery of an opinion of counsel in a form reasonably
satisfactory to the Board); or

                    (4) be in a sale to an “accredited investor” (as defined in Rule 501(a)(1), (2), (3) or (7) of
Regulation D under the Securities Act) pursuant to an exemption from registration under section
4(1) of the Securities Act (if available and upon delivery of an opinion of counsel in a form
reasonably satisfactory to the Board).

          (b) Void Transfers. To the fullest extent permitted by law, any purported Transfer that fails
to comply with the conditions set forth in Section 9.1(a) shall be void ab initio and of no force
or effect.

          (c) Transfers By Change of Control of Redeemable Preferred Member. For purposes of this
Article 9, any change of control with respect to a Redeemable Preferred Member which occurs at the
level of an entity, all or substantially all of the assets of which consist, directly or
indirectly, of an interest in the Company, shall be considered to be a Transfer.

     9.2 Rights of Assignee. Subject to Section 2.1(a)(ii), until such time, if any, as a transferee of
any permitted Transfer pursuant to this Article IX is admitted to the Company as a

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Substitute
Member pursuant to Section 9.3(d): (i) such transferee shall be an Assignee only, as the holder of
an Economic Interest, and only shall receive, to the extent Transferred, the distributions and
allocations of income, gain, loss, deduction, credit, or similar items to which the Member which
Transferred its Shares would be entitled; and (ii) such Assignee shall not be entitled or enabled
to exercise any other rights or powers of a Member including voting or consent rights (whether such
rights arise hereunder, under the LLC Act or otherwise), such other rights remaining with the
transferring Member. In such a case, the transferring Member shall remain a Member even if it has
Transferred its entire Economic Interest in the Company to one or more Assignees. In the event any
Assignee desires to make a further assignment of any Economic Interest in the Company, such
Assignee shall be subject to all of the provisions of this Agreement to the same extent and in the
same manner as any Member desiring to make such an assignment.

     9.3 Admission of Assignees as Substitute Members; Registration of Transfer on Company’s Books
and Records.

          (a) Conditions to Admission as Substitute Member. Subject to Section 9.3(b), an Assignee
shall become a Substitute Member, and the Transfer of Shares to such Assignee shall be registered
on the Company’s books and records, including the Register of Members, only if and when each of the
following conditions is satisfied:

               (i) the assignor of the Shares transferred sends written notice to the Board requesting the
admission of the Assignee as a Substitute Member and setting forth the name and address of the
Assignee, the Shares transferred and the effective date of the Transfer;

               (ii) the Board receives from the Assignee written instruments of Transfer and such Assignee’s
consent to be bound by this Agreement as a Substitute Member that are in a form reasonably
satisfactory to the Board; and

               (iii) the Board receives from the proposed assignor and/or assignee reasonably satisfactory
representations and/or information:

                    (1) as to reasonably satisfy the Board that the Transfer and admission to the Company as a
Substitute Member will not conflict with the requirements of Section 9.1 as if such requirements
applied at the time of the admission of such Assignee as a Substitute Member; and

                    (2) as are reasonably required by the Company to enable it to satisfy all “know your customer”
and anti-money laundering laws, orders, rules and regulations.

          (b) Transfers of Common Shares by Common Member and Admission of Substitute Member. Upon the
Transfer (other than a pledge or encumbrance) of Common Shares by a Common Member and the request
for admission of the Assignee thereof as a Substitute Member in accordance with Section 9.3(a)
hereof, the Transferor shall deliver its Common Share Certificate(s) to the Company for
cancellation (endorsed on the reverse side thereof or endorsed on a separate document), and, upon
the Company’s registering of the Transfer on the Register of Members and in connection with the
valid admission of the Substitute Member, the Company shall issue a new Common Share Certificate to
the Substitute

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Member for the number of Common Shares being Transferred and, if applicable, cause
to be issued to the transferor Common Member a new Common Share Certificate for the Common Shares
that were represented by the canceled Common Share Certificate and that are not being Transferred;
provided, that, the Company shall have no duty to register the Transfer unless the requirements of
Section 8-401 of the UCC as in effect in the State of Delaware are satisfied.

          (c) Refusal to Transfer. If, as a result of the failure to satisfy any of the conditions set
forth in Section 9.3(a) or 9.3(b), the Board refuses to register a Transfer of Shares, it shall,
within five Banking Days after the date on which the instrument of Transfer was delivered to the
Company or its agent, send to the transferor and the transferee notice of the refusal.

          (d) Retention of Transfer Instrument. The Company shall be entitled to retain any instrument
of Transfer which is registered but any instrument of Transfer which the Board refuses to register
shall be returned to the Person who delivered such instrument to the Company when notice of the
refusal is given.

          (e) Admission of Substitute Member. Upon the admission of any Substitute Member, the Register
of Members shall be amended to reflect the name, address and Shares of such Substitute Member and
to eliminate or adjust, if necessary, the name, address and Shares of the predecessor of such
Substitute Member.

     9.4 Withdrawal of Members.

          (a) Cessation of Membership After Transfer of Shares. If a Member has transferred all of its
Shares in the Company to one or more Assignees, then such Member shall without further act be
deemed to have resigned from the Company if and when all such Assignees have been admitted as
Substitute Members in accordance with this Agreement. A Member shall not cease to be a Member as a
result of the Bankruptcy of such Member. So long as a Member continues to own or hold any Shares,
such Member shall not have the ability to resign as a Member prior to the dissolution and winding
up of the Company, and any such resignation or attempted resignation by a Member prior to the
dissolution or winding up of the Company shall be null and void.

          (b) Cessation of Membership After Full Redemption. If all the Redeemable Preferred Shares of
a Redeemable Preferred Member have been fully redeemed in accordance with the terms of this
Agreement, such Redeemable Preferred Member shall cease to be a member of the Company automatically
without any further action required by the Company, such withdrawing Redeemable Preferred Member or
any other Member.

          (c) Conversion of Membership Interest. Upon the Incapacity of a Member, such Incapacitated
Member’s Membership Interest shall automatically be converted to an Economic Interest only, and
such Incapacitated Member (or its executor, administrator, trustee or receiver, as applicable)
shall thereafter cease to be a member of the Company and shall be deemed an Assignee for all
purposes hereunder, with the same Economic Interest as was held by such Incapacitated Member prior
to its Incapacity, but without any other rights of a Member

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unless the holder of such Economic
Interest is admitted as a Substitute Member in accordance with this Agreement.

     9.5 Delivery of Information. The Company will promptly furnish or cause to be furnished to the
Redeemable Preferred Members and, upon request of holders and prospective purchasers of Redeemable
Preferred Shares, to such holders and purchasers, copies of the information required to be
delivered to holders and prospective purchasers of the Redeemable Preferred Shares pursuant to Rule
144A(d)(4) under the Securities Act (or any successor provision thereto) in order to permit
compliance with Rule 144A in connection with resales by such holders of the Redeemable Preferred
Shares.

     9.6 Pledge of Common Shares in Connection with Credit Agreement. Notwithstanding anything to the
contrary contained in this Agreement, the restrictions on the Transfer of Common Shares contained
in this Agreement, including in this Article 9, shall not apply to any pledge of the Common
Member’s Common Shares or the Common Share Certificates representing such Common Shares, and the
Common Member is hereby authorized to pledge its Common Shares and the Common Shares Certificates
representing such Common Shares, pursuant to the Pledge Agreement.

ARTICLE X.

MISCELLANEOUS PROVISIONS

     10.1 Amendment. Except as otherwise provided herein, any amendment to this Agreement must be in
writing and approved by the Consent of a Majority In Interest of the Common Shares and Redeemable
Preferred Shares; provided however, that:

          (a) the Common Member may, without the approval of Majority In Interest of the Redeemable
Preferred Shares: (i) amend, modify or supplement this Agreement in order to correct an error which
is of a minor or technical nature, or to cure any ambiguity, defect or inconsistency; or (ii) to
make any change that would provide any additional rights or benefits to the Redeemable Preferred
Members as a class or that does not adversely affect the legal rights hereunder of any Redeemable
Preferred Member; and

          (b) without the Consent of 100% of the Redeemable Preferred Members, no amendment,
modification or termination of any provision of this Agreement related to the payment of Redeemable
Preferred Dividends or the making of any Redemption Payments to the Redeemable Preferred Members
shall be effective.

     10.2 Disclaimer of Agency. This Agreement does not create any relationship among the Members
beyond the scope set forth herein, and except as otherwise expressly provided herein, this
Agreement shall not constitute any Member the legal representative or agent of the other, nor shall
any Member have the right or authority to assume, create or incur any liability or obligation,
express or implied, against, in the name of or on behalf of any other Member or the Company.

     10.3 Regulatory Status. Neither any Member nor any Affiliate of such Member shall take any action,
omit to take any action or suffer any action to be taken with respect to itself or

53

 

any of its
Affiliates which would cause the Company to lose its status as an “exempt wholesale generator”
within the meaning of Section 32 of PUHCA or otherwise have any material adverse energy regulatory
impact on the Company.

     10.4 Notices and Information. Any notice, demand, offer, or other instrument required or permitted to be given pursuant to
this Agreement shall be in writing signed by the party giving such notice and shall, to the extent
reasonably practicable, be sent by telecopy, and if not reasonably practicable to send by telecopy,
then by hand delivery, overnight courier, telegram or certified mail (return receipt requested), to
the other parties at the addresses set forth in the Register of Members. Without limiting any
other means by which a party may be able to prove that a notice has been received by the other
party, a notice shall be deemed to be duly received: (i) if sent by hand, overnight courier or
telegram, the date when duly delivered at the address of the recipient; (ii) if sent by certified
mail, the date of the return receipt; or (iii) if sent by telecopy, upon receipt by the sender of
an acknowledgment or transmission report generated by the machine from which the telecopy was sent
indicating that the telecopy was sent in its entirety to the recipient’s telecopy number. The
Company may distribute information to Members through electronic means, including through websites.

     10.5 Consequential Damages. To the fullest extent permitted by law, neither the Company nor any
Member shall be liable to any other Member or the Company for special, indirect or consequential
damages resulting or arising out of this Agreement, including loss of profit.

     10.6 Counterparts. The Members may execute this Agreement in two or more counterparts, which
shall, in the aggregate, be signed by all the Members; each counterpart shall be deemed an original
instrument as against any Member who has signed it.

     10.7 No Right to Partition. No Member shall have the right to bring an action for partition
against the Company. Each of the Members hereby irrevocably waives any and all rights which it may
have to maintain an action to partition Company property or to compel any sale or transfer thereof.

     10.8 Additional Documents; Further Assurances. Each Member shall execute, with acknowledgment or
affidavit, if required or deemed appropriate, any and all documents and writings that may be
necessary or expedient in connection with the creation of the Company and the achievement of its
Purpose, specifically including (i) such certificates and other documents as the Board deems
necessary or appropriate to form, qualify or continue the Company as a limited liability company
(or a company in which the Members have limited liability) in all jurisdictions in which the
Company conducts or plans to conduct business and (ii) all such agreements, certificates, tax
statements, tax returns and other documents as may be required of the Company or its Members by the
laws of the United States of America, the States of Delaware and California, or any other state in
which the Company conducts or plans to conduct business, or any political subdivision or agency
thereof. The Members, from time to time, at the Company’s request, shall execute, acknowledge and
deliver such other documents, instruments, certifications and assurances, and take such other
actions, as
the Company may reasonably require to effectuate the purpose of this Agreement, or to better enable
the Company to complete, perform or discharge any of its obligations hereunder.

54

 

     10.9 Governing Law. This Agreement shall be governed by, construed, interpreted and applied in
accordance with the laws of the State of Delaware (excluding any conflict of law rules that would
refer the matter to be decided to the laws of another jurisdiction).

     10.10 Binding Effect. This Agreement shall be binding on all successors and assigns of the Members
and inure to the benefit of the respective successors and permitted assigns of the Members, except
to the extent of any express contrary provision in this Agreement.

     10.11 Partial Invalidity. If any term, provision, covenant, or condition of this Agreement is held
by a court of competent jurisdiction to be invalid, void, or unenforceable, the remaining
provisions of this Agreement shall remain in full force and effect and in no way shall be affected,
impaired, or invalidated by reason of such holding.

     10.12 Captions. Titles or captions of Sections or Articles contained in this Agreement are
inserted only as a matter of convenience and for reference, and in no way define, limit, extend or
describe the scope of this Agreement or the intent of any provision hereof.

     10.13 No Rights in Third Parties. The provisions of this Agreement are for the exclusive benefit
of the Members and their respective successors and permitted assigns. This Agreement is not
intended to benefit or create rights in any other Person (including any governmental Person),
including (a) any Person (including any governmental Person) to whom any debts, liabilities or
obligations are owed by the Company, or any Member or (b) any liquidator, trustee or creditor
acting on behalf of the Company. No such creditor or any other Person (including any governmental
Person) shall have any rights under this Agreement, including rights with respect to enforcing the
payment of capital contributions, unless specifically set forth herein or therein.

     10.14 No Title to Company Property. All property owned by the Company, whether real, personal or
mixed, and whether tangible or intangible, shall be deemed to be owned by the Company as an entity,
and no Member, individually, shall have any ownership interest or title in such property except
indirectly through such Member’s ownership of Shares.

     10.15 Persons Not Named. Unless named in this Agreement, or unless admitted to the Company as a Member pursuant to the
terms of this Agreement, no Person shall be considered a Member. The Company and the Members need
deal only with Persons so named or admitted as Members; provided, however, that any distribution by
the Company to the Persons shown on the Register of Members as a Member or its legal representative
or the assignee of the right to receive Company distributions as herein provided, shall relieve the
Company and the Member of all liability to any other Person who may be interested in such
distribution by reason of any other assignment by the Member, bankruptcy of the Member or any other
reason.

[Signature page follows]

55

 

     IN WITNESS WHEREOF, the Members of Metcalf Energy Center, LLC have executed and delivered this
Limited Liability Company Agreement as of the Effective Time.

	 	 	 	 	 	 	 	 	 
	 	 	Metcalf Holdings, LLC,	 	 
	 	 	a Delaware limited liability company	 	 
	 
	 	 	 	 	 	 	 	 
	 

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

	 	 	 	 	 	 	 	 
	 	 	Title:	 	 	 	Secretary	 	 
	 

	 	 	 	 	 	 	 	 

 

 

	 	 	 	 	 	 	 	 	 
	 	 	[SERIES A PREFERRED MEMBER]	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	By:	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 	 	Name:	 	 
	 

	 	 	 	 	 	 	 	 
	 	 	Title:	 	 
	 

	 	 	 	 	 	 	 	 

 

 

Schedule 1 to

Limited Liability Company Agreement

REGISTER OF MEMBERS

of

METCALF ENERGY CENTER, LLC

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Address, 	 	 	 	 	 	 
	 	 	Telephone 	 	 	 	Number of 	 	 
	 	 	and 	 	Number of 	 	Redeemable 	 	Common Share 
	 	 	Facsimile 	 	Common 	 	Preferred 	 	Certificate 
	Member	 	Numbers	 	Shares	 	Shares	 	Number
	Metcalf

Holdings, LLC

	 	50 West San

Fernando St.

Suite 638

San Jose, CA

95113
	 	 	1,000	 	 	 	N/A	 	 	 	1	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	CSFB Credit

Opportunities

Fund

(Employee) ,

L.P.

	 	11 Madison

Avenue

NY, NY,

10010
	 	 	N/A	 	 	 	2,550	 	 	 	N/A	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	CSFB Credit

Opportunities

Fund (Helios) ,

L.P.

	 	11 Madison

Ave.

NY, NY,

10010

Ph. (212) 538-

3527

Fax (646) 935-

7071
	 	 	N/A	 	 	 	7,450	 	 	 	N/A	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Luminus Asset

Partners LP

	 	494 Eighth

Avenue

20th Floor

NY, NY, 1001

Ph. (212) 615-

3437

Fax (212) 615-

3430
	 	 	N/A	 	 	 	3,000	 	 	 	N/A	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Luminus Energy

Partners Master

Fund, Ltd.

	 	494 Eighth

Avenue

20th Floor

NY, NY, 1001

Ph. (212) 615-

3437

Fax (212) 615-

3430
	 	 	N/A	 	 	 	2,000	 	 	 	N/A	 

 

 

Schedule 3 to

Limited Liability Company Agreement

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Address, 	 	 	 	 	 	 
	 	 	Telephone 	 	 	 	Number of 	 	 
	 	 	and 	 	Number of 	 	Redeemable 	 	Common Share 
	 	 	Facsimile 	 	Common 	 	Preferred 	 	Certificate 
	Member	 	Numbers	 	Shares	 	Shares	 	Number
	SOF 

Investments, 

L.P.

	 	MSD Capital,

L.P.

645 Fifth Ave.

21st Floor

NY, NY 10022

Ph. (212) 303-

1644

Fax (212) 303-

1622
	 	 	N/A	 	 	 	22,000	 	 	 	N/A	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Airlie 

Opportunity

Master Fund,

Ltd.

	 	115 E.

Putnam

Avenue

Greenwich,

CT 06830

Ph. (203) 661-

6200

Fax (203) 661-

0479
	 	 	N/A	 	 	 	6,000	 	 	 	N/A	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Stonehill 

Institutional

Partners, L.P.

	 	885 Third

Ave.

30th Floor

NY, NY 10022

Ph. (212) 739-

7474

Fax (212) 838-

2291
	 	 	N/A	 	 	 	10,000	 	 	 	N/A	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Redwood

Domestic Fund,

L.P.

	 	910 Sylvan

Avenue

Englewood

Cliffs, N.J.

07632

Ph. (201) 227-

5040

Fax (201) 568-

1340
	 	 	N/A	 	 	 	12,000	 	 	 	N/A	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Candlewood

Capital Partners

LLC

	 	11 Madison

Avenue

NY, NY,

10010

Ph. (212) 538-

6003

Fax (917) 256-

6144
	 	 	N/A	 	 	 	10,000	 	 	 	N/A	 

 

 

Schedule 3 to

Limited Liability Company Agreement

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Address, 	 	 	 	 	 	 
	 	 	Telephone 	 	 	 	Number of 	 	 
	 	 	and 	 	Number of 	 	Redeemable 	 	Common Share 
	 	 	Facsimile 	 	Common 	 	Preferred 	 	Certificate 
	Member	 	Numbers	 	Shares	 	Shares	 	Number
	Merrill Lynch,

Pierce, Fenner

& Smith, Inc.

	 	2 World

Financial

Center

NY, NY 10281

Ph. (212) 449-

0472

Fax (212) 449-

3695
	 	 	N/A	 	 	 	50,000	 	 	 	N/A	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Credit Suisse

First Boston

Capital LLC

	 	11 Madison

Ave.

NY, NY,

10010

Ph. (212) 325-

8681

Fax (212) 325-

8898
	 	 	N/A	 	 	 	10,000	 	 	 	N/A	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Credit Suisse

First Boston

LLC

	 	11 Madison

Ave.

NY, NY,

10010

Ph. (212) 335-

3266

Fax (212) 743-

5300
	 	 	N/A	 	 	 	10,000	 	 	 	N/A	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Continental

Casualty

Company

	 	CNA Center-

23 South

Chicago,

Illinois 60685

Ph. (312) 822-

4376

Fax (312) 817-

1680
	 	 	N/A	 	 	 	10,000	 	 	 	N/A	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	TOTAL

	 	 	 	 	1,000	 	 	 	155,000	 	 	 	N/A	 

 

 

Schedule 2 to

Limited Liability Company Agreement

CLAUSE (i) PROHIBITED TRANSFEREES

AEP

AES

Allegheny Energy

Allete

Ameren

ANP

Avista Energy

Bechtel

Bonneville Power

CalPeak Power, LLC

Central & Southwest

Centrica

Cinergy

Citizens Power

CLECO

CMS

Cogentrix

ConEdison

Constellation

Continental Cogeneration Services

Cummins West, Inc.

Dominion

DTE Energy

Duke Energy

Dynegy

Edison Mission

Edison International

El Paso Energy

Energy Management Inc.

Entergy Power

Exelon

First Energy

FPL Energy

Fresno Cogeneration Partners, LP

Idaho Power

Indeck

InterGen North America

LADWP

LCRA

LG&E Energy

LS Power

MidAmerica

Mirant

National Energy & Gas Transmission, Inc.

Nevada Power

North American Power Group Ltd.

Northeast Utilities

NRG Energy

Oxbow

Pacificorp

Panda

Pinnacle West

PP&L Global

PPL Corporation

Progress Energy

Public Service Enterprise Group

Reliant Energy

Sempra

Sithe

Southern Company

TECO

Tenaska

Tractabel

TVA

TXU

Westar Energy

Wisconsin Electric

XCEL

 

 

Schedule 3 to

Limited Liability Company Agreement

APPROVED DOCUMENTS

          Notwithstanding anything to the contrary contained in the Agreement to which this Schedule 3
is attached, capitalized terms defined and used herein shall have the meanings provided for herein.

	 	1.	 	Amended and Restated Credit Agreement (the “Credit Agreement”), dated as of the Closing
Date, by and among Metcalf Energy Center, LLC, a Delaware limited liability company
(“Company”), the financial institutions listed therein or who later become a party thereto
(the “Lenders”) and Credit Suisse, New York Branch, as lead arranger, administrative agent
(the “Administrative Agent”), book runner and collateral agent (the “Collateral Agent”) for
the Lenders.
	 
	 	2.	 	Note, in the aggregate principal amount of $100,000,000 or such lesser amount as may be
stated therein, dated as of the Closing Date, by Company in favor of Credit Suisse, New
York Branch, as Lender.
	 
	 	3.	 	Fee Letter, dated as of the Closing Date, by Administrative Agent, as accepted and
agreed to by Company.
	 
	 	4.	 	Amended and Restated Depositary Agreement, dated as of the Closing Date, by and among
Company, Administrative Agent, Collateral Agent and The Bank of New York, not in its
individual capacity but solely as depositary agent thereunder (“Depositary Agent”).
	 
	 	5.	 	Amended and Restated Pledge and Security Agreement, dated as of the Closing Date, by
and between Company, Metcalf Holdings, LLC, a Delaware limited liability company
(“Pledgor”), and Collateral Agent.
	 
	 	6.	 	Security Agreement, dated as of the January 28, 2005, by and between Company and
Collateral Agent (as assignee of ING Capital LLC, in its capacity as collateral agent
thereunder), as amended by the First Amendment to the Security Agreement, dated as of the
Closing Date, by and between Company and Collateral Agent.
	 
	 	7.	 	Subordination Agreement (Operator), dated as of January 28, 2005, by and among Calpine
Operating Services Company, Inc., a Delaware corporation (“Operator”), Company, and
Administrative Agent (as assignee of ING Capital LLC, in its capacity as administrative
agent thereunder), as amended by the First Amendment to Subordination Agreement, dated as
of the Closing Date, among Operator, Company and Administrative Agent.
	 
	 	8.	 	Deed of Trust, Assignment Of Rents, Security Agreement and Fixture Filing, dated as of
January 28, 2005, executed by Company, as trustor, in favor of ING Capital LLC, in its
capacity as collateral agent, as beneficiary for the Lenders, recorded in the Official
Records on January 31, 2005 as Document No. 18210920 (the “Original Deed of Trust)” and all
easements listed therein, the beneficial interest of which has been

 

 

Schedule 3 to

Limited Liability Company Agreement

	 	 	 	assigned to Collateral Agent pursuant to that certain Deed of Trust Assignment and
Assumption Agreement, dated as of the Closing Date, by and among ING Capital LLC, Collateral
Agent and Company (“Deed of Trust Assignment”) to be recorded in the Official Records, as
amended by the First Amendment to Deed of Trust, dated as of the Closing Date, by and
between Company and Collateral Agent (“First Amendment to Deed of Trust”), to be recorded in
the Official Records.
	 
	 	9.	 	Letter agreement, dated as of June 20, 2005 (the “Placement Agent Letter Agreement”),
among Company, Pledgor and Credit Suisse First Boston LLC, as Placement Agent.
	 
	 	10.	 	Redeemable Preferred Shares Subscription Agreement, dated as of June 20, 2005, by and
among Company, Pledgor and each of the Subscribers party thereto.
	 
	 	11.	 	Amended and Restated Sponsor Project Document Guaranty, dated as of the Closing Date,
by Calpine Corporation, a Delaware corporation (“Sponsor”), in favor of Company.
	 
	 	12.	 	Amended and Restated Administrative Services Agreement, dated as of the Closing Date,
by and between Sponsor and Company.
	 
	 	13.	 	Consent and Agreement, dated as of the Closing Date, by and among Sponsor, Company and
Administrative Agent.
	 
	 	14.	 	Master Power Purchase and Sale Agreement, dated as of January 28, 2005, by and between
Company and Calpine Energy Services L.P., a Delaware limited partnership (“CES”), as
supplemented by that certain Master Power Purchase and Sale Agreement Cover Sheet, dated as
of January 28, 2005, by and between Company and CES and that certain Master Power Purchase
and Sale Agreement Confirmation Letter, dated as of January 28, 2005, by and between
Company and CES, as amended by the First Amendment to Master Power Purchase and Sale
Agreement Confirmation Letter, dated as of the Closing Date, by and between Company and
CES.
	 
	 	15.	 	Consent and Agreement, dated as of January 28, 2005, by and among CES, Company and
Collateral Agent (as assignee of ING Capital LLC, in its capacity as collateral agent), as
amended by the Letter Agreement acknowledging assignment of security interest, dated as of
the Closing Date, by and among CES, Company and Collateral Agent.
	 
	 	16.	 	Operation and Maintenance Agreement, dated as of January 28, 2005, by and between
Operator and Company.
	 
	 	17.	 	Consent and Agreement, dated as of January 28, 2005, by and among Operator, Company and
Collateral Agent (as assignee of ING Capital LLC, in its capacity as collateral agent), as
amended by the Letter Agreement acknowledging assignment of security interest, dated as of
the Closing Date, by and among Operator, Company and Collateral Agent.

 

 

Schedule 3 to

Limited Liability Company Agreement

	 	18.	 	Construction Management Agreement, dated as of January 1, 2005, by and between Calpine
Construction Management Company, Inc., a Delaware corporation (“CCMCI”), and Company, as
amended by the First Amendment to the Construction Management Agreement, dated as of June
10, 2005, by and between CCMCI and Company and the Second Amendment to the Construction
Management Agreement, dated as of the Closing Date, between CCMCI and Company.
	 
	 	19.	 	Consent and Agreement, dated as of January 28, 2005, by and among CCMCI, Company and
Collateral Agent (as assignee of ING Capital LLC, in its capacity as collateral agent), as
amended by the Letter Agreement acknowledging assignment of security interest, dated as of
the Closing Date, by and among CCMCI, Company and Collateral Agent.
	 
	 	20.	 	Generator Special Facilities Agreement, dated as of June 3, 2002, by and between
Pacific Gas and Electric Company (“PG&E”) and Company.
	 
	 	21.	 	Letter Agreement Supplementing, Clarifying, and Modifying the Generator Special
Facilities Agreement, dated June 3, 2002, by and between PG&E and Company.
	 
	 	22.	 	Letter Agreement Regarding Facilities to be Deeded to PG&E in Satisfaction of Milestone
3 of Appendix B of the Generator Special Facilities Agreement, dated February 28, 2003, by
and between PG&E and Company.
	 
	 	23.	 	Natural Gas Service Agreement, dated as of September 9, 2004, by and between PG&E and
Company.
	 
	 	24.	 	Special Agreement for Electrical Standby, dated as of November 3, 2004, by and between
PG&E and Company.
	 
	 	25.	 	Generator Interconnection Agreement, dated November 29, 2004, by and between PG&E and
Company.
	 
	 	26.	 	Overhead Transmission Line and Switchyard Easement, dated as of November 18, 2004, by
and between PG&E and Company.
	 
	 	27.	 	Gas Distribution Service and Extension Agreement, dated as of December 24, 2004, by and
between Company and PG&E.
	 
	 	28.	 	Electric Distribution Service and Extension Agreement, dated as of August 6, 2004, by
and between Company and PG&E.
	 
	 	29.	 	Assignment of Rights Under Settlement Agreement, dated as of the Closing Date, between
Sponsor and Company.
	 
	 	30.	 	Settlement Agreement, dated as of October 3, 2003, among PG&E, Sponsor, and certain of
Sponsor’s affiliates, and approved by the FERC on July 9, 2004, in Docket No. ER03-358-000.

 

 

Schedule 3 to

Limited Liability Company Agreement

	 	31.	 	Consent and Agreement, dated as of the Closing Date, by and among PG&E, Company and
Collateral Agent.
	 
	 	32.	 	Assignment of PG&E Network Upgrade Credits, dated as of the Closing Date, by and
between Company and CES.
	 
	 	33.	 	Cooperation Agreement, dated as of June 26, 2001, by and between the City of San Jose
(“San Jose”) and Company, as assignee of CPN Delta, Inc., a Delaware corporation, as
amended by that certain Amendment No. 1 to Cooperation Agreement, dated as of October 16,
2001, and as further amended by that certain Amendment No. 2 to Cooperation Agreement,
dated as of November 19, 2002.
	 
	 	34.	 	Interim Related Agreement, dated as of September 25, 2001, by and between Company and
San Jose.
	 
	 	35.	 	Design and Construction Agreement for the Silver Creek Recycled Water Pipeline, dated
as of March 14, 2002, by and among Company, San Jose and CH2M Hill Constructors, Inc., a
Delaware corporation.
	 
	 	36.	 	Three Dash Agreement, dated as of May 20, 2004, by and between Company and San Jose.
	 
	 	37.	 	Consent and Agreement, dated as of January 28, 2005, by and among City of San Jose,
Company and Collateral Agent (as assignee of ING Capital LLC, in its capacity as collateral
agent), as amended by the Letter Agreement acknowledging assignment of security interest,
dated as of the Closing Date, by and among City of San Jose, Company and Collateral Agent.
	 
	 	38.	 	Letter Agreement, dated as of the Closing Date, by Bayrische Landesbank, as Assignor,
Administrative Agent, Company and ING Capital LLC.
	 
	 	39.	 	Letter Agreement, dated as of the Closing Date, by ING Capital LLC, as Assignor,
Administrative Agent, Company and Bayrische Landesbank.
	 
	 	40.	 	All UCC financing statements contemplated as being delivered by Company under the
Credit Agreement naming the Collateral Agent as the secured party.
	 
	 	41.	 	UCC financing statement authorized by Company and naming Company as debtor and ING
Capital LLC, in its capacity as collateral agent, as secured party, as filed with the
office of the Delaware Secretary of State on January 28, 2005 and as amended and assigned
by the UCC financing statement amendments authorized by Company and naming Company as
debtor and Administrative Agent as secured party.
	 
	 	42.	 	UCC financing statement identified as a fixture filing naming Company as debtor and ING
Capital LLC, in its capacity as collateral agent, as secured party, recorded in the

 

 

Schedule 3 to

Limited Liability Company Agreement

	 	 	 	Official Records on January 31, 2005 as Document No. 18210921, as assigned by the UCC
financing statement amendment authorized by Company and naming Company as debtor and
Administrative Agent as secured party.
	 
	 	43.	 	UCC financing statement identified as a “transmitting utility” filing naming Company as
debtor and ING Capital LLC, in its capacity as collateral agent, as secured party, as filed
with the office of the California Secretary of State on January 28, 2005, as amended by the
UCC financing statement amendment filed with the office of the California Secretary of
State on February 3, 2005, and as further amended and assigned by the UCC financing
statement amendments authorized by Company and naming Company as debtor and Administrative
Agent as secured party.
	 
	 	44.	 	UCC financing statement identified as a “transmitting utility” filing naming Company as
debtor and ING Capital LLC, in its capacity as collateral agent, as secured party, as filed
with the office of the Delaware Secretary of State on January 28, 2005 and as amended and
assigned by the UCC financing statement amendments authorized by Company and naming Company
as debtor and Collateral Agent as secured party.
	 
	 	45.	 	Professional Services Agreement dated April 22, 2005 between R.W. Beck, Inc. and the
Company.
	 
	 	46.	 	Independent Directors Contract dated as of the Closing between the Company, Carrie L.
Tillman and Cheryl A. Tussie.
	 
	 	47.	 	Indemnification Agreement dated as of the Closing between the Company, Carrie L.
Tillman and Cheryl A. Tussie.
	 
	 	48.	 	Management Agreement dated as of the Closing between the Company, Carrie L. Tillman and
Cheryl A. Tussie.
	 
	 	49.	 	Final Confidential Offering Memorandum, dated June 16, 2005 (the “Offering
Memorandum”), relating to the sale of the Shares.
	 
	 	50.	 	Disbursement Authorization Letter by the Company dated as of the Closing.

 

 

EXHIBIT A

ALLOCATION ADDENDUM

1. Defined Terms. The following capitalized words and phrases used in this Allocation Addendum
shall have the meanings indicated, to the extent not otherwise defined in Section 1.8 of the
Agreement:

     1.1 “Adjusted Capital Account” means, with respect to each Member, the balance, if any, in
such Member’s Capital Account as of the end of the relevant Allocation Year, after: (i) adding to
such Capital Account the amount that such Member is deemed to be obligated to restore pursuant to
the penultimate sentences of Regulations Sections 1.704-2(g)(1) and 1.704-2(i)(5); and (ii)
subtracting from such Capital Account such Member’s share of the items described in Regulations
Sections 1.704-1(b)(2)(ii)(d)(4), (5) and (6). The foregoing definition of Adjusted Capital
Account is intended to comply with the provisions of Regulations Section 1.704-1(b)(2)(ii)(d) and
shall be interpreted consistently therewith.

     1.2 “Allocation Year” means (i) the period commencing on the Effective Date and ending on
December 31, 2005, (ii) any subsequent twelve (12) month period commencing on the day after the
last day of the prior Allocation Year and ending on December 31 of each subsequent year, or (iii)
any portion of the period described in clauses (i) or (ii) for which the Company is required to
allocate Net Profits, Net Losses, and other items of Company income, gain, loss, or deduction
pursuant to this Allocation Addendum.

     1.3 “Capital Account” means a capital account established and maintained for each Member with
respect to the Company in which the Member has an interest in accordance with Regulations Section
1.704-1(b)(2)(iv). At the Effective Time, the initial Capital Account of each Redeemable Preferred
Member shall equal the amount paid by such Member for its Redeemable Preferred Shares. At the
Effective Time, (a) the Common Member shall be deemed to have contributed or sold to the Company,
for federal income tax purposes, all of the assets owned by the Company, subject to all liabilities
associated therewith, immediately prior to the Effective Time and (b) the Common Member’s initial
Capital Account, after taking into account each of the (i) issuance of the Redeemable Preferred
Shares, (ii) borrowing under the Credit Agreement, and (iii) distribution to the Common Member
under Section 4.2(c) of the Agreement (relating to the distribution of the net proceeds of the
issuance of the Redeemable Preferred Shares), in each case, at or about the Effective Time, shall
equal $585,000,000 less any liabilities secured by the Company’s assets or assumed by the Company
in connection with the deemed contribution or sale (not including any indebtedness repaid with the
proceeds of the borrowing under the Credit Agreement), less any amount distributed to the Common
Member at or about the Effective Time under Section 4.2(c) of the Agreement. The Capital Account
shall thereafter be adjusted as follows:

     (i) To the Member’s Capital Account there shall be added (i) such Member’s
additional Capital Contributions to the Company, (ii) such Member’s allocable share
of Net Profits and any items in the nature of income or gain from the Company that
are specially allocated to such Member under Section 2 and Section 3
of this Allocation Addendum, and (iii) the amount of any Company liabilities assumed
by such Member or that are secured by any Company property distributed to such
Member.

 

 

     (ii) From each Member’s Capital Account there shall be subtracted (i) the
amount of money distributed and the Gross Asset Value of any Company property
distributed from the Company to such Member, (ii) such Member’s allocable share of
Net Losses and any other items in the nature of expenses or losses that are
specially allocated to such Member under Section 2 and Section 3 of
this Allocation Addendum, and (iii) the amount of any liabilities of such Member
assumed by the Company or that are secured by any Company property contributed by
such Member to the Company.

     (iii) In the event a Membership Interest is Transferred in accordance with the
terms of this Agreement, the transferee shall succeed to the Capital Account of the
transferor to the extent it relates to the Transferred Membership Interest.

     (iv) In determining the amount of any liability for purposes of subparagraphs
(i) and (ii) above, there shall be taken into account Section 752(c) of the Code and
any other applicable provisions of the Code and Regulations.

     (v) In conjunction with an adjustment to the adjusted tax basis of the
Company’s Assets pursuant to Code Sections 732, 734 or 743, the Capital Accounts of
the Members shall be adjusted as provided in Regulations Section
1.704-1(b)(2)(iv)(m).

     (vi) The foregoing provisions and the other provisions of the Agreement and
this Allocation Addendum relating to the maintenance of Capital Accounts are
intended to comply with Regulations Section 1.704-1(b)(2)(iv) and shall be
interpreted and applied in a manner consistent with such Regulations Section.

For the avoidance of doubt, any payment to a Redeemable Preferred Member in redemption of a
Redeemable Preferred Share shall be treated as a distribution to such Member and reduce such
Member’s Capital Account accordingly. In the event the Board shall determine in good faith and on
a commercially reasonable basis that it is prudent to modify the manner in which the Capital
Accounts, or any debits or credits thereto, are computed in order to comply with such Regulations,
the Board may make such modification; provided that the Board shall promptly give each other Member
written notice of such modification. The Board also shall, in good faith and on a commercially
reasonable basis, (i) make any adjustments to the Capital Accounts that are necessary or
appropriate to maintain equality between the aggregate Capital Accounts of the Members and the
amount of capital reflected on the Company’s balance sheet, as computed for book purposes, in
accordance with Regulations § 1.704-1(b)(2)(iv)(q), and (ii) make any appropriate modifications to
the Capital Accounts (and, if necessary, the initial Gross Asset Value of the Company’s assets) in
the event unanticipated events might otherwise cause this Agreement not to comply with Regulations
§ 1.704-1(b) or in the event that adjustments to Capital Account balances or Gross Asset Values are
determined by the Board to be necessary or appropriate to reflect properly the economic position of
the parties and the intent and operation of this Agreement.

     1.4 “Capital Contribution” means with respect to any Member in its capacity as such, (a) the
aggregate amount of money contributed by such Member to the capital of the Company and (b) the
initial Gross Asset Value of any property (other than money) contributed by such Member to the capital of the Company, reduced by the amount of any liabilities encumbering

 

 

such property that the Company is considered to assume or take subject to under Code Section 752.

     1.5 “Company Minimum Gain” has the meaning set forth in Regulations Sections 1.704-2(b)(2) and
1.704-2(d) for the phrase “partnership minimum gain.”

     1.6 “Depreciation” shall mean, for each Allocation Year, an amount equal to the depreciation,
amortization or other cost recovery deduction allowable with respect to an asset for such
Allocation Year for federal income tax purposes, except that (a) with respect to any asset the
Gross Asset Value of which differs from its adjusted tax basis for federal income tax purposes,
which difference is being eliminated by use of the “remedial method” pursuant to Section 1.704-3(d)
of the Regulations, Depreciation for such Allocation Year shall be the amount of book basis
recovered for such Allocation Year under the rules prescribed by Section 1.704-3(d)(2) of the
Regulations, and (b) with respect to any other asset the Gross Asset Value of which differs from
its adjusted basis for federal income tax purposes at the beginning of such Allocation Year,
Depreciation shall be an amount that bears the same ratio to such beginning Gross Asset Value as
the depreciation, amortization or other cost recovery deduction for such Allocation Year for
federal income tax purposes bears to such beginning adjusted tax basis; provided,
however, that if the federal income tax depreciation, amortization or other cost recovery
deduction for such Allocation Year is zero, Depreciation shall be determined with reference to such
beginning Gross Asset Value using any reasonable method selected by the Board.

     1.7 “Gross Asset Value” means, with respect to any asset, the asset’s adjusted basis for
federal income tax purposes, except as follows:

     (i) The initial Gross Asset Value of any asset (other than cash) contributed by
a Member to the Company shall be the gross fair market value of such asset, mutually
agreed by the contributing Member and the Board, provided that the initial Gross
Asset Value of the Company’s assets at or about the Effective Time, after taking
into account each of (a) the issuance of the Redeemable Preferred Shares, (b) the
borrowing under the Credit Agreement, and (c) the distribution to the Common Member
under Section 4.2(c) of the Agreement, shall equal the sum of (I) the aggregate
initial Capital Accounts of the Members at or about the Effective Time (as
determined under the definition of “Capital Account”) and (II) the aggregate amount
of all indebtedness of the Company for federal income tax purposes at or about the
Effective Time (not including any indebtedness repaid with the proceeds of the
borrowing under the Credit Agreement at or about the Effective Time)..

     (ii) Except as otherwise provided in this Agreement or as determined by the
Board, the Gross Asset Values of all Company assets immediately prior to the
occurrence of any event described in subsection (a), subsection (b), subsection (c),
subsection (d), or subsection (e) of this Section 1.7(ii) shall be adjusted
to equal their respective gross fair market values, as determined by the Board
(using any reasonable valuation method approved by the Board), as of the following
times:

       (a) the acquisition of any additional Membership
Interest in the Company by any new or existing Member in exchange for
more than a de minimis Capital Contribution pursuant to Regulations

 

 

Section 1.704-1(b)(2)(iv)(f)(5)(i);

       (b) the distribution by the Company to a Member of more than a de
minimis amount of assets as consideration for an interest in the Company
pursuant to Regulations Section 1.704-1(b)(2)(iv)(f)(5)(ii);

       (c) the liquidation of the Company, within the meaning of Regulations
Section 1.704-1(b)(2)(ii)(g), pursuant to Regulations Section
1.704-1(b)(2)(iv)(f)(5)(ii);

       (d) immediately prior to issuance of more than a de minimis Membership
Interest in exchange for services rendered or to be rendered pursuant to
Regulations Section 1.704-1(b)(2)(iv)(f)(5)(iii); and

       (e) at such other times as are permitted by Regulations Sections
1.704-1(b)(2)(iv)(f)(5)(iv).

     (iii) The Gross Asset Value of any Company asset distributed to a Member shall
be the gross fair market value (taking Code Section 7701(g) into account) of such
asset on the date of distribution.

     (iv) The Gross Asset Values of the assets of the Company shall be increased (or
decreased) to reflect any adjustments to the adjusted basis of such Assets pursuant
to Code Section 734(b) or Code Section 743(b), but only to the extent that such
adjustments are taken into account in determining Capital Accounts pursuant to
Regulations Section 1.704-1(b)(2)(iv)(m) and subparagraph (iv) of the definition of
“Net Profits” and “Net Losses” or Section 3.7 of this Allocation Addendum,
provided, however, that Gross Asset Values shall not be adjusted pursuant to this
subparagraph (iv) to the extent that an adjustment pursuant to subparagraph (ii) is
required in connection with a transaction that would otherwise result in an
adjustment pursuant to this subparagraph (iv).

If the Gross Asset Value of a Company asset has been determined or adjusted pursuant to Section
1.7(i), Section 1.7(ii) or Section 1.7(iv) above, such Gross Asset Value shall
thereafter be adjusted by the Depreciation taken into account with respect to such Asset for
purposes of computing Net Profits and Net Losses.

     1.8 “Member Nonrecourse Debt” has the meaning set forth in Regulations Section 1.704-2(b)(4)
for the phrase “partner non-recourse debt.”

     1.9 “Member Nonrecourse Debt Minimum Gain” means an amount, with respect to each Member
Nonrecourse Debt, equal to the Company Minimum Gain that would result if such Member Nonrecourse
Debt were treated as a Nonrecourse Liability, determined in accordance with Treasury Regulation §
1.704-2(i)(3).

     1.10 “Member Nonrecourse Deductions” has the meaning set forth in Regulations Section
1.704-2(i) for the phrase “partner non-recourse deductions.”

     1.11 “Net Profits” or “Net Losses” means, with respect to the Company, for each Allocation
Year, an amount equal to the taxable income or loss of the Company for such Allocation Year,
determined in accordance with Code Section 703(a) (for this purpose, all items

 

 

of income, gain,
loss or deduction required to be stated separately pursuant to Code Section 703(a)(1) shall be
included in taxable income or loss), with the following adjustments:

     (i) Any income that is exempt from federal income tax and not otherwise taken
into account in computing Net Profits or Net Losses pursuant to this Section shall
be added to such taxable income or loss;

     (ii) Any expenditure described in Code Section 705(a)(2)(B) or treated as Code
Section 705(a)(2)(B) expenditures pursuant to Regulations Section
1.704-1(b)(2)(iv)(i), and not otherwise taken into account in computing Net Profits
or Net Losses pursuant to this Section, shall be subtracted from such taxable income
or loss;

     (iii) Gain or loss resulting from any disposition of Company assets where such
gain or loss is recognized for federal income tax purposes shall be computed by
reference to the Gross Asset Value of the assets disposed of, notwithstanding that
the adjusted tax basis of such assets differs from its Gross Asset Value;

     (iv) To the extent an adjustment to the adjusted tax basis of any Asset
pursuant to Code Section 734(b) or Code Section 743(b) is required pursuant to
Regulations Section 1.704-1(b)(2)(iv)(m)(4) to be taken into account in determining
Capital Accounts as a result of a distribution other than in liquidation of a
Member’s Membership Interest, the amount of such adjustment shall be treated as an
item of gain (if the adjustment increases the basis of the Asset) or loss (if the
adjustment decreases the basis of the Asset) from the disposition of the Asset and
shall be taken into account for the purposes of computing Net Profits and Net
Losses;

     (v) If the Gross Asset Value of any Asset is adjusted in accordance with the
terms of this Agreement, the amount of such adjustment shall be taken into account
in the taxable year of such adjustment as gain or loss from the disposition of such
Asset for purposes of computing Net Profits or Net Losses;

     (vi) In lieu of depreciation, amortization, and other cost recovery deductions
taken into account in computing such taxable income or loss, there shall be taken
into account Depreciation for such Allocation Year, computed in accordance with the
definition of Depreciation.

     (vii) Notwithstanding any other provision of this Section, any items that are
specially allocated pursuant to Section 2 or Section 3 hereof shall
not be taken into account in computing Net Profits or Net Losses.

     1.12 “Nonrecourse Deductions” has the meaning set forth in Regulations Sections 1.704-2(b)(1)
and 1.704-2(c).

     1.13 “Nonrecourse Liability” has the meaning set forth in Regulations Section 1.704-
2(b)(3).

     1.14 “Regulatory Allocations” is defined in Section 3.8 of this Allocation Addendum.

 

 

2. Allocation of Net Profits and Losses. As of the end of each Allocation Year, except as
otherwise provided in this Agreement, Net Profits and Net Losses and, to the extent necessary,
individual items of income, gain, loss or deduction of the Company shall be allocated among the
Members in a manner such that the Capital Account balance of each Member, immediately after making
the allocation and after taking into account amounts specially allocated pursuant to Section
3 of this Allocation Addendum (including Section 3.9) or otherwise pursuant to this Agreement,
is, as nearly as possible, equal (proportionately) to (I) the distributions that would be made to
the Member pursuant to Section 7.2(d) of this Agreement (taking into account the priority
of such distributions) if the Company were dissolved, its affairs wound up and its assets sold for
cash equal to their Gross Asset Value, all Company liabilities were satisfied (limited with respect
to each nonrecourse liability to the Gross Asset Value of the assets securing such liability), and
the net assets of the Company were distributed in accordance with Section 7.2(d) to the
Members immediately after making the allocation, minus (II) the Member’s share of Company
Minimum Gain and Member Nonrecourse Debt Minimum Gain, computed immediately prior to the
hypothetical sale of assets. For purposes of determining Capital Accounts under this Section
2, Capital Accounts shall first be reduced by any distributions made during the Allocation Year
for which allocations are being made.

3. Special Allocations. Notwithstanding the foregoing provisions of this Allocation Addendum, the
following allocations shall be made before the allocations of Net Profits and Net Losses set forth
in Section 2 of this Allocation Addendum:

     3.1 Minimum Gain Chargeback. Subject to the exceptions set forth in Regulations Section
1.704-2(f)(2) through (5), and notwithstanding any other provision in this Allocation Addendum, if
there is a net decrease in Company Minimum Gain during any Allocation Year, then each Member shall
be allocated items of income and gain for such taxable year (and, if necessary, for subsequent
years) in an amount equal to such Member’s share of the net decrease in Company Minimum Gain,
determined in accordance with Regulations Section 1.704-2(g)(2). Allocations pursuant to the
previous sentence shall be made in proportion to the respective amounts required to be allocated to
each Member pursuant thereto. The items to be so allocated shall be determined in accordance with
Regulations Sections 1.704-2(f)(6) and 1.704-2(j)(2). This Section 3.1 is intended to
comply with the minimum gain chargeback requirement of Regulations Section 1.704-2(b)(2) and
Section 1.704-2(f) and shall be interpreted consistently therewith.

     3.2 Member Nonrecourse Debt Minimum Gain Chargeback. Subject to the exceptions set forth in
Regulations Section 1.704-2(i)(4), and notwithstanding any other provision in this Allocation
Addendum, if there is a net decrease in Member Nonrecourse Debt Minimum Gain attributable to a
Member Nonrecourse Debt during any Allocation Year, each Member who has a share of the Member
Nonrecourse Debt Minimum Gain attributable to such Member Nonrecourse Debt, determined in
accordance with Regulations Section 1.704-2(i)(5), shall be specially allocated items of income and
gain for such taxable year (and, if necessary, subsequent years) in an amount equal to such
Member’s share of the net decrease in Member Nonrecourse Debt Minimum Gain attributable to such
Member Nonrecourse Debt, determined in a manner consistent with the provisions of Regulations
Section 1.704-2(i)(4). Allocations pursuant to the previous sentence shall be made in proportion
to the respective amounts required
to be allocated to each Member pursuant thereto. The items to be so allocated shall be
determined in accordance with Regulations Sections 1.704-2(i)(4) and 1.704-2(j)(2). This
Section 3.2 is intended to comply with the partner nonrecourse debt minimum gain chargeback
requirement of Regulations Section 1.704-2(i)(4) and shall be interpreted consistently therewith.

 

 

     3.3 Nonrecourse Deductions. Nonrecourse Deductions for any Allocation Year shall be specially
allocated to the Common Member. The amount of Nonrecourse Deductions for a Company Allocation Year
equals the excess, if any, of the net increase, if any, in the amount of Company Minimum Gain
during that fiscal year over the aggregate amount of any distributions during that fiscal year of
proceeds of a Nonrecourse Liability that are allocable to an increase in Company Minimum Gain,
determined according to the provisions of Regulations Section 1.704-2(c). For purposes of
Regulations Section 1.752-3(a)(3), the Common Member’s share of “excess nonrecourse liabilities” of
the Company shall equal one hundred percent.

     3.4 Member Nonrecourse Deductions. The Member Nonrecourse Deductions shall be allocated each
year to the Member that bears the economic risk of loss (within the meaning of Regulations Section
1.752-2) for the Member Nonrecourse Debt to which such Member Nonrecourse Deductions are
attributable.

     3.5 Qualified Income Offset. If any Member unexpectedly receives an adjustment, allocation or
distribution of the type contemplated by Regulations Section 1.704-1(b)(2)(ii)(d)(4), (5) or (6)
that causes or increases a deficit, items of income and gain shall be allocated to all such Members
(in proportion to the amounts of such deficit Adjusted Capital Accounts) in an amount and manner
sufficient to eliminate the deficit balances in such Members’ Adjusted Capital Accounts as quickly
as possible, provided that an allocation pursuant to this Section 3.5 shall be made
only if and to the extent that such Member would have a deficit Adjusted Capital Account after all
other allocations provided for in this Allocation Addendum have been tentatively made as if this
Section 3.5 were not in this Agreement. It is intended that this Section 3.5
qualify and be construed as a “qualified income offset” within the meaning of Regulations Section
1.704-1(b)(2)(ii)(d).

     3.6 Gross Income Allocation. In the event any Member has a deficit Capital Account at the end
of any Allocation Year that is in excess of the sum of (i) any amounts such Member is obligated to
restore pursuant to the terms of the Agreement or otherwise, and (ii) the amount such Member is
deemed to be obligated to restore pursuant to the penultimate sentences of Regulations Sections
1.704-2(g)(1) and 1.704-2(i)(5), each such Member shall be specially allocated items of Company
income and gain in the amount of such excess as quickly as possible, provided that an
allocation pursuant to this Section 3.6 of this Allocation Addendum shall be made only if
and to the extent that such Member would have a deficit Capital Account in excess of such sum after
all other allocations provided for in this Allocation Addendum have been made as if Section
3.5 and Section 3.6 of this Allocation Addendum were not in the Agreement.

     3.7 Section 754 Adjustments. To the extent that an adjustment to the adjusted basis of any
Company Asset pursuant to Code Section 734(b) or Code Section 743(b) is required, pursuant to the
Regulations, to be taken into account in determining Capital Accounts, the amount of such
adjustment to the Capital Accounts shall be treated as an item of gain (if the adjustment increases
the basis of the asset) or loss (if the adjustment decreases such basis), and such gain or loss
shall be specially allocated to the Members in a manner consistent with the manner in which their
Capital Accounts are required to be adjusted pursuant to such Section of
the Regulations.

     3.8 Regulatory Allocations. The allocations set forth in Sections 3.1 through
3.7 of this Allocation Addendum (the “Regulatory Allocations”) are intended to comply with
certain requirements of the Regulations. The Regulatory Allocations may not be consistent with the
manner in which the Members intend to distribute the Assets or allocate income or loss from the

 

 

Company. Accordingly, notwithstanding any other provision of this Allocation Addendum (other than
the Regulatory Allocations), the Board shall make such offsetting allocations of income, gain, loss
or deduction of the Company in a reasonable manner so that, after such offsetting allocations are
made, each Member’s Capital Account balance is, to the extent possible, equal to the Capital
Account balance such Member would have had if the Regulatory Allocations were not part of this
Agreement and all items of the Company were allocated pursuant to this Allocation Addendum without
regard to the Regulatory Allocations.

     3.9 Depreciation/Amortization Deductions. All depreciation, amortization, and similar
deductions relating to the Company property shall be specially allocated one hundred percent to the
Common Member.

     3.10 No Impermissible Deficits. Notwithstanding any other provision of this Agreement,
taxable loss (or items of deduction) shall not be allocated to a Member to the extent that the
Member has or would have, as a result of such allocations, a negative Adjusted Capital Account.
Any taxable loss (or items of deduction) which otherwise would be allocated to a Member, but which
cannot be allocated to such Member because of the application of the immediately preceding
sentence, shall instead be allocated to the other Members.

4. Tax Allocations

     4.1 Elimination of Book/Tax Disparities. If any Company asset has a Gross Asset Value
different than its adjusted tax basis to the Company for federal income tax purposes (whether by
reason of the contribution of such property to the Company, the revaluation of such property
hereunder, or otherwise), allocations of taxable income, gain, loss and deduction under this
Section 4.1 with respect to such asset shall take account of any variation between the
adjusted tax basis of such asset for federal income tax purposes and its Gross Asset Value in the
manner provided by Code section 704(c) and Regulation Section 1.704-3, using any method approved
under Treasury Regulation section 1.704-3 chosen by the Board in its sole discretion. Allocations
pursuant to this Section 4.1 are solely for purposes of federal, state and local income
taxes and shall not affect, or in any way be taken into account in computing, any Member’s Capital
Account or share of Net Profits, Net Losses, other items or distributions pursuant to any provision
of this Agreement.

     4.2 Income Characterization. For purposes of determining the character (as ordinary income or
capital gain) of any gain recognized from any disposition of a Company asset which is treated as
ordinary income because it is attributable to the recapture of any depreciation or amortization
shall, to the extent possible, be allocated pursuant to Section 2 among the Members in the
proportion which (i) the amount of depreciation previously allocated to each Member (or such
Member’s predecessor in interest) bears to (ii) the total of such depreciation allocated to all
Members. This Section 4.2 shall not alter the amount of allocations among the Members pursuant to
Section 2 but merely the character of income so allocated.

     4.3 Conformity of Reporting. Items of income, gain, loss, deduction, credit and tax
preference for state and local income tax purposes shall be allocated to and among the Members in a
manner consistent with the allocation of such items for federal income tax purposes in accordance
with the foregoing provisions of this Allocation Addendum.

     5. Other Provisions.

     5.1 All Net Profits, Net Losses or any other items of income, gain, loss or deductions of

 

 

the
Company shall be allocated to the Members pursuant to this Allocation Addendum with respect to each
Allocation Year (or part thereof) as of the last day of such year; provided that Net Profits, Net
Losses, and such other items shall also be allocated at such times as the Gross Asset Values of the
Company’s assets are adjusted pursuant to subparagraph (ii) of the definition of “Gross Asset
Value.”

     5.2 For any fiscal year during which any part of a Membership Interest or Economic Interest
changes for any reason, including the transfer of any Membership Interest or Economic Interest to
another Person, the Net Profits, Net Losses and other items of income, gain, loss, deduction and
credit for the Company for such year shall be adjusted as necessary to reflect the varying
interests of the Members during such year in accordance with Section 706 of the Code, using any
convention permitted by law and selected by the Board.

     5.3 Except as provided in Section 4 hereof, for income tax purposes under the Code and
the Regulations each Company item of income, gain, loss and deduction shall be allocated among the
Members as its correlative item of “book” income, gain, loss or deduction is allocated pursuant to
this Allocation Addendum.

     5.4 The Members are aware of the income tax consequences of the allocations made by this
Allocation Addendum and hereby agree to be bound by the provisions of this Allocation Addendum in
reporting their respective shares of Company income and loss for income tax purposes.

     5.5 The allocations set forth in this Allocation Addendum are intended to comply with the
requirements of Sections 704(b) and 704(c) of the Code and the Regulations thereunder and shall be
interpreted and applied in a manner consistent therewith. If, any provision contained in this
Agreement that allocates any item of income, gain, deduction or loss shall not, in the good faith
opinion of the Board, (i) comply with the Code provisions cited in such provision and the
Regulations, or (ii) comply with any other provision of the Code or the Regulations, then,
notwithstanding anything to the contrary contained herein, such allocation provision shall, upon
notice in writing to the other Members, be modified to satisfy such provisions of the Code and the
Regulations in a manner to be reasonably determined in good faith by the Board; provided,
that any such modification shall not alter materially the economic arrangement among the Members.

 

 

EXHIBIT B

FORM OF COMMON SHARE CERTIFICATE

Metcalf Energy Center, LLC

a Delaware limited liability company

No. ________

THIS CERTIFIES THAT Metcalf Holdings, LLC is the owner of 1000 Common Shares (as defined in the LLC
Agreement referred to herein) of Metcalf Energy Center, LLC (the “Company”) as set forth in the
Third Amended and Restated Limited Liability Company Operating Agreement, dated as of June ___,
2005 of Metcalf Energy Center, LLC as amended, modified and supplemented from time to time (the
“LLC Agreement”). Such Common Shares are not transferable except as provided in the LLC Agreement
and are otherwise subject to the terms and conditions of the LLC Agreement.

THIS CERTIFICATE is not negotiable or transferable except in connection with the transfer of the
Common Shares evidenced hereby as provided in the LLC Agreement; provided, however, that this
Certificate, when coupled with an assignment in the form set forth on the reverse hereof or
otherwise sufficient to convey an interest in the Company, duly executed in blank or assigned to
the named assignee, may be deposited with the Company and shall constitute direction by the
registered owner of this Certificate to the Company to register the change of ownership of the
Common Shares evidenced hereby to such assignee and to issue a new Certificate reflecting such
change of ownership to such assignee. The Common Shares shall constitute “securities” within the
meaning of (i) Article 8 of the Uniform Commercial Code (including Section 8-102(a)(15) thereof) as
in effect from time to time in the State of Delaware and in the State of New York and (ii) the law
of any other applicable jurisdiction that presently or hereafter is substantially similar to such
Article 8.

THIS CERTIFICATE shall be governed by the laws of the State of Delaware.

IN WITNESS WHEREOF, the Company has caused this Certificate to be signed by two duly authorized
officers and the issuance recorded in its limited liability company books as of the ___day of
June, 2005.

 

 

	 	 	 	 	 	 	 
	 	 	Metcalf Energy Center, LLC,

a Delaware limited liability company
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Title:	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Title:	 	 	 	 

THIS SECURITY HAS NOT BEEN REGISTERED OR QUALIFIED PURSUANT TO THE SECURITIES ACT OF 1933 OR THE
SECURITIES LAWS OF ANY STATE AND MAY BE OFFERED AND SOLD ONLY IF SO REGISTERED AND QUALIFIED OR IF
AN EXEMPTION FROM SUCH REGISTRATION AND QUALIFICATION EXISTS.

 

 

(REVERSE OF CERTIFICATE)

ASSIGNMENT OF COMMON SHARES

FOR VALUE RECEIVED, the undersigned (the “Assignor”) hereby assigns, conveys, sells and transfers
unto

	 	 	 	 	 
	 

(Please insert taxpayer identification

number of Assignee)

	 	 

(Please print name and address)
	 	 

___Common Shares represented by the within Certificate and irrevocably constitutes and appoints
                                         as its attorney-in-fact with full power of substitution in the premises to transfer the
same on the books of the Company.

	 	 	 	 	 	 	 	 	 	 	 
	Dated:

	 	 	 	 	 	By:	 	 	 	 
	 

	 	 

	 	 	 	 	 	 

	 	 

THIS SECURITY HAS NOT BEEN REGISTERED OR QUALIFIED PURSUANT TO THE SECURITIES ACT OF 1933 OR THE
SECURITIES LAWS OF ANY STATE AND MAY BE OFFERED AND SOLD ONLY IF SO REGISTERED AND QUALIFIED OR IF
AN EXEMPTION FROM SUCH REGISTRATION AND QUALIFICATION EXISTS.exv10w1w1w1

 

Exhibit 10.1.1.1

EXECUTION COPY

 

$2,000,000,000

AMENDED & RESTATED

REVOLVING CREDIT, TERM LOAN AND GUARANTEE AGREEMENT

among

CALPINE CORPORATION,

a Debtor-in-Possession,

as Borrower

and

THE SUBSIDIARIES OF

CALPINE CORPORATION NAMED HEREIN,

Debtors-in-Possession,

as Guarantors

and

THE LENDERS PARTY HERETO,

and

CREDIT SUISSE SECURITIES (USA) LLC

and

DEUTSCHE BANK TRUST COMPANY AMERICAS,

as Joint Syndication Agents

Dated as of February 23, 2006

and

DEUTSCHE BANK SECURITIES INC.

and

CREDIT SUISSE SECURITIES (USA) LLC,

as Joint Lead Arrangers and Joint Bookrunners

and

CREDIT SUISSE

and

DEUTSCHE BANK TRUST COMPANY AMERICAS,

as Joint Administrative Agents

 

 

 

			
	DEUTSCHE BANK SECURITIES INC.,

As Joint Lead Arrangers and Bookrunners
	 	CREDIT SUISSE SECURITIES (USA) LLC,

As Joint Lead Arrangers and Bookrunners

$1,400,000,000

FIRST PRIORITY FACILITY

DEUTSCHE BANK TRUST COMPANY AMERICAS,

AS FIRST PRIORITY AGENT

and

GENERAL ELECTRIC CAPITAL CORPORATION,

as Sub-Agent

and

LANDESBANK HESSEN THÜRINGEN GIROZENTRALE, NEW YORK BRANCH,

GENERAL ELECTRIC CAPITAL CORPORATION

and

HSH NORDBANK AG, NEW YORK BRANCH,

as Joint First Priority Documentation Agents

 

			
	 	 	 
	CREDIT SUISSE SECURITIES (USA) LLC,

As Joint Lead Arrangers and Bookrunners
	 	DEUTSCHE BANK SECURITIES INC.,

As Joint Lead Arrangers and Bookrunners

$600,000,000

SECOND PRIORITY FACILITY

CREDIT SUISSE,

AS SECOND PRIORITY AGENT

and

BAYERISCHE LANDESBANK,

GENERAL ELECTRIC CAPITAL CORPORATION

and

UNION BANK OF CALIFORNIA, N.A.,

as Joint Second Priority Documentation Agents

 

TABLE OF CONTENTS

	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	Page
	SECTION 1 DEFINITIONS	 	 	2	 
	 

	 	 	 	 	 	 	 	 	 	 
	 

	 	 	1.1.	 	 	Defined Terms
	 	 	2	 
	 

	 	 	1.2.	 	 	Terms Generally
	 	 	22	 
	 

	 	 	1.3.	 	 	Delivery of Notices or Receivables
	 	 	23	 
	 

	 	 	 	 	 	 	 	 	 	 
	SECTION 2 AMOUNT AND TERMS OF COMMITMENT	 	 	23	 
	 

	 	 	 	 	 	 	 	 	 	 
	 

	 	 	2.1.	 	 	Term Commitments
	 	 	23	 
	 

	 	 	2.2.	 	 	Procedure for Term Loan Borrowing
	 	 	23	 
	 

	 	 	2.3.	 	 	Repayment of First Priority Term Loans
	 	 	24	 
	 

	 	 	2.4.	 	 	Revolving Commitments
	 	 	24	 
	 

	 	 	2.5.	 	 	Procedure for Revolving Loan Borrowing
	 	 	24	 
	 

	 	 	2.6.	 	 	Swingline Commitment
	 	 	25	 
	 

	 	 	2.7.	 	 	Procedure for Swingline Borrowing; Refunding of Swingline Loans
	 	 	25	 
	 

	 	 	2.8.	 	 	Letters of Credit
	 	 	26	 
	 

	 	 	2.9.	 	 	Issuance of Letters of Credit
	 	 	28	 
	 

	 	 	2.10.	 	 	Nature of Letter of Credit Obligations Absolute
	 	 	28	 
	 

	 	 	2.11.	 	 	Repayment of Loans; Evidence of Debt
	 	 	29	 
	 

	 	 	2.12.	 	 	Interest Rates and Payment Dates
	 	 	29	 
	 

	 	 	2.13.	 	 	Computation of Interest and Fees
	 	 	29	 
	 

	 	 	2.14.	 	 	Inability to Determine Interest Rate
	 	 	30	 
	 

	 	 	2.15.	 	 	Optional Termination or Reduction of Revolving Commitment
	 	 	30	 
	 

	 	 	2.16.	 	 	Optional Prepayment of Loans
	 	 	31	 
	 

	 	 	2.17.	 	 	Mandatory Prepayment; Commitment Reduction
	 	 	31	 
	 

	 	 	2.18.	 	 	Conversion and Continuation Options
	 	 	33	 
	 

	 	 	2.19.	 	 	Limitations on Eurodollar Tranches
	 	 	34	 
	 

	 	 	2.20.	 	 	Pro Rata Treatment, Etc.
	 	 	34	 
	 

	 	 	2.21.	 	 	Requirements of Law
	 	 	35	 
	 

	 	 	2.22.	 	 	Taxes
	 	 	36	 
	 

	 	 	2.23.	 	 	Indemnity
	 	 	38	 
	 

	 	 	2.24.	 	 	Change of Lending Office
	 	 	38	 
	 

	 	 	2.25.	 	 	Fees
	 	 	39	 
	 

	 	 	2.26.	 	 	Letter of Credit Fees
	 	 	39	 
	 

	 	 	2.27.	 	 	Nature of Fees
	 	 	39	 
	 

	 	 	2.28.	 	 	Priority and Liens
	 	 	39	 
	 

	 	 	2.29.	 	 	Security Interest in L/C Cash Collateral Account
	 	 	40	 
	 

	 	 	2.30.	 	 	Payment of Obligations
	 	 	41	 
	 

	 	 	2.31.	 	 	No Discharge; Survival of Claims
	 	 	41	 
	 

	 	 	 	 	 	 	 	 	 	 
	SECTION 3 REPRESENTATIONS AND WARRANTIES	 	 	41	 
	 

	 	 	 	 	 	 	 	 	 	 
	 

	 	 	3.1.	 	 	Organization and Authority
	 	 	41	 
	 

	 	 	3.2.	 	 	Due Execution; Binding Obligation
	 	 	41	 
	 

	 	 	3.3.	 	 	Statements Made
	 	 	42	 
	 

	 	 	3.4.	 	 	Financial Statements
	 	 	42	 
	 

	 	 	3.5.	 	 	Loan Parties
	 	 	43	 
	 

	 	 	3.6.	 	 	Title to Assets; Liens
	 	 	43	 

i

 

	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	Page
	 

	 	 	3.7.	 	 	No Default
	 	 	43	 
	 

	 	 	3.8.	 	 	Approvals
	 	 	43	 
	 

	 	 	3.9.	 	 	The Orders
	 	 	43	 
	 

	 	 	3.10.	 	 	Use of Proceeds
	 	 	43	 
	 

	 	 	3.11.	 	 	Disclosed Matters
	 	 	44	 
	 

	 	 	3.12.	 	 	Federal Regulations
	 	 	44	 
	 

	 	 	3.13.	 	 	Compliance with Law
	 	 	44	 
	 

	 	 	3.14.	 	 	Taxes
	 	 	44	 
	 

	 	 	3.15.	 	 	ERISA
	 	 	44	 
	 

	 	 	3.16.	 	 	Environmental Matters; Hazardous Material
	 	 	44	 
	 

	 	 	3.17.	 	 	Investment Company Act; Other Regulations
	 	 	45	 
	 

	 	 	3.18.	 	 	Intellectual Property
	 	 	45	 
	 

	 	 	3.19.	 	 	Insurance
	 	 	45	 
	 

	 	 	3.20.	 	 	Labor Matters
	 	 	46	 
	 

	 	 	3.21.	 	 	Intercompany Balances
	 	 	46	 
	 

	 	 	 	 	 	 	 	 	 	 
	SECTION 4 CONDITIONS PRECEDENT	 	 	46	 
	 

	 	 	 	 	 	 	 	 	 	 
	 

	 	 	4.1.	 	 	Conditions to the Closing Date
	 	 	46	 
	 

	 	 	4.2.	 	 	Conditions to Each Extension of Credit
	 	 	47	 
	 

	 	 	 	 	 	 	 	 	 	 
	SECTION 5 AFFIRMATIVE COVENANTS	 	 	48	 
	 

	 	 	 	 	 	 	 	 	 	 
	 

	 	 	5.1.	 	 	Financial Statements, Etc.
	 	 	48	 
	 

	 	 	5.2.	 	 	Certificates; Other Information
	 	 	49	 
	 

	 	 	5.3.	 	 	Payment of Obligations
	 	 	50	 
	 

	 	 	5.4.	 	 	Maintenance of Existence; Compliance with Contractual
Obligations and Requirements of Law
	 	 	50	 
	 

	 	 	5.5.	 	 	Maintenance of Property; Insurance
	 	 	51	 
	 

	 	 	5.6.	 	 	Inspection of Property; Books and Records; Discussions
	 	 	51	 
	 

	 	 	5.7.	 	 	Notices
	 	 	51	 
	 

	 	 	5.8.	 	 	Environmental Laws
	 	 	52	 
	 

	 	 	5.9.	 	 	Obligations and Taxes
	 	 	52	 
	 

	 	 	5.10.	 	 	Employee Benefits
	 	 	53	 
	 

	 	 	5.11.	 	 	Further Assurances
	 	 	53	 
	 

	 	 	5.12.	 	 	Ratings
	 	 	54	 
	 

	 	 	5.13.	 	 	Post Closing Matters
	 	 	54	 
	 

	 	 	 	 	 	 	 	 	 	 
	SECTION 6 NEGATIVE COVENANTS	 	 	54	 
	 

	 	 	 	 	 	 	 	 	 	 
	 

	 	 	6.1.	 	 	Limitation on Indebtedness
	 	 	54	 
	 

	 	 	6.2.	 	 	Limitation on Liens
	 	 	55	 
	 

	 	 	6.3.	 	 	Limitation on Guarantee Obligations
	 	 	57	 
	 

	 	 	6.4.	 	 	Prohibition on Fundamental Changes
	 	 	57	 
	 

	 	 	6.5.	 	 	Limitation on Sale of Assets
	 	 	58	 
	 

	 	 	6.6.	 	 	Limitation on Issuances of Capital Stock and Dividends
	 	 	59	 
	 

	 	 	6.7.	 	 	Limitation on Investments, Loans and Advances
	 	 	59	 
	 

	 	 	6.8.	 	 	Transactions with Affiliates
	 	 	60	 
	 

	 	 	6.9.	 	 	Lines of Business
	 	 	60	 
	 

	 	 	6.10.	 	 	Concentration Account
	 	 	60	 
	 

	 	 	6.11.	 	 	Chapter 11 Claims
	 	 	60	 
	 

	 	 	6.12.	 	 	Reclamation Claims; Bankruptcy Code Section 546(g) Agreements
	 	 	61	 
	 

	 	 	6.13.	 	 	Capital Expenditures
	 	 	61	 

ii 

 

	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	Page
	 

	 	 	6.14.	 	 	Use of Proceeds
	 	 	61	 
	 

	 	 	6.15.	 	 	Consolidated EBITDA
	 	 	61	 
	 

	 	 	6.16.	 	 	Minimum Liquidity
	 	 	61	 
	 

	 	 	6.17.	 	 	Geysers Leverage Ratio
	 	 	62	 
	 

	 	 	6.18.	 	 	Geysers Interest Coverage Ratio
	 	 	62	 
	 

	 	 	6.19.	 	 	Amendments to Documents
	 	 	63	 
	 

	 	 	6.20.	 	 	Control Agreements
	 	 	63	 
	 

	 	 	6.21.	 	 	Adequate Protection Payments
	 	 	63	 
	 

	 	 	 	 	 	 	 	 	 	 
	SECTION 7 EVENTS OF DEFAULT	 	 	63	 
	 

	 	 	 	 	 	 	 	 	 	 
	SECTION 8 THE AGENTS	 	 	67	 
	 

	 	 	 	 	 	 	 	 	 	 
	 

	 	 	8.1.	 	 	Appointment
	 	 	67	 
	 

	 	 	8.2.	 	 	Delegation of Duties
	 	 	67	 
	 

	 	 	8.3.	 	 	Exculpatory Provisions
	 	 	68	 
	 

	 	 	8.4.	 	 	Reliance by Administrative Agents
	 	 	68	 
	 

	 	 	8.5.	 	 	Notice of Default
	 	 	68	 
	 

	 	 	8.6.	 	 	Non-Reliance on Agents and Other Lenders
	 	 	69	 
	 

	 	 	8.7.	 	 	Indemnification
	 	 	69	 
	 

	 	 	8.8.	 	 	Agent in Its Individual Capacity
	 	 	69	 
	 

	 	 	8.9.	 	 	Successor Administrative Agents
	 	 	70	 
	 

	 	 	8.10.	 	 	Syndication Agents and Documentation Agents
	 	 	70	 
	 

	 	 	8.11.	 	 	Collateral Security
	 	 	70	 
	 

	 	 	8.12.	 	 	Enforcement by the Administrative Agents
	 	 	70	 
	 

	 	 	 	 	 	 	 	 	 	 
	SECTION 9 GUARANTEE	 	 	71	 
	 

	 	 	 	 	 	 	 	 	 	 
	 

	 	 	9.1.	 	 	Guarantee
	 	 	71	 
	 

	 	 	9.2.	 	 	Right of Contribution
	 	 	71	 
	 

	 	 	9.3.	 	 	No Subrogation
	 	 	71	 
	 

	 	 	9.4.	 	 	Amendments, etc. with respect to the Obligations
	 	 	72	 
	 

	 	 	9.5.	 	 	Guarantee Absolute and Unconditional
	 	 	72	 
	 

	 	 	9.6.	 	 	Reinstatement
	 	 	73	 
	 

	 	 	9.7.	 	 	Payments
	 	 	73	 
	 

	 	 	 	 	 	 	 	 	 	 
	SECTION 10 [INTENTIONALLY OMITTED]	 	 	73	 
	 

	 	 	 	 	 	 	 	 	 	 
	SECTION 11 MISCELLANEOUS	 	 	73	 
	 

	 	 	 	 	 	 	 	 	 	 
	 

	 	 	11.1.	 	 	Amendments and Waivers
	 	 	73	 
	 

	 	 	11.2.	 	 	Notices
	 	 	74	 
	 

	 	 	11.3.	 	 	No Waiver; Cumulative Remedies
	 	 	76	 
	 

	 	 	11.4.	 	 	Survival of Representations and Warranties
	 	 	76	 
	 

	 	 	11.5.	 	 	Payment of Expenses and Taxes
	 	 	76	 
	 

	 	 	11.6.	 	 	Successors and Assigns; Participations; Purchasing Lenders
	 	 	77	 
	 

	 	 	11.7.	 	 	Adjustments; Set-off
	 	 	80	 
	 

	 	 	11.8.	 	 	Counterparts
	 	 	80	 
	 

	 	 	11.9.	 	 	GOVERNING LAW
	 	 	80	 
	 

	 	 	11.10.	 	 	Submission To Jurisdiction; Waivers
	 	 	80	 
	 

	 	 	11.11.	 	 	Absence of Prejudice to the Lenders with Respect to Matters Before
the Bankruptcy Court
	 	 	81	 
	 

	 	 	11.12.	 	 	Confidentiality
	 	 	81	 
	 

	 	 	11.13.	 	 	U.S.A. Patriot Act
	 	 	82	 

iii 

 

Schedules

	 	 	 	 	 
	Schedule 1.1A

	 	-
	 	Commitment Amounts
	Schedule 1.1B

	 	-
	 	Geysers Assets
	Schedule 1.1C

	 	-
	 	Excluded Subsidiaries
	Schedule 1.1D

	 	-
	 	Consolidated EBITDA
	Schedule 1.1E

	 	-
	 	Geysers EBITDA
	Schedule 3.4

	 	-
	 	Financial Statements
	Schedule 3.5

	 	-
	 	Loan Parties
	Schedule 3.6

	 	-
	 	Prepetition Liens
	Schedule 3.21

	 	-
	 	Intercompany Balances
	Schedule 5.13

	 	-
	 	Post-Closing Matters
	Schedule 6.1

	 	-
	 	Prepetition Indebtedness
	Schedule 6.3

	 	-
	 	Prepetition Guarantee Obligations
	Schedule 6.5(i)

	 	-
	 	Turbine Dispositions
	Schedule 6.5(k)

	 	-
	 	Scheduled Dispositions
	Schedule 6.7

	 	-
	 	Prepetition Investments
	Schedule 6.8

	 	-
	 	Affiliate Transactions
	Schedule 6.13

	 	-
	 	Additional Capital Expenditures
	 
	 	 	 	 
	Exhibits
	 	 	 	 
	 
	 	 	 	 
	Exhibit A

	 	-
	 	Form of Interim Order
	Exhibit B

	 	-
	 	Form of Closing Certificate
	Exhibit C

	 	-
	 	Form of Notice of Borrowing
	Exhibit D

	 	-
	 	Form of Assignment and Acceptance
	Exhibit E

	 	-
	 	Form of Legal Opinion
	Exhibit F

	 	-
	 	Form of Letter of Credit Request
	Exhibit G

	 	-
	 	Form of Security and Pledge Agreement
	Exhibit H

	 	-
	 	Form of Joinder to Revolving Credit, Term Loan and Guarantee Agreement
	Exhibit I

	 	-
	 	Prepayment Option Notice
	Exhibit J

	 	-
	 	Form of Exemption Certificate
	Exhibit K

	 	-
	 	Form of Notice of Continuation/Conversion

iv 

 

          AMENDED AND RESTATED REVOLVING CREDIT, TERM LOAN AND GUARANTEE AGREEMENT, dated as of February
23, 2006, among (i) CALPINE CORPORATION, a Delaware corporation (the “Borrower”), which is
a debtor and debtor-in-possession in a case pending under Chapter 11 of the Bankruptcy Code (as
defined below), (ii) each of the direct and indirect domestic Subsidiaries of Borrower designated
as a Guarantor on Schedule 3.5 hereto, (collectively, the “Guarantors” and together with
the Borrower, the “Debtors” and each a “Debtor”), each of which Guarantors is a
debtor and a debtor-in-possession in a case pending under Chapter 11 of the Bankruptcy Code (the
cases of the Borrower and the Guarantors, each a “Case” and, collectively, the
“Cases”), (iii) CREDIT SUISSE SECURITIES (USA) LLC and DEUTSCHE BANK SECURITIES INC.
(“DBSI”), as joint syndication agents (in such capacities, collectively, the
“Syndication Agents”), (iv) DEUTSCHE BANK TRUST COMPANY AMERICAS (“DB”), as
administrative agent for the First Priority Lenders hereunder (in such capacity and including any
successors, the “First Priority Agent”), (v) GENERAL ELECTRIC CAPITAL CORPORATION
(including its successors, “GE Capital”), as Sub-Agent for the Revolving Lenders hereunder
(in such capacity and including any successors, the “Sub-Agent”), (vi) CREDIT SUISSE
(“CS”), as administrative agent for the Second Priority Term Lenders hereunder (in such
capacity and including any successors, the “Second Priority Agent”), (vii) LANDESBANK
HESSEN THÜRINGEN GIROZENTRALE, NEW YORK BRANCH, GE CAPITAL and HSH NORDBANK AG, NEW YORK BRANCH, as
joint documentation agents for the First Priority Lenders hereunder, and BAYERISCHE LANDESBANK, GE
CAPITAL and UNION BANK OF CALIFORNIA, N.A., as joint documentation agents for the Second Priority
Lenders hereunder (in such capacities and including any successors, collectively, the
“Documentation Agents”), and (viii) each of the financial institutions from time to time
party hereto (collectively, the “Lenders”).

INTRODUCTORY STATEMENT

          On the applicable Petition Dates (defined below) the Debtors filed voluntary petitions with
the Bankruptcy Court (such term and other capitalized terms used in this Introductory Statement
being used with the meanings given to such terms in Section 1.1) initiating the Cases and have
continued in the possession of their assets and in the management of their businesses pursuant to
Bankruptcy Code Sections 1107 and 1108.

          On December 22, 2005 the Borrower, the Debtors and the Guarantors entered into the Revolving
Credit, Term Loan and Guarantee Agreement, dated as of December 22, 2005 (as heretofore amended,
supplemented or otherwise modified, the “Existing Credit Agreement”) among the Borrower,
the Debtors, the Guarantors, the Lenders, the First Priority Agent and the Second Priority Agent,
among others, providing for a revolving loan, term loan and letter of credit facility in an
aggregate principal amount not to exceed $2,000,000,000.

          The Borrower has requested that the Lenders amend and restate the Existing Credit Agreement to
provide loan facilities of up to $2,000,000,000 (subject to mandatory and optional reductions in
accordance with Sections 2.15 and 2.17), comprised of (i) a revolving credit and letter of credit
facility in an aggregate principal amount of up to $1,000,000,000 as set forth herein, (ii) a first
priority term facility in an aggregate principal amount of up to $400,000,000 and (iii) a second
priority term facility in an aggregate principal amount of up to $600,000,000 as set forth herein,
all of the Borrower’s obligations under each of which are guaranteed by the Guarantors.

          The proceeds of the Loans and the Letters of Credit will be used (i) to consummate the Geysers
Transaction and (ii) for working capital and other general corporate purposes, subject to the terms
of this Agreement and the Orders.

 

2

          To provide guarantees and security for the repayment of the Loans, the reimbursement of any
draft drawn under the Letters of Credit and the payment of the other Obligations of the Debtors
hereunder and under the other Loan Documents, the Debtors are providing to the Collateral Agent,
the Administrative Agents and the Lenders, pursuant to this Agreement, the Security and Pledge
Agreement and the Orders, the following (each as more fully described herein and subject to the
qualifications set forth herein):

          (a) a guarantee from each of the Guarantors of the due and punctual payment and performance of
the Obligations of the Borrower hereunder and under the Notes;

          (b) with respect to the Obligations of the Loan Parties hereunder, an allowed administrative
expense claim entitled to the benefits of Bankruptcy Code Section 364(c)(1) in each of the Cases,
having a superpriority over any and all administrative expenses of the kind specified in Bankruptcy
Code Sections 503(b) or 507(b);

          (c) pursuant to Bankruptcy Code Section 364(c)(2) a perfected first priority lien on, and
security interest in, all present and after-acquired property of the Debtors not subject to a
valid, perfected and non-avoidable lien or security interest in existence on the Petition Date or
to a valid lien in existence on the Petition Date that is perfected subsequent to the Petition Date
as permitted by Bankruptcy Code Section 546(b) (but excluding the Borrower’s and the Guarantors’
rights in respect of avoidance actions under the Bankruptcy Code and the proceeds thereof); and

          (d) pursuant to Bankruptcy Code Section 364(c)(3) a perfected junior lien on, and security
interest in, all present and after-acquired property of the Debtors that is otherwise subject to a
valid, perfected and non-avoidable lien or security interest in existence on the Petition Date or a
valid lien in existence on the Petition Date that is perfected subsequent to the Petition Date as
permitted by Bankruptcy Code Section 546(b).

          All of the claims and the Liens granted hereunder and pursuant to the Security and Pledge
Agreement and Orders in the Cases to the Collateral Agent, the Administrative Agents and the
Lenders shall be subject to the Carve-Out and the Permitted Liens, but in each case only to the
extent provided in Section 2.28, the Security and Pledge Agreement and the Orders.

          Accordingly, the parties hereto hereby agree to amend and restate the Existing Credit
Agreement in its entirety as follows:

SECTION 1

DEFINITIONS

          1.1. Defined Terms . As used in this Agreement, the following terms shall have the
meanings specified below:

          “Administrative Agents”: the collective reference to the First Priority Agent and the
Second Priority Agent.

          “Affiliate”: as to any Person, any other Person which, directly or indirectly, is in
control of, is controlled by, or is under common control with, such Person. For purposes of this
definition, “control” of a Person means the power, to direct or cause the direction of the
management and policies of such Person whether through the ownership of voting securities, by
contract or otherwise.

 

3

          “Agents”: the collective reference to the Syndication Agents, the Documentation
Agents, the First Priority Agent, the Collateral Agent and the Administrative Agents.

          “Aggregate Outstandings”: as to any Lender at any time, an amount equal to (a) until
the Closing Date, the aggregate amount of such Lender’s Commitments at such time and (b)
thereafter, the sum of (i) the aggregate then unpaid principal amount of such Lender’s Term Loans
and (ii) the amount of such Lender’s Revolving Commitment then in effect or, if the Revolving
Commitments have been terminated, the amount of such Lender’s Revolving Extensions of Credit then
outstanding.

          “Aggregate Revolving Outstandings”: at any time, the aggregate amount of the
Revolving Extensions of Credit of the Revolving Lenders outstanding at such time.

          “Agreement”: this Amended and Restated Revolving Credit, Term Loan and Guarantee
Agreement, as the same may be amended, supplemented or otherwise modified from time to time.

          “Applicable Margin”: for each Type of Loan, the rate per annum set forth under the
relevant column heading below:

	 	 	 	 	 	 	 	 	 
	 	 	Base Rate Loans	 	Eurodollar Loans
	Revolving Loans and Swingline Loans
	 	 	1.25	%	 	 	2.25	%
	First Priority Term Loans
	 	 	1.25	%	 	 	2.25	%
	Second Priority Term Loans
	 	 	3.00	%	 	 	4.00	%

          “Asset Sale”: any Disposition of property or series of related Dispositions of
property (excluding any such Disposition permitted by clause (a), (b), (c), (d), (e), (f) or (g) of
Section 6.5), and including the entry by any Global Entity into any Contractual Obligation for the
sale of any property when such contractual obligation has resulted in a payment for such property
prior to the delivery thereof, that yields gross proceeds to any Debtor (valued at the initial
principal amount thereof in the case of non-cash proceeds consisting of notes or other debt
securities and valued at fair market value in the case of other non-cash proceeds) in excess of
$1,000,000.

          “Assignment and Acceptance”: an assignment and acceptance entered into by a Lender
and an assignee and accepted by the applicable Administrative Agent, substantially in the form of
Exhibit D.

          “Authorizations”: all applications, filings, reports, documents, recordings and
registrations with, and all validations, exemptions, franchises, waivers, approvals, orders or
authorizations, consents, licenses, certificates and permits from Federal, state or local
Governmental Authorities.

          “Available Revolving Commitment”: as to any Revolving Lender at any time, an amount
equal to the excess, if any, of (a) such Lender’s Revolving Commitment then in effect over (b) such
Lender’s Revolving Extensions of Credit then outstanding; provided, that in calculating any
Lender’s Revolving Extensions of Credit for the purpose of determining such Lender’s Available
Revolving Commitment pursuant to Section 2.25; the aggregate principal amount of Swingline Loans
then outstanding shall be deemed to be zero (collectively, as to all Lenders the “Available
Revolving Commitments”).

          “Available Term Loan Commitment”: as to any Second Priority Term Lender at any time,
an amount equal to the excess, if any, of (a) the amount of such Second Priority Term Lender’s

 

4

Term Commitment then in effect over (b) the aggregate principal amount of such Second Priority
Term Lender’s Second Priority Term Loans then outstanding.

          “Bankruptcy Code”: The Bankruptcy Reform Act of 1978, as heretofore and hereafter
amended, and codified as 11 U.S.C. §§101 et seq.

          “Bankruptcy Court”: the United States Bankruptcy Court for the Southern District of
New York, or any other court having jurisdiction over the Cases from time to time.

          “Base Rate”: for any day, the higher of (a) the Federal Funds Effective Rate plus one
half of one percent (1/2%) per annum or (b) the Prime Rate. Any change in the Base Rate due to a
change in the Prime Rate or the Federal Funds Effective Rate shall be effective as of the opening
of business on the effective day of such change in the Prime Rate or the Federal Funds Effective
Rate, respectively.

          “Base Rate Loans”: Loans the rate of interest applicable to which is based upon the
Base Rate.

          “Benefited Lender”: the meaning set forth in Section 11.7(a).

          “Board of Governors”: the Board of Governors of the Federal Reserve System or any
Governmental Authority which succeeds to the powers and functions thereof.

          “Borrower”: the meaning set forth in the preamble to this Agreement.

          “Borrowing”: the making of Loans by the Lenders on a single Borrowing Date.

          “Borrowing Date”: any Business Day specified in a notice pursuant to Section 2.5 as a
date on which the Borrower requests a Loan hereunder.

          “Budget”: the cash flow projections of the Loan Parties, showing anticipated cash
receipts and disbursements on a weekly basis for the period from the Petition Date through the
thirteen weeks following the Petition Date, in form and detail reasonably satisfactory to the
Administrative Agents, and as thereafter updated in accordance with Section 5.1(d).

          “Business”: as defined in Section 3.16(b).

          “Business Day”: any day other than a Saturday, Sunday or other day on which
commercial banks in New York City are required or permitted to close (and, for a Letter of Credit,
other than a day on which the Fronting Bank issuing such Letter of Credit is closed),
provided that with respect to notices and determinations in connection with, and payments
of principal and interest on, Eurodollar Loans, such day is also a day for trading by and between
banks in Dollar deposits in the interbank eurodollar market.

          “CalBear”: CalBear Energy LP.

          “CalBear Documents”: the collective reference to (a) the Master Transaction
Agreement, dated as of September 7, 2005, by and among the Borrower, CMSC, Calpine Energy
Services, L.P., The Bear Stearns Companies Inc. and CalBear; (b) the Agency and Services Agreement,
dated as of November 10, 2005, by and among CMSC and CalBear; (c) the Trading Master Agreement,
dated as of November 10, 2005, by and among Calpine Energy Services, L.P., CMSC and CalBear and (d)
the

 

5

CalBear Risk Policy, in each case as in effect on the Closing Date and as may thereafter be
amended, supplemented or otherwise modified from time to time in accordance with Section 6.19.

          “CalBear Risk Policy”: the CalBear Energy LP Risk Policy, dated November 10, 2005, as
in effect on the Closing Date and as may thereafter be amended, supplemented or otherwise modified
from time to time in accordance with Section 6.19.

          “Calpine Risk Policy”: the Calpine Corporation Risk Management Policy, dated May 2002
(and approved by the board of directors of the Borrower on May 23, 2002), as in effect on the
Closing Date and as amended, supplemented or otherwise modified from time to time and delivered to
the Administrative Agents.

          “Capital Expenditures”: for any period, with respect to any Person, the aggregate of
all expenditures by such Person and its Subsidiaries for the acquisition or leasing (pursuant to a
capital lease) of fixed or capital assets or additions to equipment (including replacements,
capitalized repairs and improvements during such period) that should be capitalized under GAAP on a
consolidated balance sheet of such Person and its Subsidiaries.

          “Capital Lease Obligations”: as to any Person, the obligations of such Person to pay
rent or other amounts under any lease of (or other arrangement conveying the right to use) real or
personal property, or a combination thereof, which obligations are required to be classified and
accounted for as capital leases on a balance sheet of such Person under GAAP and, for the purposes
of this Agreement, the amount of such obligations at any time shall be the capitalized amount
thereof at such time determined in accordance with GAAP.

          “Capital Stock”: any and all shares, interests, participations or other equivalents
(however designated) of capital stock of a corporation, any and all equivalent ownership interests
in a Person (other than a corporation) and any and all warrants, rights or options to purchase any
of the foregoing.

          “Carve-Out”: the meaning set forth in Section 2.28(a).

          “Cases”: the meaning set forth in the preamble to this Agreement.

          “Cash Collateral”: the meaning set forth in Section 363(a) of the Bankruptcy Code.

          “Cash Collateral Order”: the meaning set forth in Section 6.21.

          “Cash Equivalents”: (a) marketable direct obligations issued by, or unconditionally
guaranteed by, the United States Government or issued by any agency thereof and backed by the full
faith and credit of the United States, in each case maturing within one year from the date of
acquisition; (b) certificates of deposit, time deposits, eurodollar time deposits or overnight bank
deposits having maturities of six months or less from the date of acquisition issued by any Lender
or by any commercial bank organized under the laws of the United States or any state thereof having
combined capital and surplus of not less than $500,000,000; (c) commercial paper of an issuer rated
at least A-1 by S&P or P-1 by Moody’s, or carrying an equivalent rating by a nationally recognized
rating agency, if both of the two named rating agencies cease publishing ratings of commercial
paper issuers generally, and maturing within six months from the date of acquisition; (d)
repurchase obligations of any Lender or of any commercial bank satisfying the requirements of
clause (b) of this definition, having a term of not more than thirty (30) days, with respect to
securities issued or fully guaranteed or insured by the United States government; (e) securities
with maturities of one year or less from the date of acquisition issued or fully

 

6

guaranteed by any state, commonwealth or territory of the United States, by any political
subdivision or taxing authority of any such state, commonwealth or territory or by any foreign
government, the securities of which state, commonwealth, territory, political subdivision, taxing
authority or foreign government (as the case may be) are rated at least A by S&P or A by Moody’s;
(f) securities with maturities of six months or less from the date of acquisition backed by standby
letters of credit issued by any Lender or any commercial bank satisfying the requirements of clause
(b) of this definition; (g) money market mutual or similar funds that invest exclusively in assets
satisfying the requirements of clauses (a) through (f) of this definition; or (h) money market
funds that (i) comply with the criteria set forth in SEC Rule 2a-7 under the Investment Company Act
of 1940, as amended, (ii) are rated AAA by S&P and Aaa by Moody’s and (iii) have portfolio assets
of at least $5,000,000,000.

          “Cash Management Obligations”: all obligations of the Loan Parties to DB in its
capacity as the principal concentration bank in the cash management system of the Loan Parties.

          “Change of Control”: (i) the acquisition of ownership, directly or indirectly,
beneficially or of record, by any Person or group (within the meaning of the Securities Exchange
Act of 1934 and the rules of the Securities and Exchange Commission thereunder as in effect on the
date hereof) of shares representing more than 50% of the aggregate ordinary voting power
represented by the issued and outstanding capital stock of the Borrower and (ii) the occupation of
a majority of seats (other than vacant seats) on the Board of Directors of the Borrower by Persons
who were neither nominated by the Board of Directors of the Borrower on the Original Closing Date
or appointed or nominated by directors so nominated.

          “Closing Date”: the date on which the conditions precedent to the making of the
initial Extension of Credit set forth in Section 4.1 have been satisfied or waived.

          “CMSC”: Calpine Merchant Services Company, Inc., a Subsidiary of the Borrower.

          “Code”: the Internal Revenue Code of 1986, as amended from time to time.

          “Collateral”: all property of the Debtors now owned or hereafter acquired in which a
security interest has been granted by the Debtors to the Collateral Agent, for the benefit of the
Lenders, as more particularly described in the Security and Pledge Agreement and the Orders.

          “Collateral Agent”: DB, in its capacity as collateral agent for the Lenders hereunder
and under the Security and Pledge Agreement.

          “Commitment”: as to any Lender, the sum of the First Priority Term Commitment, the
Second Priority Term Commitment and the Revolving Commitment of such Lender.

          “Commitment Fee”: the meaning set forth in Section 2.25.

          “Commitment Fee Rate”: a rate per annum equal to the percentage set forth below under
the column “Commitment Fee” based upon the percentage that the average daily amount of the
Available Revolving Commitments of all Lenders constitutes of the Total Revolving Commitments set
forth below under the column “Total Available Commitment”:

	 	 	 	 	 
	Total Available Commitment	 	Commitment Fee
	greater than 33%
	 	 	0.75	%
	less than or equal to 33%
	 	 	0.50	%

 

7

          “Commitment Percentages”: the collective reference to the Revolving Commitment
Percentages and the Term Loan Percentages; individually, as to any Revolving Commitment Percentage
or Term Loan Percentage, a “Commitment Percentage”.

          “Commonly Controlled Entity”: an entity, whether or not incorporated, that is under
common control with the Borrower within the meaning of Section 4001 of ERISA or is part of a
controlled group that includes the Borrower and that is treated as a single employer under Section
414 of the Code.

          “Concentration Account”: the account to be established by the Borrower, entitled
“Calpine Corporation” maintained at the office of the Collateral Agent at 60 Wall Street, New York,
New York 10005, which account and all amounts deposited therein are subject to the exclusive
dominion and control of the Collateral Agent, and which shall be used for the daily operation of
the Borrower’s business or otherwise.

          “Confirmation Order”: an order of the Bankruptcy Court confirming a Reorganization
Plan in any of the Cases.

          “Consolidated EBITDA”: for any period, Consolidated Net Income for such period plus,
without duplication and to the extent reflected as a charge in the statement of such Consolidated
Net Income for such period, the sum of (a) income tax expense, (b) interest expense, amortization
or writeoff of debt discount and debt issuance costs and commissions, discounts and other fees and
charges associated with Indebtedness (including the Loans), (c) depreciation and amortization
expense, (d) amortization of intangibles and organization costs, (e) any extraordinary or
non-recurring non-cash expenses or losses, whether or not otherwise includable as a separate item
in the statement of such Consolidated Net Income for such period, (f) non-cash losses on sales or
impairments of assets, (g) unrealized gains or losses and any non-cash realized gains or losses on
financial derivatives recognized in accordance with SFAS No. 133, (h) non-cash charges attributable
to SFAS No. 150, (i) operating lease expense, (j) distributions received from unconsolidated
investments, (k) the aggregate amount of all payments and expenses pursuant to the option agreement
to repurchase equity pursuant to the Geysers Transaction, (l) the refinancing expenses or makewell
portion or other premium paid for the early retirement or defeasance of Indebtedness as part of the
Geysers Transaction, (m) non-cash losses attributable to translations of intercompany foreign
currency transactions and (n) Restructuring Costs, and minus, (a) to the extent included in the
statement of such Consolidated Net Income for such period, the sum of (i) interest income, (ii) any
extraordinary, unusual or non-recurring income or gains (including, whether or not otherwise
includable as a separate item in the statement of such Consolidated Net Income for such period,
gains on the sales of assets), (iii) income tax credits (to the extent not netted from income tax
expense), (iv) any non-cash gain recorded on the repurchase or extinguishment of debt and (v) any
other non-cash income, (b) any cash payments made during such period for operating lease expense,
income taxes, and in respect of items described in clause (e) above subsequent to the fiscal
quarter in which the relevant non-cash expenses or losses were reflected as a charge in the
statement of Consolidated Net Income, all as determined on a consolidated basis, (c) income/loss
from unconsolidated investments, (d) non-cash gains attributable to translations of intercompany
foreign currency transaction and (e) to the extent added to EBITDA in a prior period and to the
extent subsequently applied to the purchase price in the Geysers Transaction, the aggregate amount
of all payments and expenses pursuant to the option agreement to repurchase equity as part of the
Geysers Transaction. For purposes of calculating Consolidated EBITDA for any period which includes
any month prior to December 31, 2005, Consolidated EBITDA for such month shall be such amount set
forth opposite such month on Schedule 1.1(D). For the purposes of calculating Consolidated EBITDA
for any period of twelve months (each, a

 

8

“Reference Period”), (i) if at any time during or prior to such Reference Period the
Borrower or any Subsidiary shall have made any Material Disposition, the Consolidated EBITDA for
the month in which such Material Disposition has been consummated and each month thereafter during
such Reference Period shall be (x) increased by an amount equal to 75% of the Consolidated EBITDA
(if positive) attributable to the property that is subject of such Material Disposition or (y)
decreased by an amount equal to 50% of the Consolidated EBTIDA (if negative) attributable thereto
in an amount not to exceed $60,000,000 in the aggregate and, thereafter, decreased by an amount
equal to 100% of the Consolidated EBITDA (if negative) attributable thereto; provided that
the Borrower shall have delivered to the Administrative Agents a certificate of a Responsible
Officer certifying the amount of Consolidated EBITDA attributable to the property that is subject
of such Material Disposition, together with detail reasonably satisfactory to the Administrative
Agents, as to such Consolidated EBITDA. As used in this definition, “Material Disposition” means
any disposition of property or series of related Dispositions of property consummated after the
Closing Date and permitted under this Agreement that yields gross proceeds to the Borrower or to
any of its Subsidiaries in excess of $1,000,000.

          “Consolidated Interest Expense”: for any period, total cash interest expense of the
Borrower and its Subsidiaries for such period with respect to all Indebtedness outstanding under
the Facilities, assuming all amounts are drawn under the First Priority Facility and the Second
Priority Term Facility.

          “Consolidated Net Income”: for any period, the consolidated net income (or loss) of
the Borrower and its Subsidiaries, determined on a consolidated basis in accordance with GAAP;
provided that there shall be excluded (a) the income (or deficit) of any Person accrued
prior to the date it becomes a Subsidiary of the Borrower or is merged into or consolidated with
the Borrower or any of its Subsidiaries and (b) the undistributed earnings of any Subsidiary of the
Borrower to the extent that the declaration or payment of dividends or similar distributions by
such Subsidiary is not at the time permitted by the terms of any Contractual Obligation (other than
under any Loan Document) or Requirement of Law applicable to such Subsidiary.

          “Contractual Obligation”: as to any Person, any provision of any security issued by
such Person or of any agreement, instrument or other undertaking to which such Person is a party or
by which it or any of its property is bound.

          “Credit Parties”: the collective reference to the Loan Parties and the Material
Subsidiaries.

          “CS”: the meaning set forth in the preamble to this Agreement.

          “DB”: the meaning set forth in the preamble to this Agreement.

          “DBSI”: the meaning set forth in the preamble to this Agreement.

          “Debtors”: the meaning set forth in the preamble to this Agreement.

          “Default”: any of the events specified in Section 7, whether or not any requirement
for the giving of notice, the expiration of applicable cure or grace periods, or both, has been
satisfied.

          “Disposition”: with respect to any property, any sale, lease, sale and leaseback,
assignment, conveyance, transfer or other disposition thereof. The terms “Dispose” and “Disposed
of” shall have correlative meanings.

 

9

          “Documentation Agents”: the meaning set forth in the preamble to this Agreement.

          “Dollars” and “$”: lawful money of the United States.

          “Eligible Assignee”: the meaning set forth in Section 11.6(c).

          “Environmental Laws”: any and all applicable foreign, Federal, state, local or
municipal laws, rules, orders, regulations, statutes, ordinances, codes, decrees, legally binding
requirements of any Governmental Authority or other Requirements of Law (including common law)
regulating, relating to or imposing liability or standards of conduct concerning protection of
human health or the environment, as now or may at any time hereafter be in effect.

          “ERISA”: the Employee Retirement Income Security Act of 1974, as amended from time to
time, and the regulations promulgated and rulings issued thereunder.

          “ERISA Reorganization”: with respect to any Multiemployer Plan, the condition that
such plan is in reorganization within the meaning of Section 4241 of ERISA.

          “Eurocurrency Reserve Requirements”: for any day as applied to a Eurodollar Loan, the
aggregate (without duplication) of the maximum rates (expressed as a decimal fraction) of reserve
requirements in effect on such day (including basic, supplemental, marginal and emergency reserves)
under any regulations of the Board of Governors or other Governmental Authority having jurisdiction
with respect thereto dealing with reserve requirements prescribed for eurocurrency funding
(currently referred to as “Eurocurrency Liabilities” in Regulation D of the Board of Governors)
maintained by a member bank of the Federal Reserve System.

          “Eurodollar Base Rate”: with respect to each day during each Interest Period
pertaining to a Eurodollar Loan, the rate per annum determined on the basis of the rate for
deposits in Dollars for a period equal to such Interest Period commencing on the first day of such
Interest Period appearing on Page 3750 of the Telerate screen as of 10:00 A.M., London time, two
(2) Business Days prior to the beginning of such Interest Period. In the event that such rate does
not appear on Page 3750 of the Telerate screen (or otherwise on such screen), the “Eurodollar
Base Rate” shall be determined by reference to such other comparable publicly available service
for displaying eurodollar rates as may be reasonably selected by the applicable Administrative
Agent or, in the absence of such availability, by reference to the rate at which the applicable
Administrative Agent is offered Dollar deposits at or about 10:00 A.M., New York City time, two (2)
Business Days prior to the beginning of such Interest Period in the interbank eurodollar market
where its eurodollar and foreign currency and exchange operations are then being conducted for
delivery on the first day of such Interest Period for the number of days comprised therein.

          “Eurodollar Loans”: Loans the rate of interest applicable to which is based upon the
Eurodollar Rate.

          “Eurodollar Rate”: with respect to each day during each Interest Period pertaining to
a Eurodollar Loan, a rate per annum determined for such day in accordance with the following
formula (rounded upward to the nearest 1/100th of 1%):

Eurodollar Base Rate

 

1.00 — Eurocurrency Reserve Requirements

 

10

          “Eurodollar Tranche”: the collective reference to Eurodollar Loans the then current
Interest Periods with respect to all of which begin on the same date and end on the same later date
(whether or not such Loans shall originally have been made on the same day).

          “Event of Default”: the meaning set forth in Section 7.

          “Existing Credit Agreement”: the meaning set forth in the recitals hereto.

          “Extensions of Credit”: collectively, Loans and/or Letters of Credit hereunder;
individually, as to any Loan or any Letter of Credit, an “Extension of Credit.”

          “Facility”: each of the First Priority Term Facility, the Second Priority Term
Facility and the Revolving Facility.

          “FDIC”: the Federal Deposit Insurance Corporation or any Governmental Authority that
succeeds to the powers and functions thereof.

          “Federal Funds Effective Rate”: for any day, the weighted average of the rates on
overnight federal funds transactions with members of the Federal Reserve System arranged by federal
funds brokers, as published on the next succeeding Business Day by the Federal Reserve Bank of New
York, or, if such rate is not so published for any day that is a Business Day, the average of the
quotations for the day of such transactions received by DB, in respect of the First Priority
Facility, and CS, in respect of the Second Priority Term Facility, from three federal funds brokers
of nationally recognized standing selected by it.

          “Fee Payment Date”: (a) the last Business Day of each calendar month and (b) the last
day of the Revolving Commitment Period or the Term Commitment Period, as applicable.

          “Fees”: collectively, the Commitment Fees, Letter of Credit Fees, the fees payable to
DB and CS as separately agreed by the Borrower, CS and DB, the fees payable to CS and DBSI as
separately agreed by the Borrower, CS and DBSI, the fees payable to GE Capital, the fees referred
to in Sections 2.25, 2.26, 2.27 or 11.5 and any other fees payable by any Loan Party pursuant to
this Agreement or any other Loan Document.

          “Final Order”: an order of the Bankruptcy Court entered in the Cases, in
substantially the form of the Interim Order, with such modifications thereto as are reasonably
satisfactory to the Agents and any Subsequent Final Order.

          “Final Order Date:” the date of entry of the Final Order with respect to the Borrower
which is January 26, 2006.

          “Financial Officer”: the Chief Financial Officer, Principal Accounting Officer,
Controller or Treasurer of the Borrower.

          “First Priority Agent”: the meaning set forth in the preamble to this Agreement.

          “First Priority Facility”: the collective reference to the Revolving Facility and the
First Priority Term Facility.

          “First Priority Lenders”: the collective reference to the Revolving Lenders and the
First Priority Term Lenders.

 

11

          “First Priority Term Facility”: the First Priority Term Commitments and the First
Priority Term Loans made thereunder.

          “First Priority Term Commitment”: with respect to each First Priority Lender, the
commitment of such First Priority Lender to make First Priority Term Loans in an aggregate
principal amount not to exceed the amount set forth opposite its name on Schedule 1.1A under the
heading “First Priority Term Commitment Amounts” or as may subsequently be set forth in the
Register from time to time, as the same may be reduced from time to time pursuant to Sections 2.15,
2.16 and 2.17. The aggregate First Priority Term Commitments of all Lenders on the Closing Date is
$400,000,000.

          “First Priority Term Lender”: each Lender that has a First Priority Term Commitment
or that holds a First Priority Term Loan.

          “First Priority Term Loan”: the meaning set forth in Section 2.1.

          “First Priority Term Percentage”: as to any First Priority Term Lender at any time,
the percentage which such Lender’s First Priority Term Commitment then constitutes of the aggregate
First Priority Term Commitments of all First Priority Term Lenders (or, at any time after the
Closing Date, the percentage which the aggregate principal amount of such Lender’s First Priority
Term Loans then outstanding constitutes of the aggregate principal amount of the First Priority
Term Loans then outstanding).

          “Foreign Subsidiary”: the meaning set forth in Section 6.4(c).

          “Fronting Bank”: GE Capital, or any of its affiliates, in its capacity as issuer of
the Letters of Credit.

          “Funding Office”: the office of the applicable Administrative Agent or the Sub-Agent
specified in Section 11.2 or such other office as may be specified from time to time by the
applicable Administrative Agent as its funding office by written notice to the Borrower, the
Lenders and the other Administrative Agent.

          “GAAP”: generally accepted accounting principles in the United States of America
applied on a consistent basis. In the event that any “Accounting Change” (as defined below) shall
occur and such change results in a change in the method of calculation of financial covenants,
standards or terms in this Agreement, then the Borrower and the Administrative Agents agree to
enter into negotiations in order to amend such provisions of this Agreement so as to reflect
equitably such Accounting Changes with the desired result that the criteria for evaluating the
Borrower’s financial condition shall be the same after such Accounting Changes as if such
Accounting Changes had not been made. Until such time as an amendment shall have been executed and
delivered by the Borrower, the Administrative Agents and the Required Lenders, all financial
covenants, standards and terms in this Agreement shall continue to be calculated or construed as if
such Accounting Changes had not occurred. “Accounting Changes” refers to changes in accounting
principles required by the promulgation of any rule, regulation, pronouncement or opinion by the
Financial Accounting Standards Board of the American Institute of Certified Public Accountants or,
if applicable, the SEC.

          “GE Capital”: the meaning set forth in the preamble to this Agreement.

          “Geysers Assets”: the geothermal power plants in Northern California known as The
Geysers as more particularly described on Schedule 1.1B.

 

12

          “Geysers EBITDA”: for any period, Consolidated EBITDA attributable to the Geysers
Entities, without giving effect to last three sentences of the definition of Consolidated EBITDA.
For purposes of calculating Geysers EBITDA for any period which includes any month prior to
December 31, 2005, Geysers EBITDA for such month shall be such amount set forth opposite such month
on Schedule 1.1(E).

          “Geysers Entities”: the collective reference to the following Subsidiaries of the
Borrower: Anderson Springs Energy Company, Thermal Power Company, Geysers Power I Company, Geysers
Power Company II, LLC, Geysers Power Company, LLC, Calpine Calistoga Holdings, LLC, Silverado
Geothermal Resources, Inc.

          “Geysers Interest Coverage Ratio: for any period, the ratio of (a) Geysers EBITDA for
such period to (b) Consolidated Interest Expense for such period.

          “Geysers Leverage Ratio: as at the last day of any period, the ratio of (a) the
aggregate principal amount of all Indebtedness of the Borrower and its Subsidiaries under the
Facilities on such day, assuming all amounts are drawn under the First Priority Facility and the
Second Priority Term Facility, to (b) Geysers EBITDA for such period.

          “Geysers Transaction Tranche”: $350,000,000 of the Second Priority Term Loans which
is only permitted to be borrowed substantially concurrently with the consummation of the Geysers
Transaction.

          “Geysers Transaction”: the transaction pursuant to documentation reasonably
satisfactory to the Administrative Agents pursuant to which (a) all outstanding Indebtedness
pursuant to the Leveraged Lease Documents shall have been paid in full and all Liens securing such
Indebtedness shall have been released, (b) a Global Entity which is a Debtor shall have received
title to the Geysers Assets free and clear of all Liens other than Liens permitted under Section
6.2(b), (c), (d), (e) and (f) and (c) the Leveraged Lease and all other Leveraged Lease Documents
shall have been terminated and of no further force and effect.

          “Governmental Authority”: any nation or government, any state or other political
subdivision thereof, any agency, authority, instrumentality, regulatory body, court, central bank
or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative
functions of or pertaining to government, any securities exchange and any self-regulatory
organization (including the National Association of Insurance Commissioners).

          “Global Entities”: the collective reference to the Borrower and its consolidated
Subsidiaries.

          “Guarantee Obligation”: as to any Person, any obligation, including a reimbursement,
counterindemnity or similar obligation, of such Person guaranteeing or in effect guaranteeing any
Indebtedness, leases, dividends or other obligations (the “primary obligations”) of any
other Person (the “primary obligor”) in any manner, whether directly or indirectly,
including without limitation, any obligation of such Person, whether or not contingent (a) to
purchase any such primary obligation or any property constituting direct or indirect security
therefor, (b) to advance or supply funds (i) for the purchase or payment of any such primary
obligation or (ii) to maintain working capital or equity capital of the primary obligor or
otherwise to maintain the net worth or solvency of the primary obligor, (c) to purchase property,
securities or services primarily for the purpose of assuring the owner of any such primary
obligation of the ability of the primary obligor to make payment of such primary obligation or (d)
otherwise to assure or hold harmless the owner of any such primary obligation against loss in
respect

 

13

thereof; provided that notwithstanding the foregoing, the term Guarantee Obligation
shall not include endorsements of instruments for deposit or collection in the ordinary course of
business. The amount of any Guarantee Obligation shall be deemed to be an amount equal to the
maximum reasonably anticipated liability in respect thereof as determined by such Person in good
faith.

          “Guarantor”: the meaning set forth in the preamble to this Agreement.

          “Indebtedness”: of any Person at any date, 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 current trade payables 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 indebtedness 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), (e) all Capital Lease Obligations of such
Person, (f) all obligations of such Person, contingent or otherwise, as an account party or
applicant under or in respect of acceptances, letters of credit, surety bonds or similar
arrangements, (g) the liquidation value of all redeemable preferred Capital Stock of such Person,
(h) all Guarantee Obligations of such Person in respect of obligations of the kind referred to in
clauses (a) through (g) above, (i) all obligations of the kind referred to in clauses (a) through
(h) above secured by (or for which the holder of such obligation has an existing right, contingent
or otherwise, to be secured by) any Lien on property (including accounts and contract rights) owned
by such Person, whether or not such Person has assumed or become liable for the payment of such
obligation, and (j) all obligations of such Person in respect of Swap Agreements. The Indebtedness
of any Person shall include the Indebtedness of any other entity (including any partnership in
which such Person is a general partner) to the extent such Person is liable therefor as a result of
such Person’s ownership interest in or other relationship with such entity, except to the extent
the terms of such Indebtedness expressly provide that such Person is not liable therefor.

          “Insolvency”: with respect to any Multiemployer Plan, the condition that such Plan is
insolvent within the meaning of Section 4245 of ERISA.

          “Insolvent”: pertaining to a condition of Insolvency.

          “Intellectual Property”: the collective reference to all rights, priorities and
privileges relating to intellectual property, whether arising under United States, multinational or
foreign laws or otherwise, including copyrights, copyright licenses, patents, patent licenses,
trademarks, trademark licenses, technology, know-how and processes, and all rights to sue at law or
in equity for any infringement or other impairment thereof, including the right to receive all
proceeds and damages therefrom.

          “Interest Payment Date”: the last day of each calendar month and the date of any
repayment or prepayment made in respect thereof.

          “Interest Period”: as to any Eurodollar Loan, (a) initially, the period commencing on
the borrowing or conversion date, as the case may be, with respect to such Eurodollar Loan and
ending one, three or six (or, if agreed to by all Lenders under a relevant Facility, nine or
twelve) months thereafter, as selected by the Borrower in its notice of borrowing or notice of
conversion, as the case may be, given with respect thereto; and (b) thereafter, each period
commencing on the last day of the next preceding Interest Period applicable to such Eurodollar Loan
and ending one, three or six (or, if agreed to by all Lenders under a relevant Facility, nine or
twelve) months thereafter, as selected by the Borrower by irrevocable notice to the Administrative
Agents not later than 10:00 A.M., New York City time, on the

 

14

date that is three (3) Business Days prior to the last day of the then current Interest Period
with respect thereto; provided that, all of the foregoing provisions relating to Interest
Periods are subject to the following:

     (i) if any Interest Period would otherwise end on a day that is not a Business
Day, such Interest Period shall be extended to the next succeeding Business Day
unless the result of such extension would be to carry such Interest Period into
another calendar month in which event such Interest Period shall end on the
immediately preceding Business Day;

     (ii) the Borrower may not select an Interest Period under a particular Facility
that would extend beyond the Maturity Date or beyond the date final payment is due
on the First Priority Term Loans or the Second Priority Term Loans, as the case may
be;

     (iii) any Interest Period that begins on the last Business Day of a calendar
month (or on a day for which there is no numerically corresponding day in the
calendar month at the end of such Interest Period) shall end on the last Business
Day of a calendar month; and

     (iv) the Borrower shall select Interest Periods so as not to require a payment
or prepayment of any Eurodollar Loan during an Interest Period for such Loan.

          “Interim Order”: an order of the Bankruptcy Court entered in the Cases granting
interim approval of the transactions contemplated by this Agreement and the other Loan Documents
and granting the Liens and Superpriority Claims described in the Introductory Statement in favor of
the Administrative Agents, the Collateral Agent and the Lenders, substantially in the form of
Exhibit A hereto, or otherwise in form and substance reasonably satisfactory to the Agents and any
Subsequent Interim Order.

          “Investment”: the meaning set forth in Section 6.7.

          “ISP”: International Standby Practices 1998 (International Chamber of Commerce
Publication Number 590) and any subsequent version thereof adhered to by the Fronting Bank.

          “Joinder”: the meaning set forth in Section 5.11(b).

          “L/C Application”: an application, in such form as the Fronting Bank may specify from
time to time, requesting the Fronting Bank to issue a Letter of Credit.

          “L/C Cash Collateral Account”: the account established by the Borrower under the sole
and exclusive control of the First Priority Agent maintained at the office of the First Priority
Agent at 60 Wall Street, New York, New York 10005, designated as the “Calpine Corporation
Debtor-in-Possession L/C Cash Collateral Account” or similar title, which shall be used solely for
the purposes set forth in Sections 2.8(b), 2.17 and 2.28 and any other provision of this Agreement
which requires the cash collateralization of Letter of Credit Outstandings.

          “L/C Commitment”: $300,000,000.

          “Lenders”: the meaning set forth in the preamble to this Agreement.

          “Letter of Credit Fees”: the fees payable in respect of Letters of Credit pursuant to
Section 2.26.

 

15

          “Letter of Credit Outstandings”: at any time, an amount equal to the sum of (a) the
aggregate undrawn face amount of all Letters of Credit then outstanding plus (b) all
amounts theretofore drawn under Letters of Credit and not then reimbursed.

          “Letter of Credit Request”: the meaning set forth in Section 2.9.

          “Letters of Credit”: any standby letter of credit issued pursuant to Section 2.9
which letter of credit shall be (a) for such purposes as are consistent with the terms hereof, (b)
denominated in Dollars and (c) otherwise in such form as may be reasonably approved from time to
time by the First Priority Agent and the Fronting Bank.

          “Leveraged Lease”: the leveraged lease with respect to the Geysers Assets pursuant to
the Leveraged Lease Documents.

          “Leveraged Lease Documents”: the collective reference to the Third Amended and
Restated Facility Lease Agreement dated as of May 7, 1999, between Geysers Statutory Trust and
Geysers Power Company, LLC, the Third Amended and Restated Participation Agreement dated as of May
7, 1999, among Geysers Power Company, LLC, Geysers Statutory Trust, State Street Bank and Trust
Company of California, National Association, First Union Trust Company, National Association,
Silverado Geothermal Resources, Inc., Steam Heat Lender Trust and Newcourt Capital USA Inc. (the
“Participation Agreement”), and the Operative Documents (as defined in the Participation
Agreement), as each of the foregoing has been amended, supplemented or otherwise modified from time
to time prior to the Petition Date or pursuant to Section 6.19.

          “Lien”: any mortgage, pledge, hypothecation, assignment, deposit arrangement,
encumbrance, lien (statutory or other), charge or other security interest or any preference,
priority or other security agreement or preferential arrangement of any kind or nature whatsoever
(including any conditional sale or other title retention agreement and any capital lease having
substantially the same economic effect as any of the foregoing).

          “Loan”: any loan made by any Lender pursuant to this Agreement.

          “Loan Documents”: this Agreement, the Notes, the Security and Pledge Agreement, the
Letters of Credit, the L/C Applications, the Orders and any other instrument or agreement executed
and delivered in connection herewith.

          “Loan Parties”: each Debtor that is a party to a Loan Document.

          “Majority Facility Lenders”: with respect to any Facility, the holders of more than
50% of the aggregate unpaid principal amount of the Term Loans or the Aggregate Revolving
Outstandings, as the case may be, outstanding under such Facility (or, in the case of the Revolving
Facility, prior to any termination of the Revolving Commitments, the holders of more than 50% of
the Total Revolving Commitments).

          “Majority First Priority Lenders”: at any time, holders of more than 50% of (a) until
the Closing Date, the Commitments under the First Priority Facility then in effect and (b)
thereafter, the sum of (i) the aggregate unpaid principal amount of the First Priority Term Loans
then outstanding and (ii) the Total Revolving Commitments then in effect or, if the Revolving
Commitments have been terminated, the Aggregate Revolving Outstandings then outstanding.

 

16

          “Majority Second Priority Lenders”: at any time, holders of more than 50% of (a)
until the Closing Date, the Second Priority Term Commitments then in effect and (b) thereafter, the
aggregate unpaid principal amount of the Second Priority Term Loans then outstanding.

          “Material Adverse Effect”: a material adverse effect on (a) the business, condition
(financial or otherwise), operations, assets or prospects of the Global Entities taken as a whole,
in each case, other than such effects attributable to the commencement of the Cases or the
existence of prepetition claims and of defaults under such prepetition claims, (b) the validity or
enforceability of the Orders or any of the Loan Documents, or (c) the rights and remedies of the
Lenders, the Fronting Bank, the Administrative Agents, the Sub-Agent and the Collateral Agent under
the Orders and the Loan Documents.

          “Material Environmental Amount”: an amount payable by the Borrower and/or its
Subsidiaries in excess of $1,000,000 for remedial costs, compliance costs, compensatory damages,
punitive damages, fines, penalties or any combination thereof.

          “Material Subsidiaries”: the collective reference to the following Subsidiaries of
the Borrower: the Geysers Entities, Calpine Energy Services Holdings, Inc., Calpine Calgen
Holdings, Inc., Calpine CCFC Holdings, Inc., CPN Energy Services GP, Inc., CPN Energy Services LP,
Inc. and Calpine Riverside Holdings, LLC, and all of their respective direct and indirect
Subsidiaries, excluding, however, the Subsidiaries set forth on Schedule 1.1C; it being understood
that any Subsidiary into which any Material Subsidiary merged or otherwise consolidated or any
Subsidiary to which all or substantially all of the assets of any Material Subsidiary are
transferred or otherwise disposed shall constitute a Material Subsidiary for all purposes under
this Agreement.

          “Materials of Environmental Concern”: any gasoline or petroleum (including crude oil
or any fraction thereof) or petroleum products or any hazardous or toxic substances, materials or
wastes, defined or regulated as such in or under any Environmental Law, including asbestos,
polychlorinated biphenyls and urea-formaldehyde insulation.

          “Maturity Date”: December 20, 2007.

          “Minimum Liquidity”: at any time, the sum of (a) all unrestricted cash and Cash
Equivalents of the Global Entities at such time and (b) the Available Revolving Commitment and
Available Term Loan Commitments at such time.

          “Minority Banks”: the meaning set forth in Section 11.1(b).

          “Moody’s”: Moody’s Investors Services, Inc.

          “Multiemployer Plan”: a Plan that is a multiemployer plan as defined in Section
4001(a)(3) of ERISA.

          “Net Cash Proceeds”: in connection with any Asset Sale or any Recovery Event, the
proceeds thereof in the form of cash and Cash Equivalents (including any such proceeds received by
way of deferred payment of principal pursuant to a note or installment receivable or purchase price
adjustment receivable or otherwise, but only as and when received), net of attorneys’ fees,
accountants’ fees, investment banking fees, commissions, foreign exchange charges to the extent
such proceeds are paid in a currency other than Dollars, amounts required to be applied to the
repayment of Indebtedness secured by a Lien permitted hereunder on any asset that is the subject of
such Asset Sale or Recovery Event, amounts required to be applied to the repayment of mandatorily
redeemable preferred Capital Stock permitted

 

17

hereunder, amounts used in respect of any casualty payment to the extent used to pay actual
liabilities or losses in respect of such casualty, and other customary fees and expenses actually
incurred in connection therewith and net of taxes paid or reasonably estimated to be payable as a
result thereof (after taking into account any available tax credits or deductions and any tax
sharing arrangements).

          “New York UCC”: the Uniform Commercial Code as from time to time in effect in the
State of New York.

          “Non-Excluded Taxes”: the meaning set forth in Section 2.22(a).

          “Non-U.S. Lender”: the meaning set forth in Section 2.22(d).

          “Notes”: the collective reference to any promissory note evidencing Loans.

          “Notice”: the giving of notice by the Administrative Agents to the Borrower and its
counsel (as set forth in Section 11.2) that a Default or an Event of Default has occurred and is
continuing.

          “Obligations”: (a) the principal of and interest on the Loans and the Notes and the
Letter of Credit Outstandings, (b) the Fees and all other present and future, fixed or contingent,
obligations and liabilities (monetary or otherwise) of the Loan Parties to the Lenders, the
Fronting Bank, the Collateral Agent, the Sub-Agent and each Administrative Agent under the Loan
Documents, including without limitation, all costs and expenses payable pursuant to Section 11.5,
(c) interest rate hedging agreements entered into by the Borrower and any Lender or affiliate
thereof and (d) the Cash Management Obligations.

          “Orders”: the collective reference to the Interim Order and the Final Order.

          “Original Closing Date”: December 23, 2005.

          “Other Taxes”: any and all present or future stamp or documentary taxes or any other
excise or property taxes, charges or similar levies arising from any payment made hereunder or from
the execution, delivery or enforcement of, or otherwise with respect to, this Agreement or any
other Loan Document.

          “Participants”: the meaning set forth in Section 11.6(b).

          “Patriot Act”: the USA Patriot Act, Title III of Pub. L. 107-56, signed into law on
October 26, 2001, as amended.

          “PBGC”: the Pension Benefit Guaranty Corporation established pursuant to Subtitle A
of Title IV of ERISA (or any successor).

          “Permitted Liens”: Liens permitted to exist under Section 6.2.

          “Person”: an individual, partnership, corporation, limited liability company,
business trust, joint stock company, trust, unincorporated association, joint venture, Governmental
Authority or other entity of whatever nature.

          “Petition Date”: as to any Loan Party, the date reflected on Schedule 3.5 on which
such Loan Party filed with the Bankruptcy Court a voluntary petition for relief under Chapter 11 of
the Bankruptcy Code.

 

18

          “Plan”: at a particular time, any employee benefit plan that is covered by ERISA and
in respect of which the Borrower or a Commonly Controlled Entity is (or, if such plan were
terminated at such time, would under Section 4069 of ERISA be deemed to be) an “employer” as
defined in Section 3(5) of ERISA.

          “Preferred Equity Documents”: the collective reference to the Second Amended and
Restated Limited Liability Company Operating Agreement of CCFC Preferred Holdings, LLC, the Amended
and Restated Certificate of Incorporation of Calpine CCFC GP, Inc. and the Amended and Restated
Certificate of Incorporation of Calpine CCFC LP, Inc., as each of the foregoing has been amended,
supplemented or otherwise modified from time to time.

          “Prime Rate”: the rate of interest announced by DB, in respect of the First Priority
Facility, and CS, in respect of the Second Lien Term Facility, from time to time as its prime rate.
The Prime Rate is a reference rate and does not necessarily represent the lowest rate actually
charged to any customer. Each of CS and DB may make commercial loans or other loans at rates of
interest at, above or below the Prime Rate.

          “Projections”: the meaning set forth in Section 4.1(f).

          “Properties”: the meaning set forth in Section 3.16(a).

          “Purchasing Lender”: the meaning set forth in Section 11.6(c).

          “Recovery Event”: any settlement of or payment in respect of any property or casualty
insurance claim or any condemnation proceeding relating to any asset.

          “Refunded Swingline Loans”: the meaning set forth in Section 2.7(b).

          “Register”: the meaning set forth in Section 11.6(d).

          “Regulation D”: Regulation D of the Board of Governors of the Federal Reserve System,
comprising Part 204 of Title 12, Code of Federal Regulations, as amended, and any successor
thereto.

          “Reinvestment Deferred Amount”: with respect to any Reinvestment Event, the aggregate
Net Cash Proceeds received by any Global Entity in connection therewith that are not applied to
prepay the Term Loans or reduce the Revolving Commitments pursuant to Section 2.17(a) as a result
of the delivery of a Reinvestment Notice.

          “Reinvestment Event”: any Asset Sale or Recovery Event in respect of which the
Borrower has delivered a Reinvestment Notice.

          “Reinvestment Notice”: a written notice executed by a Responsible Officer stating
that no Event of Default has occurred and is continuing and that the Borrower (directly or
indirectly through a Subsidiary) intends and expects to use all or a specified portion of the Net
Cash Proceeds of an Asset Sale or Recovery Event to acquire or repair (or reimburse itself for
amounts previously expended to acquire or repair) assets useful in its business.

          “Reinvestment Prepayment Amount”: with respect to any Reinvestment Event, the
Reinvestment Deferred Amount relating thereto less any amount expended prior to the relevant
Reinvestment Prepayment Date, or an amount contracted to be expended prior to the relevant

 

19

Reinvestment Prepayment Date to acquire or repair (or reimburse itself for amounts previously
expended to acquire or repair) assets useful in the Borrower’s business.

          “Reinvestment Prepayment Date”: with respect to any Reinvestment Event, the earlier
of (a) the date occurring six months after such Reinvestment Event and (b) the date on which the
Borrower shall have determined not to, or shall have otherwise ceased to, acquire or repair assets
useful in the Borrower’s business (or, in case of any amount contracted to be expended, such
contract has expired or terminated) with all or any portion of the relevant Reinvestment Deferred
Amount.

          “Related Fund”: with respect to any Lender that is a fund that invests in bank loans,
any other fund that invests in commercial loans and is managed or advised by the same investment
advisor as such Lender or by an Affiliate of such investment advisor.

          “Reorganization Plan”: a plan of reorganization in any of the Cases.

          “Reportable Event”: any of the events set forth in Section 4043(c) of ERISA, other
than those events as to which the thirty (30) day notice period
is waived under subsections .27, .28, .29, .30, .31, .32, .34 or .35 of PBGC Reg. § 4043.

          “Required Lenders”: at any time, the holders of more than 50% of (a) until the
Closing Date, the Commitments then in effect and (b) thereafter, the sum of (i) the aggregate
unpaid principal amount of the Term Loans then outstanding and (ii) the Total Revolving Commitments
then in effect or, if the Revolving Commitments have been terminated, the Aggregate Revolving
Outstandings then outstanding.

          “Requirement of Law”: as to any Person, the certificate of incorporation and by-laws
or other organizational or governing documents of such Person, and any law, treaty, rule or
regulation or determination of an arbitrator or a court or other Governmental Authority, in each
case applicable to or binding upon such Person or any of its property or to which such Person or
any of its property is subject.

          “Responsible Officer”: the chief executive officer, president or Financial Officer of
the Borrower, but in any event, with respect to financial matters, a Financial Officer of the
Borrower.

          “Restructuring Costs”: non-recurring and other one-time costs incurred by the
Borrower or its Subsidiaries in connection with the reorganization of its and its Subsidiaries’
business, operations and structure in respect of (a) the implementation of ongoing operational
initiatives, (b) plant closures, plant “moth-balling” or consolidation, relocation or elimination
of offices operations, (c) related severance costs and other costs incurred in connection with the
termination, relocation and training of employees, (d) legal, consulting, employee retention and
other advisor fees incurred in connection with the Cases and the related Reorganization Plan and
(v) any adequate protection payments previously consented to by the Administrative Agents.

          “Revolving Commitment”: with respect to each Lender, the commitment of such Lender to
make Revolving Loans and participate in Swingline Loans and Letters of Credit in an aggregate
principal and/or face amount not to exceed the amount set forth opposite its name on Schedule 1.1A
under the heading “Revolving Commitment Amounts” or as may subsequently be set forth in the
Register from time to time, as the same may be reduced from time to time pursuant to Sections 2.15,
2.16 and 2.17.

          “Revolving Commitment Percentage”: at any time, with respect to each Lender, the
percentage obtained by dividing its Revolving Commitment at such time by the Total Revolving
Commitment at such time or, if no Revolving Commitments are then in effect, the percentage obtained
by

 

20

dividing the aggregate Revolving Loans outstanding of such Lender by the aggregate Revolving
Loans outstanding of all the Lenders at such time; provided that, in the event that the
Revolving Loans are paid in full prior to the reduction to zero of the total outstanding Revolving
Extensions of Credit, the Revolving Commitment Percentages shall be determined in a manner designed
to ensure that the other outstanding Revolving Extensions of Credit shall be held by the Lenders on
a comparable basis.

          “Revolving Commitment Period”: the period from and including the Closing Date to but
not including the Termination Date.

          “Revolving Extensions of Credit”: as to any Revolving Lender at any time, an amount
equal to the sum of (a) the aggregate principal amount of all Revolving Loans held by such Lender
then outstanding, (b) such Lender’s Revolving Commitment Percentage of the Letter of Credit
Outstandings then outstanding and (c) such Lender’s Revolving Commitment Percentage of the
aggregate principal amount of Swingline Loans then outstanding.

          “Revolving Facility”: the Revolving Commitments and the extensions of credit made
thereunder.

          “Revolving Lender”: each Lender that has a Revolving Commitment or that holds
Revolving Loans.

          “Revolving Loans”: the meaning set forth in Section 2.4.

          “S&P”: Standard & Poor’s Ratings Services.

          “SEC”: the Securities and Exchange Commission, any successor thereto and any
analogous Governmental Authority.

          “Second Priority Agent”: the meaning set forth in the preamble to this Agreement.

          “Second Priority Term Commitment”: with respect to each Second Priority Lender, the
commitment of such Second Priority Term Lender to make Second Priority Term Loans in an aggregate
principal amount not to exceed the amount set forth opposite its name on Schedule 1.1A under the
heading “Second Priority Term Commitment Amounts” or as may subsequently be set forth in the
Register from time to time, as the same may be reduced from time to time pursuant to Sections 2.15,
2.16 and 2.17. The aggregate Second Priority Term Commitments of all Lenders on the Closing Date
is $600,000,000.

          “Second Priority Term Facility”: the Second Priority Term Commitments and the Second
Priority Term Loans made thereunder.

          “Second Priority Term Lender”: each Lender that has a Second Priority Term Commitment
or that holds a Second Priority Term Loan.

          “Second Priority Term Loan”: the meaning set forth in Section 2.1.

          “Second Priority Term Percentage”: as to any Second Priority Term Lender at any time,
the percentage which such Lender’s Second Priority Term Commitment then constitutes of the
aggregate Second Priority Term Commitments (or, at any time after the Closing Date, the percentage
which the aggregate principal amount of such Lender’s Second Priority Term Loans then outstanding
constitutes of the aggregate principal amount of the Second Priority Term Loans then outstanding).

 

21

          “Security and Pledge Agreement”: the Amended and Restated Security and Pledge
Agreement, substantially in the form of Exhibit G hereto, among the Collateral Agent and the
Grantors (as defined in the Security and Pledge Agreement) signatory thereto.

          “Single Employer Plan”: any Plan that is covered by Title IV of ERISA, but that is
not a Multiemployer Plan.

          “Sub-Agent”: the meaning set forth in the preamble to this Agreement.

          “Subsequent Final Order”: the meaning set forth in Section 5.11(b).

          “Subsequent Interim Order”: the meaning set forth in Section 5.11(b).

          “Subsidiary”: as to any Person, a corporation, partnership, limited liability company
or other entity of which shares of stock or other ownership interests having ordinary voting power
(other than stock or such other ownership interests having such power only by reason of the
happening of a contingency) to elect a majority of the board of directors or other managers of such
corporation, partnership or other entity are at the time owned, or the management of which is
otherwise controlled, directly or indirectly through one or more intermediaries, or both, by such
Person. Unless otherwise qualified, all references to a “Subsidiary” or to “Subsidiaries” in this
Agreement shall refer to a Subsidiary or Subsidiaries of the Borrower.

          “Supermajority Lenders”: at any time, the holders of more than 66-2/3% of (a) until
the Closing Date, the Commitments then in effect and (b) thereafter, the sum of (i) the aggregate
unpaid principal amount of the Term Loans then outstanding and (ii) the Total Revolving Commitments
then in effect or, if the Revolving Commitments have been terminated, the Aggregate Revolving
Outstandings then outstanding.

          “Superpriority Claim”: a claim against any Loan Party in any of the Cases which is an
administrative expense claim having priority over any or all administrative expenses of the kind
specified in Sections 503(b) or 507(b) of the Bankruptcy Code, including a claim pursuant to
Section 364(c)(1) of the Bankruptcy Code.

          “Swap Agreement”: any agreement with respect to any swap, forward, future or
derivative transaction or option or similar agreement involving, or settled by reference to, one or
more rates, currencies, commodities, equity or debt instruments or securities, or economic,
financial or pricing indices or measures of economic, financial or pricing risk or value or any
similar transaction or any combination of these transactions; provided that no phantom
stock or similar plan providing for payments only on account of services provided by current or
former directors, officers, employees or consultants of the Borrower or any of its Subsidiaries
shall be a “Swap Agreement”.

          “Swingline Commitment”: the obligation of the Swingline Lender to make Swingline
Loans pursuant to Section 2 in an aggregate principal amount at any one time outstanding not to
exceed $10,000,000.

          “Swingline Lender”: GE Capital, in its capacity as the lender of Swingline Loans.

          “Swingline Loans”: the meaning set forth in Section 2.6.

          “Swingline Participation Amount”: the meaning set forth in Section 2.7(c).

 

22

          “Syndication Agents”: the meaning set forth in the preamble to this Agreement.

          “Term Commitment”: either of the First Priority Term Commitment or the Second
Priority Term Commitment.

          “Term Commitment Percentage”: at any time, with respect to each Lender, the
percentage obtained by dividing its Term Commitment at such time by the Total Term Commitment at
such time or, if no Term Commitments are then in effect, the percentage obtained by dividing the
aggregate Term Loans outstanding of such Lender by the aggregate Term Loans outstanding of all the
Lenders at such time.

          “Term Lenders”: the collective reference to the First Priority Term Lenders and the
Second Priority Term Lenders.

          “Term Loans”: the collective reference to the First Priority Term Loans and the
Second Priority Term Loans.

          “Termination Date”: the earliest to occur of (a) the Maturity Date, (b) forty-five
(45) days after entry of the Interim Order (or such later date as the Administrative Agents may
agree to) if the Final Order has not been entered prior thereto, (c) the effective date of a
Reorganization Plan confirmed by the Bankruptcy Court pursuant to the Confirmation Order in any of
the Cases or (d) the acceleration of the Loans and the termination of the Total Commitment in
accordance with the terms hereof.

          “Total Commitment”: at any time, the sum of the Commitments of all Lenders at such
time.

          “Total Revolving Commitments”: at any time, the aggregate amount of the Revolving
Commitments then in effect. The Total Revolving Commitments on the Closing Date are
$1,000,000,000.

          “Total Term Commitments”: at any time, the aggregate amount of the First Priority
Term Commitments and Second Priority Term Commitments then in effect.

          “Transferee”: the meaning set forth in Section 11.6(f).

          “Turbine Dispositions”: the Dispositions permitted under Section 6.5(i).

          “Type”: as to any Loan, its nature as a Base Rate Loan or a Eurodollar Loan.

          “Uniform Customs”: the Uniform Customs and Practice for Documentary Credits (1993
Revision), International Chamber of Commerce Publication No. 500 and any amendments or revisions
thereof.

          “United States”: the United States of America.

          1.2. Terms Generally. The definitions in Section 1.1 shall apply equally to both the
singular and plural forms of the terms defined. Whenever the context may require, any pronoun
shall include the corresponding masculine, feminine and neuter forms. All references herein to
Sections, Exhibits and Schedules shall be deemed references to Sections and subsections of, and
Exhibits and Schedules to, this Agreement unless the context shall otherwise require. References to agreements or other Contractual Obligations shall, unless otherwise specified, be deemed to refer to such agreements or

 

23

Contractual
Obligations as amended, supplemented, restated or otherwise modified from time to time to the
extent permitted herein. Except as otherwise expressly provided herein, all terms of an accounting
or financial nature shall be construed in accordance with GAAP, as in effect from time to time;
provided, however, that for purposes of determining compliance with any covenant
set forth in Section 6, such terms shall be construed in accordance with GAAP as in effect on the
date of this Agreement applied on a basis consistent with the application used in the Borrower’s
audited financial statements referred to in Section 5.1(a).

          1.3. Delivery of Notices or Receivables. Any reference to a delivery or notice date
that is not a Business Day shall be deemed to mean the next succeeding day that is a Business Day.

SECTION 2

AMOUNT AND TERMS OF COMMITMENT

          2.1. Term Commitments. Subject to the terms and conditions hereof, (i) each First
Priority Term Lender severally, and not jointly with the other First Priority Term Lenders, agrees
to make a term loan (each, a “First Priority Term Loan” and collectively, the “First
Priority Term Loans”) to the Borrower on the Closing Date under the First Priority Term
Commitment, provided that no First Priority Term Lender shall be required to make any Term
Loan in excess of such Term Lender’s First Priority Term Commitment then in effect and (ii) each
Second Priority Term Lender severally, and not jointly with the other Second Priority Term Lenders,
agrees to make term loans (each, a “Second Priority Term Loan” and collectively, the
“Second Priority Term Loans”) to the Borrower on the Closing Date in an amount not to
exceed the amount of the Second Priority Commitment of such Lender. The Term Loans may from time
to time be Eurodollar Loans or Base Rate Loans, as determined by the Borrower and notified to the
Administrative Agents in accordance with Sections 2.2 and 2.18. On the Closing Date, the Term
Commitment of each Term Lender shall be permanently reduced by the amount of Term Loans made by
such Term Lender on the Closing Date. Amounts prepaid on account of the Term Loans may not be
reborrowed.

          2.2. Procedure for Term Loan Borrowing. The Borrower may borrow under the Term
Commitments on the Closing Date, provided that such Borrower shall give the Administrative
Agents irrevocable notice (which notice must be received by the Administrative Agents prior to
12:00 Noon, New York City time, on the Closing Date, specifying the amount of Term Loans to be
borrowed. The Term Loans made on the Closing Date shall initially be Base Rate Loans and, unless
otherwise agreed by the applicable Administrative Agent in their respective sole discretion, no
Term Loan may be converted into or continued (x) as a Eurodollar Loan prior to the date that is
three Business Days after the Closing Date or (y) as a Eurodollar Loan having an Interest Period in
excess of one week prior to the date that is the earlier of (A) 30 days after the Closing Date and
(B) completion of the syndication process. Each Borrowing under the Term Commitments shall be in
an amount equal to (x) in the case of Base Rate Loans, $1,000,000 or a whole multiple of $1,000,000
in excess thereof (or, if the then aggregate applicable Term Commitments are less than $1,000,000,
such lesser amount) or (y) in the case of Eurodollar Loans, $5,000,000 or a whole multiple of
$1,000,000 in excess thereof. Upon receipt of any such notice from the Borrower, the applicable
Administrative Agent shall promptly notify each applicable Term Lender thereof. Each applicable
Term Lender will make available to the applicable Administrative Agent at the Funding Office an
amount in immediately available funds equal to the applicable Term Loan or Term Loans to be made by such
Term Lender prior to 2:00 P.M., New York City time, on the Closing Date. Such Borrowing will then
be made available to the Borrower by the applicable Administrative Agent as directed by the
Borrower in the aggregate amounts made available to the applicable Administrative Agent by the
Lenders in like funds as received by the Administrative Agent.

 

24

          2.3. Repayment of First Priority Term Loans. The First Priority Term Loan of each
First Priority Term Lender shall mature in eight consecutive quarterly installments, each of which
shall be in an amount equal to such Lender’s First Priority Term Percentage multiplied by the
amount set forth below opposite such installment:

	 	 	 	 	 
	Installment	 	Principal Amount
	March 31, 2006
	 	$	875,000	 
	June 30, 2006
	 	$	875,000	 
	September 30, 2006
	 	$	875,000	 
	December 31, 2006
	 	$	875,000	 
	March 31, 2007
	 	$	875,000	 
	June 30, 2007
	 	$	875,000	 
	September 30, 2007
	 	$	875,000	 
	Maturity Date
	 	Balance

          2.4. Revolving Commitments. Pursuant to the Existing Credit Agreement, prior to the
Closing Date, the Revolving Lenders made revolving loans to the Borrower (the “Existing
Revolving Loans”) and on the Closing Date, no Existing Revolving Loans are outstanding.
Subject to the terms and conditions hereof, each Revolving Lender, severally and not jointly with
the other Revolving Lenders, agrees to make revolving credit loans (each, a “Revolving
Loan” and, collectively, the “Revolving Loans”) to the Borrower from time to time
during the Revolving Commitment Period in an aggregate principal amount at any one time outstanding
which, when added to such Lender’s Revolving Commitment Percentage of the then Aggregate Revolving
Outstandings, does not exceed the amount of such Lender’s Revolving Commitment in effect at such
time as at the date such Loan is to be made. During the Revolving Commitment Period, the Borrower
may use the Revolving Commitments by borrowing, prepaying the Revolving Loans in whole or in part,
and reborrowing, all in the accordance with the terms and conditions hereof. The Revolving Loans
may from time to time be Eurodollar Loans or Base Rate Loans, as determined by the Borrower and
notified to the Administrative Agents and the Sub-Agent in accordance with Sections 2.5 and 2.18.

          2.5. Procedure for Revolving Loan Borrowing. The Borrower may borrow under the
Revolving Commitments during the Revolving Commitment Period on any Business Day, provided
that the Borrower shall give the Administrative Agents and the Sub-Agent irrevocable notice (which
notice must be received by the Administrative Agents and the Sub-Agent prior to 12:00 Noon, New
York City time (a) three (3) Business Days prior to the requested Borrowing Date, in the case of
Eurodollar Loans or (b) on the same Business Day of the requested Borrowing Date, in the case of
Base Rate Loans), specifying (i) the amount and Type of Revolving Loans to be borrowed, (ii) the
requested Borrowing Date and (iii) in the case of Eurodollar Loans, the respective amounts of each
such Type of Loan and the respective lengths of the initial Interest Period therefor. Each
Borrowing under the Revolving Commitments shall be in an amount equal to (x) in the case of Base
Rate Loans, $1,000,000 or a whole multiple thereof (or, if the then Available Revolving
Commitments are less than $1,000,000, such lesser amount) or (y) in the case of Eurodollar
Loans, $5,000,000 or a multiple of $1,000,000 in excess thereof, provided, that the
Swingline Lender may request, on behalf of the Borrower, borrowings under the Revolving Commitments
that are Base Rate Loans in other amounts pursuant to Section 2.7. Upon receipt of any such notice
from the Borrower, the Sub-Agent shall promptly notify each Revolving Lender thereof. Each
Revolving Lender will make the amount of its Revolving Commitment Percentage of each Borrowing
available to the Sub-Agent at the Funding Office prior to 2:00 P.M., New York City time, on the
Borrowing Date requested by the Borrower in funds immediately available to the Sub-Agent. Such
Borrowing will then be made available to the Borrower by the Sub-Agent as directed by the

 

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Borrower in the aggregate amounts made available to the Sub-Agent by the Lenders and in like funds as
received by the Sub-Agent.

          2.6. Swingline Commitment. (a) Subject to the terms and conditions hereof, the
Swingline Lender agrees to make a portion of the credit otherwise available to the Borrower under
the Revolving Commitments from time to time during the Revolving Commitment Period by making swing
line loans (“Swingline Loans”) to the Borrower; provided that (i) the aggregate
principal amount of Swingline Loans outstanding at any time shall not exceed the Swingline
Commitment then in effect (notwithstanding that the Swingline Loans outstanding at any time, when
aggregated with the Swingline Lender’s other outstanding Revolving Loans, may exceed the Swingline
Commitment then in effect) and (ii) the Borrower shall not request, and the Swingline Lender shall
not make, any Swingline Loan if, after giving effect to the making of such Swingline Loan, the
aggregate amount of the Available Revolving Commitments would be less than zero. During the
Revolving Commitment Period, the Borrower may use the Swingline Commitment by borrowing, repaying
and reborrowing, all in accordance with the terms and conditions hereof. Swingline Loans shall be
Base Rate Loans only.

          (b) The Borrower shall repay to the Swingline Lender the then unpaid principal amount of each
Swingline Loan on the earlier of the Termination Date and the first date after such Swingline Loan
is made that is the fifteenth (15th) or last day of a calendar month and is at least two
(2) Business Days after such Swingline Loan is made; provided that on each date that a
Revolving Loan is borrowed, the Borrower shall repay all Swingline Loans then outstanding.

          2.7. Procedure for Swingline Borrowing; Refunding of Swingline Loans. (a) Whenever
the Borrower desires that the Swingline Lender make Swingline Loans it shall give the Swingline
Lender irrevocable telephonic notice confirmed promptly in writing (which telephonic notice must be
received by the Swingline Lender not later than 2:00 P.M., New York City time, on the proposed
Borrowing Date), specifying (i) the amount to be borrowed and (ii) the requested Borrowing Date
(which shall be a Business Day during the Revolving Commitment Period). Each borrowing under the
Swingline Commitment shall be in an amount equal to $1,000,000 or a whole multiple thereof. Not
later than 5:00 P.M., New York City time, on the Borrowing Date specified in a notice in respect of
Swingline Loans, the Swingline Lender shall make available to the Sub-Agent at the Funding Office
an amount in immediately available funds equal to the amount of the Swingline Loan to be made by
the Swingline Lender. The Sub-Agent shall make the proceeds of such Swingline Loan available to
the Borrower on such Borrowing Date by depositing such proceeds in an account of the Borrower
specified in writing to the Swingline Lender on such Borrowing Date in immediately available funds.

          (b) The Swingline Lender, at any time and from time to time in its sole and absolute
discretion may, on behalf of the Borrower (which hereby irrevocably directs the Swingline Lender to
act on its behalf), on one (1) Business Day’s notice given by the Swingline Lender no later than
12:00 Noon, New York City time, request each Revolving Lender to make, and each Revolving Lender
hereby agrees to make, a Revolving Loan, in an amount equal to such Revolving Lender’s Revolving Commitment
Percentage of the aggregate amount of the Swingline Loans (the “Refunded Swingline Loans”)
outstanding on the date of such notice, to repay the Swingline Lender. Each Revolving Lender shall
make the amount of such Revolving Loan available to the Sub-Agent at the Funding Office in
immediately available funds, not later than 10:00 A.M., New York City time, one (1) Business Day
after the date of such notice. The proceeds of such Revolving Loans shall be immediately made
available by the Sub-Agent to the Swingline Lender for application by the Swingline Lender to the
repayment of the Refunded Swingline Loans. The Borrower irrevocably authorizes the Swingline
Lender to charge the Borrower’s accounts with the First Priority Agent (up to the amount available
in each such account) in order to immediately pay the amount of such Refunded Swingline Loans to
the extent amounts received from the Revolving Lenders are not sufficient to repay in full such
Refunded Swingline Loans.

 

26

          (c) If prior to the time a Revolving Loan would have otherwise been made pursuant to Section
2.7(b), if for any reason, as determined by the Swingline Lender in its sole discretion, Revolving
Loans may not be made as contemplated by Section 2.7(b), each Revolving Lender shall, on the date
such Revolving Loan was to have been made pursuant to the notice referred to in Section 2.7(b),
purchase for cash an undivided participating interest in the then outstanding Swingline Loans by
paying to the Swingline Lender an amount (the “Swingline Participation Amount”) equal to
(i) such Revolving Lender’s Revolving Commitment Percentage times (ii) the sum of the
aggregate principal amount of Swingline Loans then outstanding that were to have been repaid with
such Revolving Loans.

          (d) Whenever, at any time after the Swingline Lender has received from any Revolving Lender
such Lender’s Swingline Participation Amount, the Swingline Lender receives any payment on account
of the Swingline Loans, the Swingline Lender will distribute to such Lender its Swingline
Participation Amount (appropriately adjusted, in the case of interest payments, to reflect the
period of time during which such Lender’s participating interest was outstanding and funded and, in
the case of principal and interest payments, to reflect such Lender’s pro rata
portion of such payment if such payment is not sufficient to pay the principal of and interest on
all Swingline Loans then due); provided, however, that in the event that such
payment received by the Swingline Lender is required to be returned, such Revolving Lender will
return to the Swingline Lender any portion thereof previously distributed to it by the Swingline
Lender.

          (e) Each Revolving Lender’s obligation to make the Loans referred to in Section 2.7(b) shall
be absolute and unconditional and shall not be affected by any circumstance, including (i) any
setoff, counterclaim, recoupment, defense or other right that such Revolving Lender or the Borrower
may have against the Swingline Lender, the Borrower or any other Person for any reason whatsoever,
(ii) the occurrence or continuance of a Default or an Event of Default or the failure to satisfy
any of the other conditions specified in Section 4, (iii) any adverse change in the condition
(financial or otherwise) of the Borrower, (iv) any breach of this Agreement or any other Loan
Document by the Borrower, any other Loan Party or any other Revolving Lender or (v) any other
circumstance, happening or event whatsoever, whether or not similar to any of the foregoing.

          2.8. Letters of Credit. (a) Subject to the terms and conditions hereof, the Borrower
may request the Fronting Bank, from time to time during the Revolving Commitment Period, to issue,
and subject to the terms and conditions contained herein, the Fronting Bank agrees, in reliance on
the agreements of the other Lenders set forth in Section 2.8(e), to issue, for the account of the
Borrower, one or more Letters of Credit; provided that (i) no Letter of Credit shall be
issued if after giving effect to such issuance, (A) the Letter of Credit Outstandings would exceed
the L/C Commitment or (B) the Aggregate Revolving Outstandings would exceed the Total Revolving
Commitment; and (ii) no Letter of Credit shall be issued if the Fronting Bank shall have received notice from the First Priority Agent, the Sub-Agent or the
Required Lenders (and a copy of such notice shall be delivered to the Borrower) that the conditions
to such issuance have not been met.

          (b) Each Letter of Credit shall be denominated in Dollars and expire no later than the earlier
of (x) the first anniversary of its date of issuance and (y) the date that is five (5) Business
Days prior to the Maturity Date; provided that any Letter of Credit with a one year term
may provide for the renewal thereof for additional one year periods (which, in no event, shall
extend beyond the date described in the foregoing clause (y)); provided, further,
that if the Termination Date occurs prior to the expiration of any Letter of Credit, and
provisions, satisfactory to the Fronting Bank, for the treatment of such Letter of Credit as a
letter of credit under a successor credit facility have not been agreed upon, the Borrower shall,
on or prior to the Termination Date, cause all such Letters of Credit to be replaced and returned
to the Fronting Bank undrawn and marked “cancelled” or to the extent that the Borrower is unable to
so replace and return any Letter(s) of Credit, such Letter(s) of Credit shall be secured by a “back

 

27

to back” letter of credit satisfactory to the Fronting Bank, or cash collateralized in an amount
equal to 105% of the face amount of such Letter(s) of Credit by the deposit by the Borrower of cash
in such percentage amount into the L/C Cash Collateral Account. Such cash shall be remitted to the
Borrower upon the expiration, cancellation or other termination or satisfaction of all Obligations
hereunder.

          (c) Each Letter of Credit shall be subject to the ISP and, to the extent not inconsistent
therewith, the laws of the state under whose laws each Letter of Credit is issued, as applicable.
The Fronting Bank shall not at any time be obligated to issue any Letter of Credit hereunder if
such issuance would conflict with, or cause the Fronting Bank or any Lender to exceed any limits
imposed by, any applicable Requirement of Law. The Borrower shall pay to the Fronting Bank, in
addition to such other fees and charges as are specifically provided for in Section 2.26, such fees
and charges in connection with the issuance, amendment and processing of the Letters of Credit
issued by the Fronting Bank as are customarily imposed by the Fronting Bank from time to time in
connection with letter of credit transactions.

          (d) If any drawing shall be presented for payment under any Letter of Credit (which shall be
pursuant to a sight drawing), the Fronting Bank shall promptly notify the Borrower of the date and
amount thereof. Drawings paid under each Letter of Credit shall be reimbursed by the Borrower in
immediately available funds not later than the date a drawing is paid (or the next Business Day if
the Borrower receives notice of such drawing after 12:00 Noon, New York City time), on the date
that the drawing is paid and shall bear interest from the date the drawing is paid until the
drawing is reimbursed in full at a rate per annum equal to the Base Rate plus Applicable Margin for
Revolving Loans; it being understood that no interest shall accrue to the extent the Fronting Bank
receives payment prior to 12:00 Noon, New York City time, on the date the drawing is paid. The
Borrower shall effect such reimbursement (x) if such draw occurs prior to the Termination Date, in
cash or through a Borrowing of Base Rate Loans without the satisfaction of the conditions precedent
set forth in Section 4.2 and which Borrowing shall be effected without the need for a request
therefor from the Borrower or (y) if such draw occurs on or after the Termination Date, in cash.
Each Lender agrees to make the Loans described in clause (x) of the preceding sentence
notwithstanding a failure to satisfy the conditions precedent set forth in Section 4.2.

          (e) Immediately upon the issuance of any Letter of Credit by the Fronting Bank, the Fronting
Bank shall be deemed to have sold to each Lender other than the Fronting Bank, and each such other
Lender shall be deemed unconditionally and irrevocably to have purchased from the Fronting Bank,
without recourse or warranty, an undivided interest and participation, to the extent of such
Lender’s Revolving Commitment Percentage, in such Letter of Credit, each drawing thereunder and the
obligations of the Loan Parties under this Agreement with respect thereto. Upon any change in the
Revolving Commitments pursuant to Section 11.6, it is hereby agreed that with respect to all Letter of
Credit Outstandings, there shall be an automatic adjustment to the participations hereby created to
reflect the new Revolving Commitment Percentages of the assigning and assignee Lenders. Any action
taken or omitted by the Fronting Bank under or in connection with a Letter of Credit, if taken or
omitted in the absence of gross negligence or willful misconduct as determined in a final and
non-appealable decision of a court of competent jurisdiction, shall not create for the Fronting
Bank any resulting liability to any other Lender.

          (f) In the event that the Fronting Bank makes any payment under any Letter of Credit and the
Borrower shall not have reimbursed such amount in full to the Fronting Bank pursuant to Section
2.8(d), the Fronting Bank shall promptly notify the First Priority Agent and the Sub-Agent, and the
Sub-Agent shall promptly notify each Lender of such failure, and each Lender shall promptly and
unconditionally pay to the Fronting Bank the amount of such Lender’s Revolving Commitment
Percentage of such unreimbursed payment in same day funds. If the Fronting Bank so notifies the

 

28

Administrative Agents, and the Sub-Agent so notifies the Lenders prior to 11:00 A.M., New York City
time, on any Business Day, each Lender shall make available to the Fronting Bank such Lender’s
Revolving Commitment Percentage of the amount of such payment on such Business Day in same day
funds and if such notice is received after such time period, each Lender shall make such payment on
the next succeeding Business Day in same day funds). If and to the extent any such Lender shall
not have so made its Revolving Commitment Percentage of the amount of such payment available to the
Fronting Bank, such Lender agrees to pay to the Fronting Bank, forthwith on demand such amount,
together with interest thereon, for each day from such date until the date such amount is paid to
the Fronting Bank at a rate equal to the effective rate for overnight funds in New York as reported
by the Federal Reserve Bank of New York for such day (or, if such day is not a Business Day, the
next preceding Business Day). The failure of any Lender to make available to the Fronting Bank its
Revolving Commitment Percentage of any payment under any Letter of Credit shall not relieve any
other Lender of its obligation hereunder to make available to the Fronting Bank its Revolving
Commitment Percentage of any payment under any Letter of Credit on the date required, as specified
above, but no Lender shall be responsible for the failure of any other Lender to make available to
the Fronting Bank such other Lender’s Revolving Commitment Percentage of any such payment.
Whenever the Fronting Bank receives a payment of a reimbursement obligation as to which it has
received any payments from the Lenders pursuant to this paragraph, the Fronting Bank shall pay to
each Lender which has paid its Revolving Commitment Percentage thereof, in same day funds, an
amount equal to such Lender’s Revolving Commitment Percentage thereof.

          2.9. Issuance of Letters of Credit. The Borrower may from time to time request that
the Fronting Bank issue or amend a Letter of Credit by delivering to the Fronting Bank and the
Administrative Agents a request substantially in the form of Exhibit F (a “Letter of Credit
Request”) and such other certificates, documents and other papers and information as the
Fronting Bank may reasonably request. Upon receipt of a Letter of Credit Request, the Fronting Bank
agrees to promptly process each such request and the certificates, documents, L/C Application and
other papers and information delivered to it therewith in accordance with its customary procedures
and shall issue the Letter of Credit requested thereby (but in no event shall the Fronting Bank be
required to issue any Letter of Credit earlier than two (2) Business Days after its receipt of the
Letter of Credit Request therefor and all such other certificates, documents, L/C Application and
other papers and information relating thereto and unless such terms and conditions of the requested
Letter of Credit are commercially customary) by issuing the original of such Letter of Credit to
the beneficiary thereof or as otherwise may be agreed to by the Fronting Bank and the Borrower.
Promptly after the issuance or amendment of a Letter of Credit, the Fronting Bank shall notify the
Borrower and the Administrative Agents, in writing, of such issuance or amendment and such notice
shall be accompanied by a copy of such Letter of Credit or amendment. Upon receipt of such notice,
the First Priority Agent shall promptly notify each Lender, in writing, of such Letter of Credit or amendment and if so requested by a
Lender, the First Priority Agent shall furnish such Lender with a copy of such Letter of Credit or
amendment.

          2.10. Nature of Letter of Credit Obligations Absolute. The Borrower’s obligations in
respect of the Letter of Credit Outstandings shall be unconditional and irrevocable and shall be
paid strictly in accordance with the terms of this Agreement under all circumstances, including
without limitation: (i) any lack of validity or enforceability of any Letter of Credit; (ii) the
existence of any claim, set-off, defense or other right which the Borrower may have at any time
against a beneficiary of any Letter of Credit or against any of the Lenders, whether in connection
with this Agreement, the transactions contemplated herein or any unrelated transaction; (iii) any
draft, demand, certificate or other document presented under any Letter of Credit proving to be
forged, fraudulent, invalid or insufficient in any respect or any statement therein being untrue or
inaccurate in any respect; (iv) payment by the Fronting Bank of any Letter of Credit against
presentation of a demand, draft or certificate or other document which does not comply with the
terms of the Letter of Credit, except payment resulting from the gross negligence or willful
misconduct, as determined in a final and nonappealable decision of a court

 

29

of competent
jurisdiction, of the Fronting Bank; or (v) the fact that any Default or Event of Default shall have
occurred and be continuing.

          2.11. Repayment of Loans; Evidence of Debt. (a) The Borrower hereby unconditionally
promises to pay to the applicable Administrative Agent or, in the case of Revolving Loans, the
Sub-Agent for the account of each Lender the then unpaid principal amount of each Loan of such
Lender on the Termination Date. The Borrower hereby further agrees to pay interest on the unpaid
principal amount of the Loans from time to time outstanding from the date hereof until payment in
full thereof at the rates per annum, and on the dates, set forth in Section 2.12.

          (b) Each Lender shall maintain in accordance with its usual practice an account or accounts
evidencing Indebtedness of the Borrower to such Lender resulting from each Loan of such Lender from
time to time, including the amounts of principal and interest payable and paid to such Lender from
time to time under this Agreement.

          (c) Each Administrative Agent or, in the case of Revolving Loans, the Sub-Agent shall, in
respect of the relevant Facilities, record in the Register, with separate sub-accounts for each
Lender, (i) the amount and Borrowing Date of each Loan made hereunder, (ii) the amount of any
principal or interest due and payable or to become due and payable from the Borrower to each Lender
hereunder and (iii) both the amount of any payment received by the Administrative Agents or the
Sub-Agent, as applicable, hereunder from the Borrower and each Lender’s Commitment Percentage
thereof.

          (d) The entries made in the Register and the accounts of each Lender maintained pursuant to
Sections 2.11(b) and (c) shall, to the extent permitted by applicable law, be prima
facie evidence of the existence and amounts of the obligations of the Borrower therein
recorded absent manifest error; provided, however, that the failure of any Lender,
either Administrative Agent or the Sub-Agent to maintain the Register or any such account, or any
error therein, shall not in any manner affect the obligation of the Borrower to repay (with
applicable interest) the Loans made to the Borrower by such Lender in accordance with the terms of
this Agreement.

          2.12. Interest Rates and Payment Dates. (a) Each Eurodollar Loan shall bear interest for each day during each Interest Period with
respect thereto at a rate per annum equal to the Eurodollar Rate determined for such day plus the
Applicable Margin.

          (b) Each Base Rate Loan shall bear interest at a rate per annum equal to the Base Rate from
time to time plus the Applicable Margin.

          (c) Notwithstanding the foregoing, at any time after the occurrence and during the continuance
of an Event of Default, the outstanding Obligations shall bear interest at a rate per annum equal
to the rate that would otherwise be applicable thereto pursuant to the foregoing provisions of this
Section plus 2% (or in the case of any such amounts that do not otherwise bear interest,
the rate applicable to Base Rate Loans under the relevant Facility plus 2% or, in the case
of any such amounts that do not relate to a particular Facility, the rate then applicable to Base
Rate Loans under the Revolving Facility plus 2%).

          (d) Interest shall be payable in arrears on each Interest Payment Date; provided that
interest accruing pursuant to paragraph (c) of this Section shall be payable from time to time on
demand.

          2.13. Computation of Interest and Fees. (a) Interest and fees payable pursuant
hereto shall be calculated on the basis of a 360-day year for the actual days elapsed, except that,
with respect to Base Rate Loans the rate of interest on which is calculated on the basis of the
Prime Rate, the interest

 

30

thereon shall be calculated on the basis of a 365- (or 366-, as the case
may be) day year for the actual days elapsed. The applicable Administrative Agent shall as soon as
practicable notify the Borrower and the Lenders of each determination of a Eurodollar Rate. Any
change in the interest rate on a Loan resulting from a change in the Base Rate or the Eurocurrency
Reserve Requirements shall become effective as of the opening of business on the day on which such
change becomes effective. The applicable Administrative Agent shall as soon as practicable notify
the Borrower and the Lenders of the effective date and the amount of each such change in interest
rate.

          (b) Each determination of an interest rate in respect of an applicable Facility by an
Administrative Agent pursuant to any provision of this Agreement shall be conclusive and binding on
the Borrower and the Lenders in the absence of manifest error. Such Administrative Agent shall, at
the request of the Borrower, deliver to the Borrower a statement showing the quotations used by
such Administrative Agent in determining any interest rate hereunder.

          2.14. Inability to Determine Interest Rate. If prior to the first day of any Interest
Period:

     (a) the applicable Administrative Agent shall have reasonably determined (which
determination shall be conclusive and binding upon the Borrower) that, by reason of
circumstances affecting the relevant market, adequate and reasonable means do not exist for
ascertaining the Eurodollar Rate for such Interest Period, or

     (b) the applicable Administrative Agent shall have received notice from the Required
Lenders that the Eurodollar Rate determined or to be determined for such Interest Period in
good faith by such Required Lenders will not adequately and fairly reflect the cost to such
Lenders (as conclusively certified by such Lenders) of making or maintaining their affected
Loans during such Interest Period,

such Administrative Agent shall give telecopy or telephonic notice thereof to the Borrower and the
relevant Lenders as soon as practicable thereafter. If such notice is given (x) any Eurodollar
Loans hereunder requested to be made on the first day of such Interest Period shall be made as Base
Rate Loans, (y) any Loans hereunder that were to have been converted on the first day of such
Interest Period to Eurodollar Loans shall be continued as Base Rate Loans and (z) any outstanding
Eurodollar Loans hereunder shall be converted, on the last day of the then-current Interest Period,
to Base Rate Loans; provided that if the circumstances giving rise to such notice shall
cease or otherwise become inapplicable to such Required Lenders, then such Required Lenders shall
promptly give notice of such change in circumstances to the Administrative Agents and the Borrower.
Until such notice has been withdrawn by the applicable Administrative Agent, no further Eurodollar
Loans hereunder shall be made or continued as such, nor shall the Borrower have the right to
convert Loans hereunder to Eurodollar Loans.

          2.15. Optional Termination or Reduction of Revolving Commitment. Upon not less than
three (3) Business Days’ prior written notice to the Administrative Agents and the Sub-Agent, the
Borrower may at any time, without premium or penalty, in whole permanently terminate, or from time
to time in part permanently reduce, the Total Revolving Commitments; provided that no such
termination or reduction of the Total Revolving Commitments shall be permitted if, after giving
effect thereto and to any prepayments of the Revolving Loans, the Aggregate Revolving Outstandings
at such time would exceed the Total Revolving Commitments. Each such partial reduction of the
Total Revolving Commitments shall be in the principal amount of $1,000,000 or a whole multiple
thereof. Simultaneously with any termination or reduction of the Total Revolving Commitments, the
Borrower shall pay to the Sub-Agent for the account of each Lender the Commitment Fee accrued on
the amount of the Revolving Commitments of such Lender so terminated or reduced through the date
thereof. Any reduction of the

 

31

Total Revolving Commitment pursuant to this Section 2.15 shall be
applied pro rata in accordance with each Lender’s Revolving Commitment Percentage
to reduce the Revolving Commitment of each such Lender.

          2.16. Optional Prepayment of Loans. Subject to the provisos below, the Borrower may
at any time and from time to time prepay the Loans, in whole or in part, without premium or
penalty, upon irrevocable notice delivered to the Administrative Agents and, in the case of the
Revolving Loans, the Sub-Agent prior to 10:00 A.M., New York City time on the same Business Day,
which notice shall specify the date and amount of prepayment and whether the prepayment is of
Eurodollar Loans or Base Rate Loans; provided that if a Eurodollar Loan is prepaid on any
day other than the last day of the Interest Period applicable thereto, the Borrower shall also pay
any amounts owing pursuant to Section 2.23; provided, further, that any optional
prepayment of the Second Priority Term Loans pursuant to this Section 2.16 shall be accompanied by
a prepayment premium equal to (x) 2% of the principal amount of such prepayment if such prepayment
occurs on or before the six-month anniversary of the Original Closing Date and (y) 1% of the
principal amount of such prepayment if such prepayment occurs after the six-month anniversary of
the Original Closing Date, but on or before the one year anniversary of the Original Closing Date.
Upon receipt of any such notice of prepayment the applicable Administrative Agent or, in the case
of the Revolving Facility, the Sub-Agent shall notify each relevant Lender thereof on the date of
receipt of such notice. If any such notice is given, the amount specified in such notice shall be
due and payable on the date specified therein, together with (except in the case of Base Rate
Loans) accrued interest to such date on the amount prepaid. Partial prepayments shall be in an
aggregate principal amount of $1,000,000 or a whole multiple of $1,000,000 in excess thereof.
Partial prepayments of Swingline Loans shall be in an aggregate principal amount of $1,000,000 or a
whole multiple thereof. Any prepayments pursuant to this Section 2.16 shall be applied,
first, to the prepayment of the First Priority Term Loans until paid in full
and, second, to the Second Priority Term Loans. The application of any prepayment
pursuant to this Section 2.16 shall be made, first, to Base Rate Loans and, second,
to Eurodollar Loans.

          2.17. Mandatory Prepayment; Commitment Reduction. (a) If on any date any Global
Entity shall receive Net Cash Proceeds from any Asset Sale or Recovery Event then, subject to the
proviso below or unless a Reinvestment Notice shall be delivered in respect thereof, such Global
Entity shall, or a Loan Party shall cause such Global Entity to, pay within one (1) Business Day
after receipt by such Global Entity such Net Cash Proceeds directly to the applicable
Administrative Agent to be applied toward the prepayment of the Term Loans and the reduction of the
Revolving Commitments as set forth in Section 2.17(b); provided, that, notwithstanding the
foregoing, (i) the aggregate Net Cash Proceeds of Asset Sales that may be excluded from the
foregoing requirement pursuant to a Reinvestment Notice shall not exceed $50,000,000 in the
aggregate during the term of this Agreement, (ii) the aggregate Net Cash Proceeds of Recovery
Events that may be excluded from the foregoing requirement pursuant to a Reinvestment Notice shall
not exceed (A) $25,000,000 in the aggregate during the term of this Agreement if the subject of
such Recovery Events are assets owned by the Geysers Entities and (B) $150,000,000 in the aggregate
during the term of this Agreement if the subject of such Recovery Events are assets owned by Global
Entities other than the Geysers Entities, (iii) on each Reinvestment Prepayment Date, an amount
equal to the Reinvestment Prepayment Amount with respect to the relevant Reinvestment Event shall
be applied toward the prepayment of the Term Loans and the reduction of the Revolving Commitments
as set forth in Section 2.17(b) and (iv) the Borrower shall not be required pursuant to this
Section 2.17(a) to apply (x) $100,000,000 in the aggregate during the term of this Agreement of Net
Cash Proceeds of any Asset Sale permitted under Section 6.5(j) and (k), any Turbine Disposition or
any Asset Sale of property of any Global Entity that is not a Credit Party or an unconsolidated
Subsidiary and (y) Net Cash Proceeds of any Turbine Dispositions of less than $200,000,000, in the
aggregate.

 

32

          (b) Amounts to be applied in connection with prepayments of the Loans and Commitment
reductions made pursuant to Section 2.17(a) shall be applied, first, to the prepayment of
the First Priority Term Loans (in accordance with Section 2.20(b)) until the First Priority Term
Loans are paid in full, second, to reduce permanently the Revolving Commitments until the
Total Revolving Commitments are reduced to $750,000,000 and, third, to the prepayment of
the Second Priority Term Loans until paid in full. Any such reduction of the Revolving Commitments
shall be accompanied by prepayment of the Revolving Loans and/or Swingline Loans to the extent, if
any, that the Aggregate Revolving Outstandings exceed the amount of the Total Revolving Commitments
as so reduced. The application of any prepayment pursuant to Section 2.17 shall be made,
first, to Base Rate Loans and, second, to Eurodollar Loans; provided,
however, in connection with any such prepayments of the Term Loans pursuant to Section
2.17(a), such prepayments shall be applied on a pro rata basis to the then outstanding applicable
Term Loans being prepaid irrespective of whether such outstanding Term Loans are Base Rate Loans or
Eurodollar Loans; provided, that if no Lender exercises the right to waive such prepayment
pursuant to Section 2.17(e), then, with respect to such prepayment, the amount of such prepayment
shall be applied first to Term Loans that are Base Rate Loans to the full extent thereof before
application to Term Loans that are Eurodollar Loans in a manner that minimizes the amount of any
payments required to be made by the Borrower pursuant to Section 2.23. Each prepayment of the
Loans under Section 2.17 (except in the case of Revolving Loans that are Base Rate Loans and
Swingline Loans) shall be accompanied by accrued interest to the date of such prepayment on the
amount prepaid.

          (c) Upon the Termination Date, the Total Commitment shall automatically terminate in full and
the Borrower shall pay the Loans in full (including all accrued and unpaid interest thereon, Fees
and other Obligations in respect thereof) and, if there are any Letter of Credit Outstandings
constituting undrawn Letters of Credit, the Borrower shall replace such Letter(s) of Credit,
provide a “back-to-back” letter of credit acceptable to the Fronting Bank or collateralize such Letter
of Credit Outstandings, in each case in the manner set forth in Section 2.8(b).

          (d) On the Closing Date, the Borrower shall pay the Existing Revolving Loans in full with the
proceeds of the Term Loans, without a corresponding permanent reduction of the Total Revolving
Commitments.

          (e) Notwithstanding anything to the contrary in Section 2.17(b) or 2.20, with respect to the
amount of any mandatory prepayment described in Section 2.17 (such amount, the “Prepayment
Amount”), the Borrower will, on the date specified in Section 2.17 for such prepayment, give
the Administrative Agents telephonic notice (promptly confirmed in writing) requesting that the
First Priority Agent prepare and provide to each First Priority Term Lender a notice (each, a
“Prepayment Option Notice”) as described below. As promptly as practicable after receiving
such notice from the Borrower, the First Priority Agent will send to each First Priority Term
Lender a Prepayment Option Notice, which shall be substantially in the form of Exhibit I, and shall
include an offer (“Offer”) by the Borrower to prepay on the date (each a “Mandatory
Prepayment Date”) that is ten (10) Business Days after the date of the Prepayment Option
Notice, the relevant First Priority Term Loans of such Lender by an amount equal to the portion of
the Prepayment Amount indicated in such Lender’s Prepayment Option Notice. Each First Priority
Term Lender may accept or reject the Offer contained in the Prepayment Option Notice. With respect
to First Priority Term Lenders accepting such Offer, on the Mandatory Prepayment Date, the First
Priority Agent shall pay to the relevant First Priority Lenders the aggregate amount necessary to
prepay that portion of the outstanding relevant First Priority Term Loans in respect of which such
Lenders have accepted prepayment as described above. Any First Priority Term Lenders rejecting
such Offer must, as soon as practicable, but in no event later than five (5) Business Days after
receipt of the Prepayment Option Notice, give the First Priority Agent telephonic notice (promptly
confirmed in writing) of such rejection and the First Priority Agent will give the Borrower
corresponding telephonic notice (promptly confirmed in writing) and the amounts equal to the
portion of the Prepayment Amount

 

33

indicated in such First Priority Term Lenders’ Prepayment Option
Notice will be used on the applicable Mandatory Prepayment Date to reduce the Revolving Commitments
and repay the Second Priority Term Loans in accordance with Section 2.17(b). Notwithstanding
anything to the contrary contained in Section 2.17(b) or 2.20, with respect to the Prepayment
Amount, the Borrower will, on the date specified in Section 2.17 for such prepayment or no later
than five (5) Business Days after the applicable Mandatory Prepayment Date with respect to any
amount rejected by the First Priority Term Lenders and to be applied to the prepayment of the
Second Priority Term Loans in accordance with the immediately preceding sentence, give the
Administrative Agents telephonic notice (promptly confirmed in writing) requesting that the Second
Priority Agent prepare and provide to each Second Priority Lender a Prepayment Option Notice. As
described above, the Second Priority Agent will send to each Second Priority Lender a Prepayment
Option Notice, which shall include an Offer by the Borrower to prepay on the Mandatory Prepayment
Date the relevant Second Priority Term Loans of such Lender by an amount equal to the portion of
the Prepayment Amount indicated in such Lender’s Prepayment Option Notice. Each Second Priority
Term Lender may accept or reject the Offer contained in the Prepayment Option Notice. With respect
to Second Priority Term Lenders accepting such Offer, on the Mandatory Prepayment Date, the First
Priority Agent shall pay to the relevant Second Priority Lenders the aggregate amount necessary to
prepay that portion of the outstanding relevant Second Priority Term Loans in respect of which such
Lenders have accepted prepayment as described above. Any Second Priority Term Lenders rejecting
such offer must, as soon as practicable, but in no event later than five (5) Business Days after
receipt of the Prepayment Option Notice, give the Administrative Agents, telephonic notice
(promptly confirmed in writing) of such rejection and the Second Priority Agent will give the
Borrower telephonic notice of the same (promptly confirmed in writing), and the amounts equal to
the portion of the Prepayment Amount indicated in such Second Priority Term Lenders’ Prepayment
Option Notice will be used to repay Revolving Loans, provided that such repayments of the Revolving Loans shall not reduce
the Total Revolving Commitments.

          2.18. Conversion and Continuation Options. (a) The Borrower may elect from time to
time to convert Eurodollar Loans to Base Rate Loans by giving the Administrative Agents and, in the
case of the Revolving Loans, the Sub-Agent prior irrevocable notice, in substantially the form
attached hereto as Exhibit K, of such election no later than 12:00 Noon, New York City time, on the
Business Day preceding the proposed conversion date, provided that any such conversion of
Eurodollar Loans may only be made on the last day of an Interest Period with respect thereto. The
Borrower may elect from time to time to convert Base Rate Loans to Eurodollar Loans by giving the
Administrative Agents and, in the case of the Revolving Loans, the Sub-Agent prior irrevocable
notice of such election no later than 12:00 Noon, New York City time, on the third (3rd)
Business Day preceding the proposed conversion date (which notice shall specify the length of the
initial Interest Period therefor), provided that no Base Rate Loan under a particular
Facility may be converted into a Eurodollar Loan when any Event of Default has occurred and is
continuing and the applicable Administrative Agent or the Majority Facility Lenders in respect of
such Facility have determined in its or their sole discretion not to permit such conversions.
Upon receipt of any such notice the applicable Administrative Agent or, in the case of the
Revolving Loans, the Sub-Agent shall promptly notify each relevant Lender thereof.

          (b) Any Eurodollar Loan may be continued as such upon the expiration of the then current
Interest Period with respect thereto by the Borrower giving irrevocable notice to the
Administrative Agents or, in the case of the Revolving Loans, the Sub-Agent, in accordance with the
applicable provisions of the term “Interest Period” set forth in Section 1.1, of the length of the
next Interest Period to be applicable to such Loans, provided that no Eurodollar Loan under
a particular Facility may be continued as such when any Event of Default has occurred and is
continuing and the applicable Administrative Agent has or the Majority Facility Lenders in respect
of such Facility have determined in its or their sole discretion not to permit such continuations,
and provided, further, that if the Borrower shall fail to give any required notice
as described above in this paragraph or if such

 

34

continuation is not permitted pursuant to the
preceding proviso such Loans shall be automatically converted to Base Rate Loans on the last day of
such then expiring Interest Period. Upon receipt of any such notice the applicable Administrative
Agent or, in the case of the Revolving Loans, the Sub-Agent shall promptly notify each relevant
Lender thereof.

          2.19. Limitations on Eurodollar Tranches. Notwithstanding anything to the contrary in
this Agreement, all borrowings, conversions and continuations of Eurodollar Loans and all
selections of Interest Periods shall be in such amounts and be made pursuant to such elections so
that, (a) after giving effect thereto, the aggregate principal amount of the Eurodollar Loans
comprising each Eurodollar Tranche shall be equal to $5,000,000 or a whole multiple of $1,000,000
in excess thereof and (b) no more than ten Eurodollar Tranches shall be outstanding at any one
time.

          2.20. Pro Rata Treatment, Etc. (a) Each borrowing by the Borrower from the Lenders
hereunder, each payment by the Borrower on account of any commitment or ticking fee and any
reduction of the Commitments of the Lenders shall be made pro rata according to the respective
First Priority Term Percentages, Second Priority Term Percentages or Revolving Commitment
Percentages, as the case may be, of the relevant Lenders.

          (b) Each payment (including each prepayment) by the Borrower on account of principal and
interest on (x) the First Priority Term Loans shall be made pro rata according to
the respective outstanding principal amount of the First Priority Term Loans then held by the First
Priority Term Lenders (except as otherwise provided in Section 2.17(e)) and (y) the Second Priority
Term Loans shall be made pro rata according to the respective outstanding principal
amount of the Second Priority Term Loans then held by the Second Priority Term Lenders (except as
otherwise provided in Section 2.17(e)). The amount of each principal prepayment of the First
Priority Term Loans shall be applied to reduce the then remaining installments of First Priority
Term Loans in reverse order of maturity. The amount of each principal prepayment of the Second
Priority Term Loans shall be applied to reduce the outstanding amount of Second Priority Term Loans
pro rata based upon the respective then remaining principal amounts thereof.

          (c) Each payment (including each prepayment) by the Borrower on account of principal or
interest on the Revolving Loans shall be made pro rata according to the respective outstanding
principal amounts of the Revolving Loans then held by the Revolving Lenders.

          (d) All payments by the Borrower hereunder and under the Notes shall be made in Dollars in
immediately available funds at the Funding Office of the applicable Administrative Agent or, in the
case of the Revolving Loans, the Sub-Agent by 2:00 P.M., New York City time, on the date on which
such payment shall be due, provided that if any payment hereunder would become due and
payable on a day other than a Business Day such payment shall become due and payable on the next
succeeding Business Day and, with respect to payments of principal, interest thereon shall be
payable at the then applicable rate during such extension. Interest in respect of any Loan
hereunder shall accrue from and including the date of such Loan to but excluding the date on which
such Loan is paid in full.

          (e) Unless the applicable Administrative Agent or, in the case of the Revolving Loans, the
Sub-Agent shall have been notified in writing by any Lender prior to a Borrowing that such Lender
will not make the amount that would constitute its share of such borrowing available to such
Administrative Agent or, in the case of the Revolving Loans, the Sub-Agent, such Administrative
Agent or the Sub-Agent, as applicable, may assume that such Lender is making such amount available
to such Administrative Agent or the Sub-Agent, as applicable, and such Administrative Agent or the
Sub-Agent, as applicable, may, in reliance upon such assumption, make available to the Borrower a
corresponding amount. If such amount is not made available the applicable Administrative Agent or
the Sub-Agent, as

 

35

applicable, by the required time on the Borrowing Date therefor, such Lender
shall pay to such Administrative Agent or the Sub-Agent, as applicable, on demand, such amount with
interest thereon, at a rate equal to the greater of (i) the Federal Funds Effective Rate and (ii) a
rate determined by such Administrative Agent or the Sub-Agent, as applicable, in accordance with
banking industry rules on interbank compensation, for the period until such Lender makes such
amount immediately available to such Administrative Agent or the Sub-Agent, as applicable. A
certificate of the applicable Administrative Agent or the Sub-Agent, as applicable, submitted to
any Lender with respect to any amounts owing under this paragraph shall be conclusive in the
absence of manifest error. If such Lender’s share of such borrowing is not made available to the
applicable Administrative Agent or the Sub-Agent, as applicable, by such Lender within three (3)
Business Days after such Borrowing Date, such Administrative Agent or the Sub-Agent, as applicable,
shall also be entitled to recover such amount with interest thereon at the rate per annum
applicable to Base Rate Loans under the relevant Facility, on demand, from the Borrower, such
recovery to be without prejudice to the rights of the Borrower against any such Lender.

          (f) Unless the applicable Administrative Agent or, in the case of the Revolving Loans, the
Sub-Agent shall have been notified in writing by the Borrower prior to the date of any payment due
to be made by the Borrower hereunder that the Borrower will not make such payment to such
Administrative Agent or the Sub-Agent, as applicable, such Administrative Agent or the Sub-Agent,
as applicable, may assume that the Borrower is making such payment, and such Administrative
Agent, or the Sub-Agent, as applicable, may, but shall not be required to, in reliance upon such
assumption, make available to the Lenders their respective pro
rata shares of a
corresponding amount. If such payment is not made to such Administrative Agent or the Sub-Agent,
as applicable, by the Borrower within three (3) Business Days after such due date, such
Administrative Agent or the Sub-Agent, as applicable, shall be entitled to recover, on demand, from
each Lender to which any amount which was made available pursuant to the preceding sentence, such
amount with interest thereon at the rate per annum equal to the daily average Federal Funds
Effective Rate. Nothing herein shall be deemed to limit the rights of either Administrative Agent,
the Sub-Agent or any Lender against the Borrower.

          2.21. Requirements of Law. (a) If the adoption of or any change in any Requirement
of Law or in the interpretation or application thereof or compliance by any Lender with any request
or directive (whether or not having the force of law) from any central bank or other Governmental
Authority, in each case, made subsequent to the date hereof:

     (i) shall subject any Lender to any tax of any kind whatsoever with respect to
this Agreement, any Letter of Credit, any Application or any Eurodollar Loan made by
it, or change the basis of taxation of payments to such Lender in respect thereof
(except for Non-Excluded Taxes covered by Section 2.22 and changes in the rate of
tax on the overall net income of such Lender);

     (ii) shall impose, modify or hold applicable any reserve, special deposit,
compulsory loan or similar requirement against assets held by, deposits or other
liabilities in or for the account of, advances, loans or other extensions of credit
by, or any other acquisition of funds by, any office of such Lender that is not
otherwise included in the determination of the Eurodollar Rate; or

     (iii) shall impose on such Lender any other condition;

and the result of any of the foregoing is to increase the cost to such Lender, by an amount that
such Lender deems to be material, of making, converting into, continuing or maintaining Eurodollar
Loans or issuing or participating in Letters of Credit or Swingline Loans, or to reduce any amount
receivable hereunder in respect thereof, then, in any such case, the Borrower shall promptly pay
such Lender, upon

 

36

its demand, any additional amounts necessary to compensate such Lender for such
increased cost or reduced amount receivable. If any Lender becomes entitled to claim any
additional amounts pursuant to this paragraph, it shall promptly notify the Borrower (with a copy
to the applicable Administrative Agent) of the event by reason of which it has become so entitled.

          (b) If any Lender shall have determined that the adoption of or any change in any Requirement
of Law regarding capital adequacy or in the interpretation or application thereof or compliance by
such Lender or any corporation controlling such Lender with any request or directive regarding
capital adequacy (whether or not having the force of law) from any Governmental Authority made
subsequent to the date hereof shall have the effect of reducing the rate of return on such Lender’s
or such corporation’s capital as a consequence of its obligations hereunder or under or in respect
of any Letter of Credit to a level below that which such Lender or such corporation could have
achieved but for such adoption, change or compliance (taking into consideration such Lender’s or
such corporation’s policies with respect to capital adequacy) by an amount deemed by such Lender to
be material, then from time to time, after submission by such Lender to the Borrower (with a copy
to the applicable Administrative Agent) of a written request therefor, the Borrower shall pay to such Lender
such additional amount or amounts as will compensate such Lender or such corporation for such
reduction.

          (c) A certificate as to any additional amounts payable pursuant to this Section submitted by
any Lender to the Borrower (with a copy to the applicable Administrative Agent) shall be conclusive
in the absence of manifest error. Notwithstanding anything to the contrary in this Section, the
Borrower shall not be required to compensate a Lender pursuant to this Section for any amounts
incurred more than 180 days prior to the date that such Lender notifies the Borrower of such
Lender’s intention to claim compensation therefor; provided that, if the circumstances
giving rise to such claim have a retroactive effect, then such 180 days period shall be extended to
include the period of such retroactive effect. The obligations of the Borrower pursuant to this
Section shall survive the termination of this Agreement and the payment of the Loans and all other
amounts payable hereunder.

          2.22. Taxes. (a) All payments made by the Borrower under this Agreement and the
other Loan Documents shall be made free and clear of, and without deduction or withholding for or
on account of, any present or future income, stamp or other taxes, levies, imposts, duties,
charges, fees, deductions or withholdings, now or hereafter imposed, levied, collected, withheld or
assessed by any Governmental Authority, excluding net income taxes, gross receipt taxes (imposed in
lieu of net income taxes) and franchise taxes (imposed in lieu of net income taxes) imposed on
either Administrative Agent, the Sub-Agent, the Fronting Bank or any Lender as a result of a
present or former connection between such Administrative Agent or such Lender and the jurisdiction
of the Governmental Authority imposing such tax or any political subdivision or taxing authority
thereof or therein (other than any such connection arising solely from such Administrative Agent,
the Sub-Agent, the Fronting Bank or such Lender having executed, delivered or performed its
obligations or received a payment under, or enforced, this Agreement or any other Loan Document).
If any such non-excluded taxes, levies, imposts, duties, charges, fees, deductions or withholdings
(“Non-Excluded Taxes”) or Other Taxes are required to be withheld from any amounts payable
to either Administrative Agent, the Sub-Agent, the Fronting Bank or any Lender hereunder, the
amounts so payable to such Administrative Agent, the Sub-Agent, the Fronting Bank or such Lender
shall be increased to the extent necessary to yield to such Administrative Agent, the Sub-Agent,
the Fronting Bank or such Lender (after payment of all Non-Excluded Taxes and Other Taxes) interest
or any such other amounts payable hereunder at the rates or in the amounts specified in this
Agreement, provided, however, that the Borrower shall not be required to increase
any such amounts payable to any Lender with respect to any Non-Excluded Taxes (i) that are
attributable to such Lender’s failure to comply with the requirements of paragraph (d) or (e) of
this Section or (ii) that are United States withholding taxes imposed on amounts payable to such
Lender at the time such Lender becomes a party to this Agreement, except to the extent that such
Lender’s assignor (if any) was entitled, at the time of

 

37

assignment, to receive additional amounts
from the Borrower with respect to such Non-Excluded Taxes pursuant to this paragraph.

          (b) In addition, the Borrower shall pay any Other Taxes to the relevant Governmental Authority
in accordance with applicable law.

          (c) Whenever any Non-Excluded Taxes or Other Taxes are payable by the Borrower, as promptly as
possible thereafter the Borrower shall send to the applicable Administrative Agent for its own
account or for the account of the Sub-Agent, the Fronting Bank or the relevant Lender, as the case
may be, a certified copy of an original official receipt received, if any, by the Borrower or other
documentary evidence showing payment thereof. If the Borrower fails to pay any Non-Excluded Taxes
or Other Taxes when due to the appropriate taxing authority or fails to remit to the applicable
Administrative Agent the required receipts or other required documentary evidence, the Borrower
shall indemnify such Administrative Agent and the Sub-Agent, the Fronting Bank or the Lenders for
any such taxes and for any incremental taxes, interest or penalties that may become payable by such
Administrative Agent or the Sub-Agent, the Fronting Bank or any Lender as a result of any such
failure.

          (d) Each Lender (or Transferee) that is not a “U.S. Person” as defined in Section 7701(a)(30)
of the Code (a “Non-U.S. Lender”) shall deliver to the Borrower and the applicable
Administrative Agent (or, in the case of a Participant, to the Lender from which the related
participation shall have been purchased) two copies of either U.S. Internal Revenue Service Form
W-8BEN, Form W-8ECI or W-81MY (and all necessary attachments), or, in the case of a Non-U.S. Lender
claiming exemption from U.S. federal withholding tax under Section 871(h) or 881(c) of the Code
with respect to payments of “portfolio interest”, a statement substantially in the form of Exhibit
J and a Form W-8BEN, or any subsequent versions thereof or successors thereto, properly completed
and duly executed by such Non-U.S. Lender claiming complete exemption from, or a reduced rate of,
U.S. federal withholding tax on all payments by the Borrower under this Agreement and the other
Loan Documents. Such forms shall be delivered by each Non-U.S. Lender on or before the date it
becomes a party to this Agreement (or, in the case of any Participant, on or before the date such
Participant purchases the related participation). In addition, each Non-U.S. Lender shall deliver
such forms promptly upon the obsolescence or invalidity of any form previously delivered by such
Non-U.S. Lender. Each Non-U.S. Lender shall promptly notify the Borrower at any time it determines
that it is no longer in a position to provide any previously delivered certificate to the Borrower
(or any other form of certification adopted by the U.S. taxing authorities for such purpose).
Notwithstanding any other provision of this paragraph, a Non-U.S. Lender shall not be required to
deliver any form pursuant to this paragraph that such Non-U.S. Lender is not legally able to
deliver.

          (e) A Lender that is entitled to an exemption from or reduction of non-U.S. withholding tax
under the law of the jurisdiction in which the Borrower is located, or any treaty to which such
jurisdiction is a party, with respect to payments under this Agreement shall deliver to the
Borrower (with a copy to the applicable Administrative Agent), at the time or times prescribed by
applicable law or reasonably requested by the Borrower, such properly completed and executed
documentation prescribed by applicable law as will permit such payments to be made without
withholding or at a reduced rate, provided that such Lender is legally entitled to
complete, execute and deliver such documentation and in such Lender’s judgment such completion,
execution or submission would not materially prejudice the legal position of such Lender.

          (f) If an Administrative Agent, the Sub-Agent, the Fronting Bank or any Lender determines, in
its sole discretion, that it has received a refund of any Non-Excluded Taxes or Other Taxes as to
which it has been indemnified by the Borrower or with respect to which the Borrower has paid
additional amounts pursuant to this Section 2.22, it shall pay over such refund to the Borrower
(but only

 

38

to the extent of indemnity payments made, or additional amounts paid, by the Borrower
under this Section 2.22 with respect to the Non-Excluded Taxes or Other Taxes giving rise to such
refund), net of all out-of-pocket expenses of such Administrative Agent, the Sub-Agent, the
Fronting Bank or such Lender and without interest (other than any interest paid by the relevant
Governmental Authority with respect to such refund); provided that the Borrower, upon the
request of such Administrative Agent, the Sub-Agent, the Fronting Bank or such Lender, agrees to
repay the amount paid over to the Borrower (plus any penalties, interest or other charges imposed
by the relevant Governmental Authority) to such Administrative Agent or such Lender in the event
such Administrative Agent, the Sub-Agent, the Fronting Bank or such Lender is required to repay
such refund to such Governmental Authority. This paragraph shall not be construed to require the
Administrative Agents, the Sub-Agent, the Fronting Bank or any Lender to make available its tax
returns (or any other information relating to its taxes which it deems confidential) to the
Borrower or any other Person.

          (g) The agreements in this Section shall survive the termination of this Agreement and the
payment of the Loans and all other amounts payable hereunder.

          2.23. Indemnity. The Borrower agrees to indemnify each Lender for, and to hold each
Lender harmless from, any loss or expense that such Lender may sustain or incur as a consequence of
(a) default by the Borrower in making a borrowing of, conversion into or continuation of Eurodollar
Loans after the Borrower has given a notice requesting the same in accordance with the provisions
of this Agreement, (b) default by the Borrower in making any prepayment of or conversion from
Eurodollar Loans after the Borrower has given a notice thereof in accordance with the provisions of
this Agreement or (c) the making of a prepayment or conversion of Eurodollar Loans on a day that is
not the last day of an Interest Period with respect thereto. Such indemnification may include an
amount equal to the excess, if any, of (i) the amount of interest that would have accrued on the
amount so prepaid, or not so borrowed, converted or continued, for the period from the date of such
prepayment or of such failure to borrow, convert or continue to the last day of such Interest
Period (or, in the case of a failure to borrow, convert or continue, the Interest Period that would
have commenced on the date of such failure) in each case at the applicable rate of interest for
such Loans provided for herein (excluding, however, the Applicable Margin included therein, if any)
over (ii) the amount of interest (as reasonably determined by such Lender) that would have accrued
to such Lender on such amount by placing such amount on deposit for a comparable period with
leading banks in the interbank eurodollar market. A certificate as to any amounts payable pursuant
to this Section submitted to the Borrower by any Lender shall be conclusive in the absence of
manifest error. Notwithstanding anything to the contrary in this Section, the Borrower shall not
be required to compensate a Lender pursuant to this Section for any amounts incurred more than 180
days prior to the date that such Lender notifies the Borrower of such Lender’s intention to claim
compensation therefor; provided that, if the circumstances giving rise to such claim have a
retroactive effect, then such 180 days period shall be extended to include the period of such
retroactive effect. This covenant shall survive the termination of this Agreement and the payment
of the Loans and all other amounts payable hereunder.

          2.24. Change of Lending Office. Each Lender agrees that, upon the occurrence of any
event giving rise to the operation of Section 2.21 or 2.22(a) with respect to such Lender, it will,
if requested by the Borrower, use reasonable efforts (subject to overall policy considerations of
such Lender) to designate another lending office for any Loans affected by such event with the
object of avoiding the consequences of such event; provided that such designation is made
on terms that, in the good faith judgment of such Lender, cause such Lender and its lending
office(s) to suffer no economic, legal or regulatory disadvantage, and provided,
further, that nothing in this Section shall affect or postpone any of the obligations of
the Borrower or the rights of any Lender pursuant to Section 2.21 or 2.22(a).

 

39

          2.25. Fees. (a) The Borrower shall pay to the Sub-Agent, for the account of each
Revolving Lender, a commitment fee (the “Commitment Fee”) for the period commencing on the
Original Closing Date to the Termination Date, computed at the Commitment Fee Rate on the average
daily amount of the Available Revolving Commitment of such Lender during the period for which
payment is made, payable monthly in arrears on each Fee Payment Date, commencing on the first such
date to occur after the Original Closing Date.

          (b) The Borrower agrees to pay to the Administrative Agents, DBSI and CS the fees in the
amounts and on the dates as set forth in any fee agreements with the Administrative Agents, CS and
DBSI and to perform any other obligations contained therein.

          2.26. Letter of Credit Fees. The Borrower shall pay with respect to each Letter of
Credit (a) to the Sub-Agent on behalf of (i) the Revolving Lenders, a fee calculated from and
including the date of issuance of such Letter of Credit to the expiration or termination date of
such Letter of Credit at the rate per annum of 2.25% on the face amount of such Letter of Credit
and (b) to the Fronting Bank a fee of 0.25% on the face amount of such Letter of Credit for the
issuance, amendment and processing referred to in Section 2.8(c). Accrued fees described in the
foregoing sentence of this Section in respect of each Letter of Credit shall be due and payable in
arrears on each Fee Payment Date, commencing on the first such date to occur after the date hereof.

          2.27. Nature of Fees. All Fees shall be paid on the dates due, in immediately
available funds, to the applicable Administrative Agent or the Sub-Agent, as the case may be (for
the respective accounts of the applicable Administrative Agent, the Sub-Agent, the Fronting Bank
and the Lenders), as provided herein. Once paid, none of the Fees shall be refundable under any
circumstances.

          2.28. Priority and Liens. (a) The Loan Parties hereby covenant, represent and
warrant that, upon entry of the Interim Order (or the Final Order, as applicable), the Obligations
of the Loan Parties hereunder and under the other Loan Documents and the Interim Order (or the
Final Order, as applicable), (i) pursuant to Section 364(c)(1) of the Bankruptcy Code, shall at all
times constitute allowed Superpriority Claims, (ii) pursuant to Section 364(c)(2) of the Bankruptcy
Code, shall be secured by a perfected first priority Lien on, and security interest in, all present
and after-acquired property of the Debtors not subject to a valid, perfected and non-avoidable lien
or security interest in existence on the Petition Date or to a valid lien in existence on the
Petition Date that is perfected subsequent to the Petition Date as permitted by Bankruptcy Code
Section 546(b) (but excluding the Borrower’s and the Guarantors’ rights in respect of avoidance
actions under the Bankruptcy Code and the proceeds thereof); and (iii) pursuant to Section
364(c)(3) of the Bankruptcy Code, shall be secured by a perfected junior Lien on, and security
interest in, all present and after-acquired property of the Debtors that is otherwise subject to a
valid, perfected and non-avoidable lien or security interest in existence on the Petition Date or a
valid lien in existence on the Petition Date that is perfected subsequent to the Petition Date as
permitted by Bankruptcy Code Section 546(b), subject and subordinate in each case with respect to
subclauses (i) through (iii) above, only to, in the event of the occurrence and during the
continuance of an Event of Default, the payment of (A) unpaid fees and expenses of professionals
retained by the Debtors or any official committee (each a “Committee”) appointed in
accordance with Section 1102 of the Bankruptcy Code and the reasonable expenses of members of the
Committee of unsecured creditors or otherwise that are (I) incurred prior to the occurrence and
continuance of an Event of Default and (II) allowed by the Bankruptcy Court, at any time, under
sections 105(a), 330 and 331 of the Bankruptcy Code, (B) unpaid fees and expenses of professionals
retained by the Debtors or any Committee and the reasonable expenses of members of the Committee of
unsecured creditors up to an aggregate amount not to exceed $25,000,000 that (I) are incurred after
the occurrence and during the continuance of an Event of Default and (II) allowed by the Bankruptcy
Court, at any time, under Sections 105(a), 330 and 331 of the Bankruptcy Code or otherwise, (C) in
the event of a conversion of the Cases, the reasonable fees and

 

40

expenses of a chapter 7 trustee
under section 726(b) of the Bankruptcy Code in an amount not exceeding $2,000,000, and (D) fees
required to be paid to the Clerk of the Bankruptcy Court and to the Office of the United
States Trustee under 28 U.S.C. §1930(a) (collectively, the “Carve-Out”), provided,
however that the Carve-Out shall not include any fees or expenses incurred in challenging
the Liens or Superpriority Claims of the Collateral Agent, Administrative Agents or Lenders granted
under this Agreement, the Security and Pledge Agreement and the Orders (it being understood that,
in the event of a liquidation of the Borrower’s and the other Debtors’ estates an amount equal to
the Carve-Out shall be reserved from the proceeds of such liquidation, or from cash held in the
estates at such time, and held in a segregated account prior to the making of the distributions);
provided, further, however, no Loan Party 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.
For clarity, the Administrative Agents and Lenders agree that so long as no Event of Default shall
have occurred and be continuing, the Debtors shall be permitted to pay compensation and
reimbursement of fees and expenses allowed and payable under Bankruptcy Code Sections 105(a), 330,
and 331, as the same may be due and payable, and neither such amounts nor any retainers paid to the
professionals retained by the Debtors or any Committee, nor any fees, expenses, indemnities or
other amounts paid to any Agent, Lender or their respective attorneys and agents under this
Agreement, shall reduce the Carve-Out, provided, that nothing herein shall be construed to impair
the ability of any party to object to any of the fees, expenses, reimbursement or compensation
described in clauses (ii) and (iii) above, and provided, further, that cash or
other amounts on deposit in the L/C Cash Collateral Account shall not be subject to the Carve-Out.

          (b) As to all Collateral, each Loan Party hereby assigns and conveys as security, grants a
security interest in, hypothecates, mortgages, pledges and sets over unto the Collateral Agent all
of the right, title and interest of the Borrower and such Guarantor in all of such Collateral. The
Borrower and each Guarantor acknowledges that, pursuant to the Orders, the Liens granted in favor
of the Collateral Agent (on behalf of the Lenders) in all of the Collateral shall be perfected
without the recordation of any Uniform Commercial Code financing statements, notices of Lien or
other instruments. The Borrower and each Guarantor further agrees that (a) the Collateral Agent
shall have the rights and remedies set forth in the Security and Pledge Agreement in respect of the
Collateral and (b) if requested by the Collateral Agent, the Borrower and each of the Guarantors
shall enter into separate security agreements, pledge agreements and fee and leasehold mortgages
with respect to such Collateral on terms reasonably satisfactory to the Collateral Agent.

          2.29. Security Interest in L/C Cash Collateral Account. Pursuant to Section 364(c)(2)
of the Bankruptcy Code, the Loan Parties hereby assign and pledge to the Collateral Agent (for the
benefit of the Lenders and as security for the Obligations), and hereby grant to the Collateral
Agent (for the benefit of the Lenders) a first priority security interest, senior
to all other Liens, if any, in all of the Loan

 

41

Parties’ right, title and interest in and to
the L/C Cash Collateral Account and any direct investment of the funds contained therein.

          2.30. Payment of Obligations. Upon the maturity (whether by acceleration or
otherwise) of any of the Obligations under this Agreement or any of the other Loan Documents, the
Lenders shall be entitled to immediate payment of such Obligations without further application to
or order of the Bankruptcy Court.

          2.31. No Discharge; Survival of Claims. The Borrower and each Guarantor agrees that
to the extent its Obligations hereunder are not satisfied in full, (a) its Obligations arising
hereunder shall not be discharged by the entry of a Confirmation Order (and each Loan Party,
pursuant to Section 1141(d)(4) of the Bankruptcy Code, hereby waives any such discharge) and (b)
the Superpriority Claim granted to the Administrative Agents and the Lenders pursuant to the Orders
and described in Section 2.28 and the Liens granted to the Collateral Agent pursuant to the Orders
and described in Section 2.28 shall not be affected in any manner by the entry of a Confirmation
Order.

SECTION 3

REPRESENTATIONS AND WARRANTIES

          In order to induce the Lenders to amend and restate the Existing Credit Agreement and to make
Extensions of Credit hereunder, the Borrower and each of the Guarantors jointly and severally
represent and warrant on each date required pursuant to Section 4 to each Lender as follows:

          3.1. Organization and Authority. Each Loan Party (a) is duly organized and validly
existing under the laws of the state of its organization or incorporation and is duly qualified as
a foreign corporation and is in good standing in the jurisdiction of its organization and in each
jurisdiction where its ownership, lease or operation of property or the conduct of its business
requires such qualification, except in each case, in which the failure to so qualify, could not
reasonably be expected to have a Material Adverse Effect; (b) subject to the entry by the
Bankruptcy Court of the Interim Order (or the Final Order, as applicable), has the requisite
corporate or limited liability company power and authority, as the case may be, to effect the
transactions contemplated hereby and by the other Loan Documents, and (c) subject to the entry by
the Bankruptcy Court of the Interim Order (or the Final Order, as applicable), has all requisite
corporate or limited liability company power and authority and the legal right to own, pledge,
mortgage and operate its properties, to lease the properties it operates as lessee and to conduct
its business as now or currently proposed to be conducted.

          3.2. Due Execution; Binding Obligation. Upon entry by the Bankruptcy Court of the
Interim Order (or the Final Order, as applicable), the execution, delivery and performance by the
Loan Parties of each of the Loan Documents to which it is a party, and the commencement of the
Cases (i) are within the respective corporate or limited liability company powers of each Loan
Party, as the case may be, have been duly authorized by all necessary corporate or limited
liability company action, as the case may be, including the consent of shareholders or member(s)
where required, and do not (A) contravene the charter, by-laws or other organizational documents of
any Loan Party, (B) violate any applicable law (including without limitation, the Securities
Exchange Act of 1934) or regulation (including without limitation, Regulation U or X of the
Board of Governors), or any order or decree of any Governmental Authority binding on any such Loan
Party, in each case, which could reasonably be expected to have a Material Adverse Effect, (C)
conflict with or result in a breach of, or constitute a default under, any material Contractual
Obligation of any Loan Party entered into on or after the Petition Date, including any material
indenture, mortgage or deed of trust entered into on or after the Petition Date, any material
provision of any security issued by any Loan Party on or after the Petition Date or any material
lease,

 

42

agreement, instrument or other undertaking entered into on or after the Petition Date
binding on any Loan Party or any of their properties, or (D) result in or require the creation or
imposition of any Lien upon any of the property of any Loan Party other than the Liens permitted or
granted pursuant to this Agreement, the other Loan Documents or the Orders; and (ii) do not require
the consent, authorization by or approval of or notice to or filing or registration with any
Governmental Authority (other than the entry of the Orders). Upon entry by the Bankruptcy Court of
the Interim Order (or the Final Order, as applicable), this Agreement has been duly executed and
delivered by each Loan Party. This Agreement is, and each of the other Loan Documents to which
each Loan Party is or will be a party, when delivered hereunder or thereunder, and upon entry and
subject to the terms of the Interim Order (or the Final Order, as applicable), will be, a legal,
valid and binding obligation of each Loan Party enforceable against each Loan Party in accordance
with its terms and the Interim Order (or the Final Order, as applicable).

          3.3. Statements Made. The statements, written or oral, which have been made by any
Loan Party to the Administrative Agents, any of the Lenders or to the Bankruptcy Court in
connection with any Loan Document, and any financial statement delivered pursuant hereto or thereto
(other than to the extent that any such statements constitute projections or other forward-looking
statements), taken as a whole and in light of the circumstances in which made, contain no untrue
statement of a material fact and do not omit to state a material fact necessary to make such
statements not misleading in any case, which have not been, prior to the date hereof, corrected,
supplemented, or remedied by subsequent documents furnished or statements made orally or in writing
to the Administrative Agents, Lenders or the Bankruptcy Court (as appropriate); and, to the extent
that any such written statements constitute projections or other forward-looking statements, such
projections or other forward-looking statements were prepared in good faith on the basis of
assumptions, methods, data, tests and information believed by such Loan Party to be valid and
accurate in all material respects at the time such projections were furnished to the Administrative
Agents, any Lender or the Bankruptcy Court; it being understood that (i) any such Projections and
Budgets and other forward-looking statements furnished to the Administrative Agents and the Lenders
is forward-looking information subject to significant uncertainties and contingencies, which may be
beyond the Borrower’s or Guarantors’ control, (ii) no assurance is given by the Borrower or the
Guarantors that such forecasts and projections and other forward-looking information furnished to
the Administrative Agents or the Lenders will be realized and (iii) the actual results may differ
from such Projections, Budgets and other forward-looking information furnished to the Lenders and
(iv) such differences may be material.

          3.4. Financial Statements. The Borrower has furnished the Administrative Agents and
the Lenders with copies of (i) consolidated audited financial statements of the Global Entities for
the fiscal year ended December 31, 2004, (ii) audited financial statements of Geysers Power
Company, LLC for the fiscal year ended December 31, 2004, (iii) unaudited financial statements for
each of the Geysers Entities (other than Geysers Power Company, LLC) for the fiscal year ended
December 31, 2004, (iv) consolidated unaudited financial statements of the Global Entities for the
fiscal quarter ended September 30, 2005 and (v) unaudited consolidating financial statements of the
Material Subsidiaries for the fiscal quarter ended September 30, 2005. All such financial
statements are complete and correct and fairly present in all
material respects the financial condition of the Global Entities, the Geysers Entities (other
than Geysers Power Company LLC) or Material Subsidiaries, as applicable, as at such dates and the
results of their operations for the fiscal periods ended on such dates (in the case of any
unaudited financial statement, subject to year-end audit adjustments and the absence of footnotes)
all in accordance with GAAP applied on a consistent basis. Except as set forth on Schedule 3.4,
the Borrower and the Material Subsidiaries, as a whole, do not have on the date hereof any material
liabilities or liabilities for taxes, except as referred to or provided in the balance sheet
referred to above. Since the Petition Date, there has not occurred, or become known, any event or
condition that has had, or could reasonably be expected to have, a Material Adverse Effect, other
than those events which customarily occur following the commencement of a proceeding under Chapter
11 of the Bankruptcy Code.

 

43

          3.5. Loan Parties. Except as disclosed to the Administrative Agents and the Lenders
by the Borrower in writing from time to time after the Closing Date, (a) Schedule 3.5 sets forth
the name, Petition Date, location of chief executive office, location of Inventory and Equipment
(as each such term is defined in the New York UCC) (other than Inventory or Equipment that is
temporarily absent for maintenance, repair, refurbishment or bona fide business purposes in the
ordinary course of business or is in transit between locations set forth on Schedule 3.5) and
jurisdiction of incorporation of each Loan Party and, as to each such Loan Party, the percentage of
each class of Capital Stock owned by such Loan Party and (b) there are no outstanding
subscriptions, options, warrants, calls, rights or other agreements or commitments (other than
stock options or restricted stock granted to employees or directors and directors’ qualifying
shares) of any nature relating to any Capital Stock of any Material Subsidiary, except as created
by the Loan Documents or other Permitted Liens.

          3.6. Title to Assets; Liens. (a) As of the Closing Date, each of the Credit Parties
has good and marketable title (subject only to Permitted Liens) to the properties shown to be owned
by the Credit Parties on the Borrower’s balance sheet as of September 30, 2005. Each of the Credit
Parties owns and has on the date hereof good and marketable title or subsisting leasehold interests
subject to Permitted Liens to, and enjoys on the date hereof peaceful and undisturbed possession
of, all such material properties that are necessary for the operation and conduct of its
businesses.

          (b) There are no Liens of any nature whatsoever on any assets of any Credit Party other than:
(i) Liens granted pursuant to the Orders and this Agreement; (ii) other Liens in existence on the
Petition Date as reflected on Schedule 3.6; and (iii) other Permitted Liens. The aggregate
Indebtedness or other obligations secured (or that may be secured) by each such Lien is correctly
described in Schedule 6.1. No Credit Party is party to any contract, agreement, lease or
instrument entered into on or after the Petition Date the performance of which, either
unconditionally or upon the happening of an event, will result in or require the creation of a Lien
that is not a Permitted Lien on any assets of such Credit Party in violation of this Agreement.

          3.7. No Default. No “Voting Rights Trigger Event”, defaults, events of default or
similar events have occurred under the Preferred Equity Documents, except to the extent that (x)
any such “Voting Rights Trigger Event” occurred solely as a result of the commencement of the Cases
and has been stayed and not exercised or (y) any such “Voting Rights Trigger Event”, default, event
of default or similar event has not resulted in a change of control or similar event at CCFC
Preferred Holdings, LLC or any of its
Subsidiaries or in a foreclosure or acceleration action by lenders of Indebtedness of CCFC
Preferred Holdings, LLC or any of its Subsidiaries.

          3.8. Approvals. Except for the Orders, no Authorizations of any Governmental
Authority, or any applicable securities exchange, are necessary for the execution, delivery or
performance by each Loan Party of the Loan Documents to which it is a party, or for the legality,
validity or enforceability hereof or thereof.

          3.9. The Orders. As of the date of the making of any Extension of Credit hereunder,
the Interim Order (or the Final Order, as applicable) has been entered and has not been stayed,
amended, vacated, reversed, rescinded or otherwise modified in any respect (except in accordance
with the terms hereof).

          3.10. Use of Proceeds. The proceeds of the Loans shall be used (a) for working
capital and other general corporate purposes of the Loan Parties and, to the extent not prohibited
hereunder, of other Global Entities and any other purposes expressly permitted hereunder and (b) a
portion of the Term Loans shall prepay any outstanding Existing Revolving Loans on the Closing
Date.

 

44

          3.11. Disclosed Matters. Except as disclosed in writing to the Administrative Agents
and the Lenders prior to the date hereof, to each Loan Party’s knowledge there are no unstayed
legal or arbitral proceedings, or any proceedings or investigation by or before any governmental or
regulatory authority or agency, pending or threatened in writing to any Loan Party, or (to the
actual knowledge of the Borrower) threatened against any Loan Party which is reasonably likely to
be determined adversely and if so determined would have a Material Adverse Effect or that seek to
enjoin or delay any of the transactions contemplated hereby.

          3.12. Federal Regulations. No part of the proceeds of any Loans, and no other
Extensions of Credit hereunder, will be used for “buying” or “carrying” any “margin stock” within
the respective meanings of each of the quoted terms under Regulation U as now and from time to time
hereafter in effect or for any purpose that violates the provisions of the Regulations of the Board
of Governors. If requested by any Lender or either Administrative Agent, the Borrower will furnish
to each Administrative Agent and each Lender a statement to the foregoing effect in conformity with
the requirements of FR Form G-3 or FR Form U-1, as applicable, referred to in Regulation U.

          3.13. Compliance with Law. No Credit Party is in violation of any applicable law,
rule or regulation, or in default with respect to any judgment, writ, injunction or decree of any
Governmental Authority, the violation of which, or a default with respect to which, could
reasonably be expected to have a Material Adverse Effect.

          3.14. Taxes. Each Credit Party has filed or caused to be filed all Federal and state income tax and
other material tax returns that are required to be filed and subject to extension periods has paid
all taxes shown to be due and payable on said returns or on any assessments made against it or any
of its property and all other taxes, fees or other charges imposed on it or any of its property by
any Governmental Authority (other than any the amount or validity of which are currently being
contested in good faith by appropriate proceedings and with respect to which reserves in conformity
with GAAP have been provided on the books of the relevant Credit Party); no tax Lien has been
filed, and, to the knowledge of the Borrower, no claim is being asserted, with respect to any such
tax, fee or other charge.

          3.15. ERISA. Except as, individually or in the aggregate, does not or could not
reasonably be expected to result in a Material Adverse Effect: neither a Reportable Event nor an
“accumulated funding deficiency” (within the meaning of Section 412 of the Code or Section 302 of
ERISA) has occurred during the five-year period prior to the date on which this representation is
made or deemed made with respect to any Plan, and each Plan has complied in all respects with the
applicable provisions of ERISA and the Code; no termination of a Single Employer Plan has occurred,
and no Lien in favor of the PBGC or a Plan has arisen, during such five-year period; the present
value of all accrued benefits under each Single Employer Plan (based on those assumptions used to
fund such Plans) did not, as of the last annual valuation date prior to the date on which this
representation is made or deemed made, exceed the value of the assets of such Plan allocable to
such accrued benefits; neither the Borrower nor any Commonly Controlled Entity has had a complete
or partial withdrawal from any Multiemployer Plan; neither the Borrower nor any Commonly Controlled
Entity would become subject to any liability under ERISA if the Borrower or any such Commonly
Controlled Entity were to withdraw completely from all Multiemployer Plans as of the valuation date
most closely preceding the date on which this representation is made or deemed made; and no such
Multiemployer Plan is in ERISA Reorganization or Insolvent.

          3.16. Environmental Matters; Hazardous Material. Except as in the aggregate, could
not reasonably be expected to result in a Material Adverse Effect:

          (a) the facilities and properties owned, leased or operated by any Credit Party (the
“Properties”) do not contain, and have not previously contained, any Materials of
Environmental Concern

 

45

in amounts or concentrations or under circumstances that constitute a
violation of, or could give rise to liability under, any Environmental Law;

          (b) no Credit Party has received or is aware of any written notice of violation, alleged
violation, non-compliance, liability or potential liability regarding environmental matters arising
under or compliance with Environmental Laws with regard to any of the Properties or the business
operated by any Credit Party (the “Business”), nor does the Borrower have knowledge or
reason to believe that any such notice will reasonably be expected to be received or is being
threatened;

          (c) Materials of Environmental Concern have not been transported or disposed of from the
Properties in violation of, or in a manner or to a location that would reasonably be expected to
give rise to liability under, any Environmental Law, nor have any Materials of Environmental
Concern been generated, treated, stored or disposed of at, on or under any of the Properties in
violation of, or in a manner that would reasonably be expected to give rise to liability under, any
applicable Environmental Law;

          (d) no judicial proceeding or governmental or administrative action is pending or, to the
knowledge of the Borrower, threatened, under any Environmental Law to which any Credit Party is or,
to the knowledge of the Borrower, will be named as a party with respect to the Properties or the
Business, nor are there any consent decrees or other decrees, consent orders, administrative orders
or other orders, or other administrative or judicial requirements outstanding under any
Environmental Law with respect to the Properties or the Business;

          (e) there has been no release or threat of release of Materials of Environmental Concern at or
from the Properties, or arising from or related to the operations of any Credit Party in connection
with the Properties or otherwise in connection with the Business, in violation of or in amounts or
in a manner that could give rise to liability under Environmental Laws;

          (f) the Properties and all operations at the Properties are in compliance, and have in the
last five years been in compliance, with all applicable Environmental Laws, and there is no
Material of Environmental Concern at, under or about the Properties or violation of any
Environmental Law with respect to the Properties or the Business; and

          (g) no Credit Party has contractually assumed or, to the knowledge of the Borrower, assumed by
operation of law any liability of any other Person under Environmental Laws.

          3.17. Investment Company Act; Other Regulations. No Loan Party is an “investment
company”, or a company “controlled” by an “investment company”, within the meaning of the
Investment Company Act of 1940, as amended. No Loan Party is subject to regulation under any
Requirement of Law (other than Regulation X of the Board) that limits its ability to incur
Indebtedness.

          3.18. Intellectual Property. Each Credit Party owns, or is licensed to use, all
material Intellectual Property necessary for the conduct of its business as currently conducted.
No material claim has been asserted and is pending by any Person challenging or questioning the use
of any Intellectual Property or the validity or effectiveness of any Intellectual Property, nor
does the Borrower know of any valid basis for any such material claim. The use of Intellectual
Property by each Credit Party, to the knowledge of a Responsible Officer, does not infringe on the
rights of any Person in any material respect.

          3.19. Insurance. All policies of insurance of any kind or nature owned by or issued
to each Credit Party, including without limitation, policies of life, fire, theft, product
liability, public liability, property damage, other casualty, employee fidelity, workers’
compensation, employee health

 

46

and welfare, title, property and liability insurance, are in full
force and effect except to the extent commercially reasonably determined by the Borrower not to be
necessary pursuant to the immediately succeeding clause or which is not material to the overall
coverage and are of a nature and provide such coverage as in the reasonable opinion of the
Borrower, is sufficient and as is customarily carried by companies of the size and character of the
Credit Parties.

          3.20. Labor Matters. Except as, in the aggregate, could not reasonably be expected to
have a Material Adverse Effect: (a) there are no strikes or other labor disputes against any
Credit Party pending or, to the
knowledge of the Borrower, threatened; (b) hours worked by and payment made to employees of
each Credit Party have not been in violation of the Fair Labor Standards Act or any other
applicable Requirement of Law dealing with such matters; and (c) all payments due from any Credit
Party on account of employee health and welfare insurance have been paid or accrued as a liability
on the books of the relevant Credit Party.

          3.21. Intercompany Balances. Set forth on Schedule 3.21 are the intercompany loans
and other indebtedness of the Material Subsidiaries to the Borrower, including without limitation,
the principal amount of any indebtedness shown on the consolidated books and records of the
Borrower as being payable as of the Closing Date by such Material Subsidiary without giving effect
to any conversion of such indebtedness to an equity contribution by the Borrower and whether or not
evidenced by a promissory note.

SECTION 4

CONDITIONS PRECEDENT

          4.1. Conditions to the Closing Date. The occurrence of the Closing Date is subject to
the satisfaction or waiver (including a waiver of all conditions set forth herein to the extent set
forth on Schedule 5.13) of the following conditions precedent:

          (a) Credit Agreement. The Administrative Agents shall have received this Agreement
and the Security and Pledge Agreement, each executed and delivered by a duly authorized officer of
each Loan Party.

          (b) Corporate Documents and Proceedings. The Administrative Agents shall have
received for each Loan Party on the Original Closing Date, the date of execution of any Joinder or
pursuant to the Geysers Transaction, a certificate of the Secretary or an Assistant Secretary or a
duly authorized officer of each Loan Party dated the date of the initial Extension of Credit
hereunder, in substantially the form attached hereto as Exhibit B, certifying (A) that attached
thereto is a true and complete copy of resolutions adopted by the Board of Directors (or equivalent
governing body) of such entity, authorizing the transactions contemplated hereby and (B) as to the
incumbency and specimen signature of each officer (or other authorized signatory) of such entity
executing this Agreement, the Notes to be executed by it and the Loan Documents or any other
document delivered by it in connection herewith or therewith (such certificate to contain a
certification by another officer (or other authorized representative) of such entity as to the
incumbency and signature of the officer (or other authorized representative) signing the
certificate referred to in this clause (b)), provided that in connection with such
certificates delivered prior to the Closing Date in connection with the Original Closing Date, the
Joinder on [January 9, 2006] or the consummation of the Geysers Transaction, no information
contained in or attached to such certificates shall have been amended or otherwise modified as of
the Closing Date.

          (c) Final Order. The Administrative Agents and each of the Lenders shall have
received a certified copy of (a) the Final Order in respect of the Borrower, which shall authorize

 

47

extensions of credit in amounts up to $2,000,000,000 and (b) a Subsequent Final Order with respect
to Geysers Power Company LLC and Silverado Geothermal Resources, Inc. and such Final Order and such
Subsequent Final Order shall be in full force and effect, and shall not have been vacated, stayed,
reversed, rescinded, modified or amended in any respect without the prior written consent of the
Administrative Agents and the Required Lenders. If such Final Order and/or such Subsequent Final
Order are or is the subject of a pending appeal in any respect, none of the making of any Extensions of Credit,
the grant of Liens and Superpriority Claims pursuant to Sections 2.28 or 2.29 and the Security and
Pledge Agreement or the performance by the Borrower or any Guarantor subject to such Final Order or
Subsequent Final Order of any of their respective obligations under any of the Loan Documents or
under any instrument or agreement referred to herein shall be the subject of a presently effective
stay pending appeal.

          (d) Payment of Fees; Expenses. The Borrower shall have paid or will pay
contemporaneously with the making on the Closing Date of the Extensions of Credit by the Lenders to
the Administrative Agents, each other Agent and each Lender, as applicable, the then unpaid balance
of all accrued and unpaid Fees owed under and pursuant to this Agreement, or the Orders and all
amounts payable under Section 2.28(a) and all out-of-pocket expenses for which invoices have been
presented to the Borrower and the Committee of unsecured creditors as required by the Final Order
(including reasonable fees, disbursements and other charges of counsel and other advisors to the
Administrative Agents, the other Agents and the Lenders on the Closing Date) on or before the
Closing Date. All such amounts will be paid with proceeds of Loans made on the Closing Date and
will be reflected in the funding instructions given by the Borrower to the Administrative Agents on
or before the Closing Date.

          (e) Legal Opinion. The Administrative Agents shall have received the legal opinion of
Kirkland & Ellis LLP, counsel to the Loan Parties, addressed to the Administrative Agents and the
Lenders and otherwise substantially in the form of Exhibit E hereto.

          (f) Lien Searches. The Administrative Agents shall have received the results of
recent lien searches in each of the jurisdictions where the Credit Parties are organized and where
assets of the Credit Parties are located, and such search shall reveal no liens or encumbrances on
any of the assets of the Credit Parties except for liens and encumbrances permitted by Section 6.2
or discharged on or prior to the Closing Date pursuant to documentation reasonably satisfactory to
the Administrative Agents.

          (g) Pledged Stock; Stock Powers; Pledged Notes. The Collateral Agent shall have
received (i) the certificates representing the shares of Capital Stock pledged pursuant to the
Security and Pledge Agreement together with an undated stock power for each such certificate
executed in blank by a duly authorized officer of the pledgor thereof and (ii) each promissory note
(if any) pledged to the Collateral Agent pursuant to the Security and Pledge Agreement endorsed
(without recourse) in blank (or accompanied by an executed transfer form in blank) by the pledgor
thereof.

          4.2. Conditions to Each Extension of Credit. The obligation of the Lenders and the
Fronting Bank to make each Extension of Credit, including the initial Extension of Credit, is
subject to the following conditions precedent:

          (a) Notice. The Administrative Agents and, in the case of the Revolving Facility, the
Sub-Agent shall have received the applicable notice of borrowing, in substantially the form
attached hereto as Exhibit C, from the Borrower or, in the case of a Letter of Credit, the Fronting
Bank shall have received an L/C Application.

          (b) Representations and Warranties. All representations and warranties contained in
or pursuant to this Agreement and the other Loan Documents, or otherwise made in writing in
connection herewith or therewith, shall be true and correct in all material respects on and as of
the date of each

 

48

Extension of Credit hereunder with the same effect as if made on and as of such
date (unless stated to relate to a specific earlier date, in which case, such representations and
warranties shall be true and correct in all material respects as of such earlier date), including
that since the Petition Date there shall not have occurred any event, series of events or
occurrence (including acts of terrorism or war directly affecting the Borrower or its Subsidiaries) that has had, or could reasonably be expected to
have, a Material Adverse Effect.

          (c) No Default or Event of Default. No Default or Event of Default shall have
occurred and be continuing on such Borrowing Date or after giving effect to such Extension of
Credit on such Borrowing Date.

          (d) Payment of Fees. The Borrower shall have paid or will simultaneously pay to the
Administrative Agents, the Sub-Agent and the Lenders the then unpaid balance of all accrued and
unpaid Fees, expenses and other amounts then due and payable under and pursuant to this Agreement
(including without limitation, amounts payable under Section 2.25(c)), or the Orders for which
invoices have been presented to the Borrower and the Committee of unsecured creditors as required
by the Final Order.

The request by the Borrower for, and the acceptance by the Borrower of, each Extension of Credit
and issuance of a Letter of Credit hereunder shall be deemed to be a representation and warranty by
the Borrower that the conditions specified in this Section 4.2 have been satisfied or waived at
that time.

SECTION 5

AFFIRMATIVE COVENANTS

          Each of the Loan Parties hereby agrees that, so long as the Commitments remain in effect, any
Extension of Credit remains outstanding and unpaid or any other Obligation is owing to any Lender
or any Agent hereunder or under any other Loan Document (other than Letters of Credit, together
with all fees that have accrued and will accrue thereon through the stated termination date of such
Letters of Credit, which have been supported in the manner described in Section 2.8(b) or
contingent indemnification obligations for which no claim has been asserted), such Loan Party shall
and the Borrower shall cause each of its Material Subsidiaries to:

          5.1. Financial Statements, Etc. In the case of the Borrower, deliver to the
Administrative Agents and each Lender:

          (a) as soon as available and in any event within 105 days after the fiscal year ending
December 31, 2005 and ninety (90) days after the end of each fiscal year thereafter, a copy of the
audited consolidated balance sheet of the Borrower and its consolidated Subsidiaries as at the end
of such year and the related audited consolidated statements of operations, stockholders’ equity
and of cash flows for such year, setting forth in each case in comparative form the corresponding
consolidated and consolidating figures for the preceding fiscal year, reported on without
qualification arising out of the scope of the audit, by PricewaterhouseCoopers or another
independent certified public accountants of nationally recognized standing;

          (b) as soon as available and in any event within (i) sixty (60) days after the fiscal quarter
ending March 31, 2006 and (ii) forty-five (45) days after the end of (A) the fiscal quarter ending
on each of June 30, 2006 and September 30, 2006 and (B) each of the first three quarterly fiscal
periods of each fiscal year thereafter, a copy of the unaudited consolidated balance sheet of the
Borrower and its consolidated Subsidiaries as at the end of such quarter and the related unaudited
consolidated statements of income and of cash flows for such quarter and the portion of the fiscal
year through the end of such

 

49

quarter, setting forth in each case in comparative form the
corresponding consolidated figures for the corresponding periods in the preceding fiscal year,
accompanied by a certificate of a Responsible Officer, which certificate shall state that such
consolidated financial statements fairly present, in all material
respects, the consolidated financial condition and results of operations of the Borrower and
its consolidated Subsidiaries, in accordance with GAAP, consistently applied, as at the end of, and
for, such period (subject to normal year-end audit adjustments and the absence of footnotes);

          (c) not later than (i) March 10, 2006 as to the fiscal month ending December 31, 2005, (ii)
forty-five (45) days after the fiscal month ending on each of January 31, 2006, February 28, 2006
and March 31, 2006 and (iii) thirty (30) days after the end of each month thereafter, the unaudited
consolidated balance sheet and the unaudited consolidated statement of income of the Borrower and
its consolidated Subsidiaries for such fiscal month, together with a comparison to the Projections
for the period through the end of such month, certified by a Responsible Officer as being fairly
stated in all material respects (subject to normal quarter-end and year-end audit adjustments and
the absence of footnotes);

          (d) as soon as available, but in any event by the Wednesday of each week, an updated Budget
for the succeeding 13-week period of the projected consolidated cash flows of the Global Entities,
taken as a whole;

          (e) no later than Wednesday of each week, a comparison of (i) actual cash receipts and cash
disbursements of the Global Entities for the week most recently ended against (ii) projected cash
receipts and cash disbursements of the Global Entities for such week most recently delivered
pursuant to paragraph (d) above, in form and substance satisfactory to the Administrative Agents
(including a detailed explanation of any material variances) certified by a Responsible Officer as
being fairly stated in all material respects;

          (f) on and after the Final Order Date, no later than 30 days after the end of each month,
updated Projections reflecting any modifications made by management thereto since the delivery of
any prior update thereof;

          (g) on or before the Final Order Date, unaudited consolidating financial statements of the
Material Subsidiaries for the fiscal quarter ended September 30, 2005; and

          (h) as soon as available, monthly statements for all bank accounts maintained by the Borrower
with Union Bank of California and for all Investment accounts maintained by the Borrower with
Scudder Investments.

All such financial statements delivered pursuant to Sections 5.1(a), (b) and (c) shall be complete
and correct in all material respects and shall be prepared in reasonable detail and in accordance
with GAAP applied consistently throughout the periods reflected therein and with prior periods.

          5.2. Certificates; Other Information. In the case of the Borrower, deliver to the
Administrative Agents and each Lender:

          (a) Concurrently with the delivery of the financial statements referred to in Section 5.1(a)
for the 2005 fiscal year of the Borrower and thereafter, a certificate of the independent certified
public accountants reporting on such financial statements stating that in making the examination
necessary therefor no knowledge was obtained of any Default or Event of Default pursuant to
Sections 6.13, 6.15, 6.16, 6.17 or 6.18, except as specified in such certificate;

 

50

          (b) concurrently with the delivery of the financial statements referred to in Sections 5.1(a),
(b) and (c), a certificate of a Responsible Officer of the Borrower (i) stating that such
Responsible Officer has obtained no knowledge of any Default or Event of Default that has occurred and is
continuing, except, in each case, as specified in such certificate and (ii) setting forth the
calculations required to determine compliance with the covenants set forth in Section 6;

          (c) promptly upon their becoming available, copies of all registration statements and regular
periodic reports, if any, that any Loan Party shall have filed with the SEC (or any Governmental
Authority which succeeds to the powers and functions thereof) or any national securities exchange;

          (d) promptly following the delivery thereof to any Loan Party or to the Board of Directors or
management of any Loan Party, a copy of any management letter or report by independent public
accountants with respect to the financial condition, operations or business of the Borrower and its
Subsidiaries;

          (e) to the Administrative Agents and the Sub-Agent and counsel to the Administrative Agents
and the Sub-Agent, at least one day prior to such filing or distribution, copies of all pleadings,
motions, applications, judicial information, financial information and other documents to be filed
by or on behalf of the Borrower or any of the Guarantors with the Bankruptcy Court or the United
States Trustee in the Cases, or to be distributed by or on behalf of the Borrower or any of the
Guarantors to any official committee appointed in the Cases (other than emergency pleadings,
motions or other filings where, despite such Debtor’s commercially reasonable efforts, such one-day
notice is impracticable); and

          (f) promptly upon request, such other material information (financial or otherwise, including
without limitation, any Plan or Multiemployer Plan and any material reports or other material
information required to be filed with any Governmental Authority by the Borrower or any Commonly
Controlled Entity under ERISA) as may be reasonably requested by the Administrative Agents or any
Lender.

          5.3. Payment of Obligations. In the case of any Loan Party, except in accordance with
the Bankruptcy Code or by an applicable order of the Bankruptcy Court pay, discharge or otherwise
satisfy at or before maturity or before they become delinquent, as the case may be, (i) all its
post-Petition Date taxes and other material obligations of whatever nature that constitute
administrative expenses under Section 503(b) of the Bankruptcy Code in the Cases, except, so long
as no material property (other than money for such obligation and the interest or penalty accruing
thereon) of any Loan Party is in danger of being lost or forfeited as a result thereof, no such
obligation need be paid if the amount or validity thereof is currently being contested in good
faith by appropriate proceedings and reserves in conformity with GAAP with respect thereto have
been provided on the books of the Loan Parties and (ii) all obligations arising prepetition
permitted to be paid postpetition but prior to confirmation of a Reorganization Plan by order of
the Bankruptcy Court that has been entered with the consent of (or non-objection by) the
Administrative Agents.

          5.4. Maintenance of Existence; Compliance with Contractual Obligations and Requirements of
Law. (a) Preserve, renew and keep in full force and effect its legal existence, (b) take all
reasonable action to maintain all rights, privileges and franchises reasonably necessary or
desirable in the normal conduct of its business, except (i) as otherwise permitted pursuant to
Section 6.4 and Section 6.5 or (ii) to the extent failure to do so could not reasonably be
expected, in the aggregate, to have a Material Adverse Effect, and (c) subject to the effect of the
Cases and the Bankruptcy Code, comply with all Contractual
Obligations and Requirements of Law except to the extent that failure to comply therewith
could not reasonably be expected, in the aggregate, to have a Material Adverse Effect.

 

51

          5.5. Maintenance of Property; Insurance. Keep and maintain all of its property
necessary to the conduct of its business in good working order and condition subject to ordinary
wear and tear and obsolescence and from time to time make all needful and proper repairs, renewals,
replacements, extensions, additions, betterments and improvements thereto, to the extent and in the
manner useful or customary for companies in similar businesses, except where failure to do so could
not reasonably be expected to have a Material Adverse Effect; maintain with financially sound and
reputable insurance companies insurance policies (or, where appropriate, self-insurance) on all of
its property in at least such amounts and against at least such risks (but including in any event
public liability, product liability and business interruption) as are customarily insured against
by companies of similar size engaged in the same or a similar business in the same geographic
locale, which policies, in the case of any Loan Party, shall name the Collateral Agent as the loss
payee or additional insured, as applicable, for the proceeds of any such first party policy, such
as all risk property and business interruption coverage (other than workers’ compensation, director
and officer, automobile liability, health, medical and life insurance policies) except where
failure to so maintain such insurance could not reasonably be expected to have a Material Adverse
Effect; and furnish to the Collateral Agent, upon written request, full information as to the
insurance carried.

          5.6. Inspection of Property; Books and Records; Discussions. Keep proper books of
records and accounts in which full, true and correct in all material respects entries in conformity
with GAAP and all Requirements of Law shall be made of all dealings and transactions in relation to
its business and activities; and, upon reasonable prior notice to the Borrower through the
Administrative Agents, permit representatives of either Agent or any Lender to visit and inspect
any of its properties and examine and make abstracts from any of its books and records at any
reasonable time or times during normal business hours and to discuss the business, operations,
properties and financial and other condition of the Global Entities with officers and employees of
the Global Entities and with their independent certified public accountants and with their
financial advisors.

          5.7. Notices. Promptly, and in any event within five (5) Business Days after a
Responsible Officer becomes aware thereof (except as otherwise provided in (e) below), give notice
to the Administrative Agents, with a copy for each Lender, of:

          (a) the occurrence of any Default or Event of Default;

          (b) any (i) default or event of default under any post-Petition Date Contractual Obligation of
any Loan Party that could reasonably be expected to have a Material Adverse Effect; or (ii)
litigation, investigation or proceeding which may exist at any time between a Credit Party and any
Governmental Authority, which in either case, if not cured or if adversely determined, as the case
may be, could reasonably be expected to have a Material Adverse Effect;

          (c) any post-Petition Date litigation (or in the case of any Material Subsidiary that is not a
Debtor, any litigation) or proceeding affecting any (i) Credit Party an adverse determination in
which could reasonably be expected to have a Material Adverse Effect or (ii) any Material
Subsidiary in which injunctive or similar relief is sought;

          (d) any adverse change, development or event, which could reasonably be expected to have a
Material Adverse Effect;

          (e) the following events, as soon as practicable and in any event within thirty (30) days
after any Credit Party knows or has reason to know thereof: (i) the occurrence of any Reportable
Event with respect to any Plan, a failure to make any required contribution to a Plan, the creation
of any Lien in favor of the PBGC or a Plan or any withdrawal from, or the termination, ERISA
Reorganization

 

52

or Insolvency of, any Multiemployer Plan or (ii) the institution of proceedings or
the taking of any other action by the PBGC or any Commonly Controlled Entity or any Multiemployer
Plan with respect to the withdrawal from, or the termination, ERISA Reorganization or Insolvency
of, any Plan in the case of each of the foregoing clauses (i) or (ii) where such event has had or
could reasonably be expected to have a Material Adverse Effect;

          (f) any written notices or other material indicating the presence or suspected presence of
Materials of Environmental Concern on, at, or under any property of any Credit Party, or any part
thereof, in violation of, or in a manner or condition that has resulted or is reasonably likely to
result, in the reasonable judgment of a Responsible Officer of the Borrower, in the payment of a
Material Environmental Amount; and

          (g) any violation of the CalBear Risk Policy which (i) may give rise to (A) any payment under
the Guarantee Obligation described in Section 6.3(g), or (B) a Lien granted by CMSC or Calpine to
CalBear on cash collateral pursuant to the CalBear Documents or (ii) would be in any material
manner, adverse to the interests of the Lenders; provided that such notice required under this
Section 5.7(g) shall only be given to the Administrative Agents.

Each notice pursuant to this subsection shall be accompanied or provided as soon as practicable
thereafter by a statement of a Responsible Officer setting forth details of the occurrence referred
to therein and stating what action the Borrower has taken or proposes to take with respect thereto.

          5.8. Environmental Laws. (a) Comply with, and take reasonable efforts to ensure
compliance by all tenants and subtenants, if any, with, all applicable Environmental Laws, and
obtain and comply with and maintain, and ensure that all tenants and subtenants obtain and comply
with and maintain, any and all licenses, approvals, notifications, registrations or permits
required by applicable Environmental Laws except where the failure to comply with the foregoing
could not give rise to a Material Adverse Effect.

          (b) Conduct and complete all investigations, studies, sampling and testing, and all remedial,
removal and other actions required under Environmental Laws except where the failure to comply with
the foregoing could not give rise to a Material Adverse Effect and promptly comply in all material
respects with all lawful orders and directives of all Governmental Authorities under applicable
Environmental Laws; provided, however, the Borrower may use all lawful means to
protest or challenge the imposition by any Governmental Authority of any requirements under any
such lawful orders, directives or that otherwise arise under applicable Environmental Laws.

          5.9. Obligations and Taxes. Pay all of their material obligations (or in the case of
any Loan Party, any such obligations arising after the Petition Date) promptly and in accordance
with their terms and pay and discharge promptly all material taxes, assessments and governmental
charges or levies imposed upon it or upon its income or profits or in respect of its property (in
the case of any Loan Party, such taxes, assessments and
governmental charges and fines arising after the Petition Date) before the same shall become
in default as well as all material lawful claims for labor, materials and supplies or otherwise (or
in the case of any Loan Party, such claims arising after the Petition Date) which, if unpaid, would
become a Lien or charge upon such properties or any part thereof; provided,
however, that the Credit Parties shall not be required to pay and discharge or to cause to
be paid and discharged any such obligation, tax, assessment, charge, levy or claim so long as the
validity or amount thereof shall be contested in good faith by appropriate proceedings (if the
Credit Parties shall have set aside on their books adequate reserves therefor in accordance with
GAAP).

 

53

          5.10. Employee Benefits. Comply (and with respect to Plans covered by Title IV of
ERISA, cause their respective Commonly Controlled Entities to comply) in all material respects with
the applicable provisions of ERISA and the Code and other applicable laws, rules and regulations
with respect to any Plan, the failure of which could reasonably be expected to result in a Material
Adverse Effect.

          5.11. Further Assurances. (a) In the case of any Loan Party, at the cost and expense
of the Borrower, execute and file all such further documents and instruments, and perform such
other acts, as the Administrative Agents or the Required Lenders may reasonably determine are
necessary or advisable with respect to the Liens granted to the Collateral Agent in connection with
this Agreement, the Security and Pledge Agreement and the Interim Order (or the Final Order, as
applicable) and with respect to the priority of such Liens purported to be granted pursuant to this
Agreement and the Interim Order (or the Final Order, as applicable). Without limiting the
generality of the foregoing, the Loan Parties shall assist the Administrative Agents, the
Collateral Agent, and the Lenders in the preparation and filing of any Uniform Commercial Code
financing statements or mortgages reasonably requested by the Collateral Agent, the Administrative
Agents or the Required Lenders.

          (b) With respect to any Global Entity that is not a Foreign Subsidiary which becomes a debtor
and debtor-in-possession in a case pending under Chapter 11 of the Bankruptcy Code (other than
Celtic Power Corporation and Calpine East Fuels, LLC), within 30 days after becoming a debtor,
cause such Global Entity (i) to become a party to this Agreement, as a Guarantor, by executing a
joinder to this Agreement in substantially the form attached hereto as Exhibit H (a
“Joinder”); (ii) to execute and deliver to the Collateral Agent an assumption agreement to
the Security and Pledge Agreement and such amendments to the Security and Pledge Agreement as the
Collateral Agent deems necessary or advisable to grant to the Collateral Agent, for the benefit of
the Lenders, a Liens in all of its assets; (iii) (A) as to any Global Entity which is a Material
Subsidiary, (I) within 5 days after such Global Entity becomes a debtor, the Administrative Agents
shall have received satisfactory evidence of entry of an interim order, reasonably satisfactory to
the Administrative Agents, granting the Superpriority Claim status and Liens described in Section
2.28 (such order, a “Subsequent Interim Order”) in respect of such Global Entity and (II)
within 40 days after such Global Entity becomes a debtor, the Administrative Agents shall have
received satisfactory evidence of entry a final non-appealable Bankruptcy Court order, reasonably
satisfactory to the Administrative Agents, granting the Superpriority Claim status and Liens
described in Section 2.28 which shall be in full force and effect, and shall not have been vacated,
stayed, reversed, modified or amended in any respect without the prior written consent of the
Administrative Agents (such order, a “Subsequent Final Order”) in respect of such Global
Entity; or (B) as to any Global Entity which is a not Material Subsidiary, (I) within 30 days after
such Global Entity becomes a debtor, the Administrative Agents shall have received satisfactory
evidence of entry of a Subsequent Interim Order or a Subsequent Final Order in respect of such
Global Entity and (II) within 55 days after such Global Entity becomes a debtor, the Administrative
Agents shall have received satisfactory evidence of entry a
Subsequent Final Order in respect of such Global Entity; (iv) to take such actions necessary
or advisable to grant to the Collateral Agent for the benefit of the Lenders a Liens in the
Collateral described in the Security and Pledge Agreement with respect to such Global Entity,
including the filing of Uniform Commercial Code financing statements in such jurisdictions as may
be required by the Security and Pledge Agreement or by law or as may be requested by the
Administrative Agents or the Collateral Agent; (v) to deliver to the Administrative Agents a
certificate of such Subsidiary, substantially in the form of Exhibit B, with appropriate insertions
and attachments; provided, however, such Global Entity shall not be required pursuant to this
Section 5.11(b) to pledge to the Collateral Agent 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 such Global Entity); and (vi) if
requested by the Administrative Agents or the Collateral Agent, deliver to the Administrative
Agents

 

54

legal opinions relating to the matters described above, which opinions shall be in form and
substance, and from counsel, reasonably satisfactory to the Administrative Agents.

          5.12. Ratings. Use commercially reasonable efforts to obtain a rating for the
Facilities by each of S&P and Moody’s on or before the Final Order Date or as soon as practicable
thereafter.

          5.13. Post Closing Matters. Within 90 days after the Closing Date, deliver to the
Administrative Agents evidence of completion of the actions specified on Schedule 5.13.

SECTION 6

NEGATIVE COVENANTS

          Each of the Loan Parties hereby agrees that, so long as the Commitments remain in effect, any
Note or any Letter of Credit Outstandings remain outstanding and unpaid or any other amount is
owing to any Lender or any Agent hereunder or under any other Loan Document (other than Letters of
Credit together with all fees that have accrued and will accrue thereon through the stated
termination date of such Letters of Credit, which have been supported in a manner in the manner
described in Section 2.8(b) or contingent indemnification obligations for which no claim has been
asserted) or any other amount is owing to any Lender or any Agent hereunder or under any other Loan
Document, such Loan Party shall not, and shall not permit any Material Subsidiary to, directly or
indirectly:

          6.1. Limitation on Indebtedness. Create, incur, assume or suffer to exist any
Indebtedness, except:

          (a) Indebtedness under this Agreement and the other Loan Documents;

          (b) Indebtedness otherwise owed to (x) DB, CS, any other financial institution that is a
Lender under this Agreement or any of their respective banking affiliates in respect of overdrafts
and related liabilities arising from treasury, depository or cash management services or in
connection with any automated clearing house transfers of funds and (y) DB, CS, any other financial
institution that is a Lender under this Agreement or any of their respective Affiliates in respect
of interest rate hedging transactions;

          (c) Indebtedness outstanding on the Petition Date and listed on Schedule 6.1, but excluding
the refinancing of any such Indebtedness of any Loan Party and including any refinancing of any
such Indebtedness of any Credit Party which is not a Debtor without increasing, or shortening the
maturity of, the principal amount thereof;

          (d) Indebtedness of the Borrower to any Subsidiary and of any Guarantor to the Borrower or any
other Guarantor;

          (e) endorsements of instruments in the ordinary course of business and consistent with past
practices of the Credit Parties;

          (f) Indebtedness of any of the Credit Parties arising in the ordinary course of business (and
consistent with past practice of the relevant Credit Parties) of such Credit Party and owing to a
financial institution providing netting services to the Global Entities, provided that (i)
such Indebtedness was incurred in respect of the provision of such netting services with respect to
intercompany Indebtedness permitted to be incurred and outstanding pursuant to this Agreement and
(ii)

 

55

such Indebtedness does not remain outstanding for more than three (3) days from the date of
its incurrence or longer if permitted under relevant netting contracts and consistent with past
practices;

          (g) Indebtedness of any of the Credit Parties consisting of the financing of insurance
premiums in the ordinary course of business (and consistent with practice of the Credit Parties);

          (h) Indebtedness of any of the Credit Parties consisting of take-or-pay obligations contained
in supply agreements entered into in the ordinary course of business (and consistent with practice
of the Credit Parties);

          (i) Indebtedness of the Loan Parties incurred in connection with the rejection of leases and
executory contracts in the Cases; provided that the obligation of any Loan Party in respect
of such Indebtedness shall be determined, by a final non-appealable order of the Bankruptcy Court
entered at the time of such rejection, to be a general, unsecured, non-priority claim;

          (j) Indebtedness represented by appeal, bid, performance, surety or similar bonds, workers’
compensation claims, self-insurance obligations and bankers acceptances issued for the account of
any Credit Party, in each case to the extent incurred in the ordinary course of business in
accordance with customary industry practices in amounts customary in the Borrower’s industry;

          (k) Indebtedness of any wholly owned Subsidiary of the Borrower that is not a Debtor to any
Loan Party, when added to Guarantee Obligations permitted under Section 6.3(e) and Investments
permitted under Section 6.7(i), in an aggregate principal amount (for all of such Subsidiaries) not
to exceed $20,000,000 at any one time outstanding;

          (l) post-Petition Date purchase money Indebtedness (including Capital Leases) and Indebtedness
of the Credit Parties to third parties, when added to Investments permitted under Section 6.7(j),
in an aggregate principal amount (for all of the Credit Parties) not to exceed $25,000,000 at any
one time outstanding;

          (m) Indebtedness of any non-wholly owned Subsidiary of the Borrower that is not a Debtor to
any Loan Party, when added to Guarantee Obligations permitted under Section 6.3(f) and Investments
permitted under Section 6.7(k), in an aggregate principal amount (for all of such Subsidiaries) not
to exceed $5,000,000 at any one time outstanding; and

          (n) Swap Agreements incurred in the ordinary course of business and consistent with applicable
risk management guidelines established by the Borrower from time to time and delivered to the
Administrative Agents.

          6.2. Limitation on Liens. Create, incur, assume or suffer to exist any Lien upon any
of its property, whether now owned or hereafter acquired, except for:

          (a) Liens existing on the Petition Date and listed on Schedule 3.6;

          (b) carriers’, warehousemen’s, mechanics’, materialmen’s, repairmen’s, landlords’ or other
similar Liens arising in the ordinary course of business which in the aggregate do not materially
detract from the value of the property or assets or materially impair the use thereof in the
operation of the business of the Borrower and its Subsidiaries are not overdue for a period of more
than sixty (60) days or which are being contested in good faith by appropriate proceedings and for
which adequate reserves with respect thereto are maintained on the books of the Borrower or the
affected Credit Parties, as the case may be, in accordance with GAAP;

 

56

          (c) Liens imposed by any Governmental Authority for taxes, assessments or charges not yet due
or that are being contested in good faith and by appropriate proceedings if, unless the amount
thereof is not material with respect to its financial condition, adequate reserves with respect
thereto are maintained on the books of the Borrower or the affected Credit Parties, as the case may
be, in accordance with GAAP;

          (d) deposits to secure the performance of bids, trade contracts (other than for borrowed
money), leases, statutory obligations, surety and appeal bonds, performance bonds, and other
obligations of a like nature incurred in the ordinary course of business;

          (e) easements, rights-of-way, restrictions, zoning ordinances and other similar encumbrances
incurred in the ordinary course of business which, are not substantial in amount and which do not
in any case materially detract from the value of the property subject thereto or materially
interfere with the ordinary conduct of the business of the Credit Parties;

          (f) Liens granted to the Collateral Agent, the Administrative Agents, and the Lenders pursuant
to the Loan Documents;

          (g) Liens incurred or deposits made in the ordinary course of business in connection with
workers’ compensation, unemployment insurance and other types of social security, or to secure the
performance of tenders, statutory obligations, surety and appeal bonds, bids, government contracts,
performance and return-of-money bonds and other similar obligations incurred in the ordinary course
of business (exclusive of obligations in respect of the payment for borrowed money);

          (h) Liens arising from precautionary Uniform Commercial Code financing statements regarding
operating leases permitted by this Agreement;

          (i) any interest or title of a licensor, lessor or sublessor under any lease permitted by this
Agreement;

          (j) Liens arising from judgments, decrees or attachments to the extent not constituting an
Event of Default under Section 7(l);

          (k) licenses, leases or subleases granted to third parties not interfering in any material
respect with the business of any Credit Party;

          (l) Liens of sellers of goods to any Credit Party arising under Article 2 of the Uniform
Commercial Code in the ordinary course of business, covering only the goods sold and covering only
the unpaid purchase price for such goods and related expenses;

          (m) other Liens securing Indebtedness or other obligations in an aggregate amount secured by
all such Liens not to exceed $25,000,000 at any one time outstanding; and

          (n) Liens granted by CMSC to CalBear on (a) cash collateral pursuant to the CalBear Documents
so long as the amount of such cash collateral subject to such Liens does not exceed $20,000,000,
provided that the foregoing Liens shall only be permitted to the extent that CMSC is not
required to post any such cash collateral more than three times during the term of this Agreement
for a period in excess of three Business Days as a result of any violation of the Calpine Risk
Policy and (b) the Capital Stock of CMSC and all or substantially all of the assets of CMSC which
Liens consist of the right of first refusal in favor of CalBear existing on the Closing Date.

 

57

          6.3. Limitation on Guarantee Obligations. Create, incur, assume or suffer to exist
any Guarantee Obligation except for:

          (a) Guarantee Obligations existing on the Petition Date and listed on Schedule 6.3;

          (b) Guarantee Obligations incurred in the ordinary course of business and consistent with past
practices of the Borrower in respect of the obligations of any Guarantor, or of any other Guarantor
of the obligations of the Borrower or any Guarantor;

          (c) Guarantees by the Borrower of Indebtedness and other obligations of Guarantors that are
permitted to be incurred under this Agreement;

          (d) Guarantee Obligations of the Guarantors under this Agreement and the Orders;

          (e) Guarantee Obligations of any Loan Party of obligations of any wholly owned Subsidiary of
the Borrower that is not a Debtor, when added to Indebtedness permitted under Section 6.1(k) and
Investments permitted under Section 6.7(i), in an aggregate principal amount (for all of such Loan
Parties) not to exceed $20,000,000 at any one time outstanding;

          (f) Guarantee Obligations of any Loan Party of obligations of any non-wholly owned Subsidiary
of the Borrower that is not a Debtor, when added to Indebtedness permitted under Section 6.1(m) and
Investments permitted under Section 6.7(k), in an aggregate principal amount (for all of such Loan
Parties) not to exceed $5,000,000 at any one time outstanding; and

          (g) Guarantee Obligations of the Borrower in respect of CMSC’s obligations under the CalBear
Documents.

          6.4. Prohibition on Fundamental Changes. Enter into any acquisition, merger,
consolidation or amalgamation, or liquidate, wind up or dissolve itself (or suffer any liquidation
or dissolution), or convey, sell, lease, assign, transfer or otherwise dispose of, all or
substantially all of its property, business or assets or make any material change in its
present method of conducting business except to the extent contemplated by the CalBear
Documents (it being acknowledged that (x) changes to the operating and internal management
structure of the Borrower, such as the merger of certain business divisions or the consolidation of
certain management functions within the Loan Parties and (y) rejection of contracts by any Loan
Party pursuant to the Bankruptcy Code shall not constitute a material change in the method of
conducting business) or create or acquire any new Subsidiaries, except that:

          (a) any Credit Party other than the Borrower may be merged or consolidated with any other
Guarantor so long as the surviving entity of such merger is a Guarantor or a new Subsidiary which,
substantially concurrently with such merger or consolidation, becomes a Debtor and Guarantor in
accordance with Section 5.11(b);

          (b) any Credit Party may be merged or consolidated with the Borrower if the surviving entity
of such merger is the Borrower;

          (c) any of the Borrower’s non-U.S. subsidiaries (each a “Foreign Subsidiary”) may be
merged or consolidated with another Foreign Subsidiary;

          (d) any Credit Party (other than the Borrower) may dispose of any or all of its assets (upon
voluntary liquidation or otherwise) to the Borrower or any Guarantor or to any new Subsidiary

 

58

which, substantially concurrently with such transfer, becomes a Debtor and Guarantor in accordance
with Section 5.11(b);

          (e) any Credit Party which is not a Loan Party may be merged or consolidated with any other
Credit Party which is not a Loan Party;

          (f) the liquidation of the Philadelphia Biogas Supply, Inc., Calpine Capital Trust IV and
Calpine Capital Trust V to the extent such Subsidiaries do not own any assets or property or the
assets or property of such Subsidiaries are distributed to a Loan Party; and

          (g) any Disposition permitted under Section 6.5.

          6.5. Limitation on Sale of Assets. Dispose of any of its property, whether now owned
or hereafter acquired, or, in the case of a Subsidiary of the Borrower, issue or sell any shares of
such Subsidiary’s Capital Stock to any Person except:

          (a) (i) the sale, lease or other disposition of (A) inventory in the ordinary course of
business, (B) uneconomical, obsolete, surplus or worn out property, (C) property that is no longer
used or useful in the business, or (D) boilers, water lines and related property of Clear Lake
Cogeneration, L.P., (ii) the rejection of contracts or leases determined by the Borrower in good
faith to be unprofitable (other than (x) facility leases in respect of Material Subsidiaries and
(y) leases described in clause (iii) below) or (iii) so long as no Event of Default shall have
occurred and be continuing and the Loans have not become due and payable as a result thereof, the
rejection of facility leases in respect of, or the surrender of (including the consensual
foreclosure of), Designated Projects (as defined in the Cash Collateral Order) determined by the
Borrower in good faith to be unprofitable;

          (b) the consumption or use of fuel supplies, or other consumables, or the conversion of
fossil, geothermal or other assets to power or the distribution, sale or trading of power
(including without limitation, steam or electrical power) and natural gas or other fuels, in each case in
the ordinary course of business and consistent with the past practices of the Credit Parties;

          (c) exchange or trade-in, or sale and application of proceeds to or for replacement assets to
be used in the business;

          (d) liquidation, sale or disposition of Cash Equivalents or inventory in the ordinary course
of business;

          (e) the discount or write-off of accounts receivable overdue by more than ninety (90) days or
the sale of any such accounts receivable for the purpose of collection, in each case in the
ordinary course of business;

          (f) termination of leases, surrender or sublease of real or personal property in the ordinary
course of business;

          (g) incurrence of Liens permitted under Section 6.2;

          (h) transactions permitted under clauses (a) through (f) in Section 6.4;

          (i) the Disposition of the turbines listed on Schedule 6.5(i) in arm’s length transactions at
fair market value or as approved by the Bankruptcy Court, and the Disposition to any Global Entity
of turbine parts and components for use as spare or replacement parts;

 

59

          (j) the Disposition of property of any Credit Party other than a Material Subsidiary in arm’s
length transactions at fair market value, provided that the Net Cash Proceeds thereof shall
be applied to reduce the Revolving Commitments and prepay the Loans to the extent required by
Section 2.17(a); and

          (k) the Disposition of property listed on Schedule 6.5(k) in arm’s length transactions at fair
market value, provided that the Net Cash Proceeds thereof shall be applied to reduce the
Revolving Commitments and prepay the Loans in accordance with Section 2.17(a).

          6.6. Limitation on Issuances of Capital Stock and Dividends. Declare or pay, directly
or indirectly, any dividends or make any other distribution or payment, whether in cash, property,
securities or a combination thereof, with respect to (whether by reduction of capital or otherwise)
any shares of Capital Stock, or set apart any sum for the aforesaid purposes, provided that
(x) any Material Subsidiary of the Borrower may pay dividends to any Guarantor that is its direct
parent or which is paid to a Guarantor through a non-Guarantor that is its direct parent, and any
Foreign Subsidiary may pay dividends to any other Foreign Subsidiary, (y) any Material Subsidiary
that is not a Debtor may pay dividends to any other Material Subsidiary that is not a Debtor and
(z) any Material Subsidiary (including without limitation, Calpine CCFC Holdings, Inc.) (A) that is
not a Debtor may pay dividends pursuant to the Preferred Equity Documents as in effect on the date
hereof at any time so long as no Default or Event of Default shall have occurred and is continuing
or (B) that is a Debtor may pay dividends not constituting a Default or an Event of Default under
Section 7(i)(v).

          6.7. Limitation on Investments, Loans and Advances. Make any advance, loan, extension of credit or capital contribution to, or purchase any
stock, bonds, notes, debentures or other securities of or any assets constituting a business unit
of, or make any other investment (each, an “Investment”) in, any Person, except:

          (a) Investments in Cash Equivalents;

          (b) Investments necessary to consummate the Geysers Transaction;

          (c) Indebtedness permitted pursuant to Section 6.1(c) and (n);

          (d) intercompany Investments (i) by any Loan Party in the Borrower or another Loan Party that,
prior and after giving effect to such investment, is a Guarantor or (ii) listed on Schedule 6.7;

          (e) Investments (including debt obligations) received in connection with bankruptcy or
reorganization of suppliers and customers in settlement of delinquent obligations of, and other
disputes with, customers and suppliers arising in the ordinary course of business;

          (f) deposits made in the ordinary course of business to secure the performance of leases or
other contractual arrangements; and

          (g) intercompany Investments among the Loan Parties or among Credit Parties which are not Loan
Parties in the ordinary course;

          (h) loans and advances by the Credit Parties to employees of the Credit Parties for moving and
travel expenses and other similar expenses, in each case incurred in the ordinary course of
business (and consistent with practice of the relevant Credit Parties);

 

60

          (i) Investments by any Loan Party in any wholly owned Subsidiary of the Borrower that is not a
Debtor, when added to Indebtedness permitted under Section 6.1(k) and Guarantee Obligations
permitted under Section 6.3(e), in an aggregate principal amount (for all of such Subsidiaries) not
to exceed $20,000,000 at any one time outstanding;

          (j) Investments by Credit Parties in third parties, when added to Indebtedness permitted under
Section 6.1(l), in an aggregate principal amount (for all of the Credit Parties) not to exceed
$25,000,000 at any one time outstanding; and

          (k) Investments by any Loan Party in any non-wholly owned Subsidiary of the Borrower that is
not a Debtor, when added to Indebtedness permitted under Section 6.1(m) and Guarantee Obligations
permitted under Section 6.3(f), in an aggregate principal amount (for all of such Loan Parties) not
to exceed $5,000,000 at any one time outstanding; and

          6.8. Transactions with Affiliates. Sell or transfer any property or assets to, or
otherwise engage in any other transactions with, any of its Affiliates, except that (i) any Loan
Party may engage in transactions with any other Loan Party, (ii) any Global Entity that is not a
Credit Party may engage in transactions with any other Global Entity that is not a Credit Party,
and (iii) any Credit Party may engage in (A) transactions set forth on Schedule 6.8 and (B) any
transaction which is otherwise expressly permitted under this Agreement or otherwise in the
ordinary course of business at prices and on terms and conditions not less favorable to such Credit
Party than could be obtained in a comparable arm’s-length transaction from unrelated third parties.

          6.9. Lines of Business. Engage to any substantial extent in any line or lines of
business activity other than (i) businesses of the type as those in which the Credit Parties are
engaged on the Original Closing Date or which are related thereto and (ii) as required by the
Bankruptcy Code, or modify or alter in any material manner the nature and type of the Credit
Parties’ businesses, except (x) such modifications disclosed to the Administrative Agents or as
required by the Bankruptcy Code, (y) as contemplated by the CalBear Documents and (z) for sales
permitted under Section 6.5.

          6.10. Concentration Account. (a) Fail to maintain a system of cash management that
concentrates unrestricted cash in excess of $25,000,000 into the Concentration Account on a daily
basis pursuant to arrangements reasonably satisfactory to the Collateral Agent and (b) fail to
provide the Collateral Agent with an executed control or similar agreement relating to the
investment account maintained by Borrower with Scudder Investments (or another affiliate of the
Collateral Agent), in form and substance reasonably acceptable to the Collateral Agent and the
Borrower. All funds in the Concentration Account shall be invested by the Collateral Agent, as
principal concentration bank, in overnight cash accounts or other money market funds as approved by
the Collateral Agent. In connection with the maintenance of the foregoing, the Borrower shall seek
the entry of appropriate Bankruptcy Court orders, reasonably satisfactory to the Administrative
Agents and the Borrower, providing for the implementation of such cash management system. Subject
to the Orders, the Borrower may direct the transfer of available funds on deposit in the
Concentration Account to its disbursement accounts and, subject to Sections 6.1 and 6.7,
Subsidiaries of the Borrower.

          6.11. Chapter 11 Claims. In respect of any Loan Party, incur, create, assume, suffer
to exist or permit any other Superpriority Claim or Lien which is pari passu with or senior to the
claims of the Collateral Agent, Administrative Agents and the Lenders granted pursuant to this
Agreement, the Security and Pledge Agreement and the Final Order except for the Carve-Out and
Permitted Liens which, in accordance with the Final Order, are senior to such Liens.

 

61

          6.12. Reclamation Claims; Bankruptcy Code Section 546(g) Agreements. (a) Make any
payments or transfer any property on account of claims asserted by any vendors of any Loan Party
for reclamation in accordance with Section 2-702 of the Uniform Commercial Code and Section 546(c)
of the Bankruptcy Code or (b) enter into any agreements or file any motion seeking a Bankruptcy
Court order for the return of property of any Loan Party to any vendor pursuant to Section 546(g)
of the Bankruptcy Code in the aggregate for clauses (a) and (b) in excess of $2,000,000 in the
aggregate.

          6.13. Capital Expenditures. Make or commit to make (by way of the acquisition of
securities of a Person or otherwise) any Capital Expenditure of the Loan Parties in the ordinary
course of business exceeding $264,000,000 in fiscal year 2006 of the Borrower and $246,000,000 in
fiscal year 2007 of the Borrower, provided, that any such amount, if not so expended in the
fiscal year for which it is permitted, may be carried over for expenditure in the next succeeding
fiscal year. In addition, the Loan Parties shall be permitted to make the Capital Expenditures
described on Schedule 6.13 and with Reinvestment Deferred Amounts to the extent
permitted under Section 2.17(a), in each case without reducing the amount permitted for any
fiscal year set forth in the immediately preceding sentence.

          6.14. Use of Proceeds. Use the proceeds of the Loans or the Letters of Credit for
purposes other than those described in Section 3.10.

          6.15. Consolidated EBITDA. Permit cumulative Consolidated EBITDA for the Global
Entities for each rolling twelve (12) fiscal month period ending on the dates listed below to be
less than the amount listed opposite such month:

	 	 	 
	 	 	Global Entities
	Month	 	EBITDA ($)
	March 31, 2006

	 	$450,000,000
	April 30, 2006
	 	$450,000,000
	May 31, 2006
	 	$450,000,000
	June 30, 2006
	 	$500,000,000
	July 31, 2006
	 	$500,000,000
	August 31, 2006
	 	$560,000,000
	September 30, 2006
	 	$560,000,000
	October 31, 2006
	 	$560,000,000
	November 30, 2006
	 	$560,000,000
	December 31, 2006
	 	$575,000,000
	January 31, 2007
	 	$575,000,000
	February 28, 2007
	 	$575,000,000
	March 31, 2007
	 	$575,000,000
	April 30, 2007
	 	$615,000,000
	May 31, 2007
	 	$615,000,000
	June 30, 2007
	 	$615,000,000
	July 31, 2007
	 	$650,000,000
	August 31, 2007
	 	$650,000,000
	September 30, 2007
	 	$675,000,000
	October 31, 2007
	 	$675,000,000
	November 30, 2007
	 	$675,000,000

          6.16. Minimum Liquidity. Permit Minimum Liquidity of the Loan Parties at the last day
of each calendar month to be less than $250,000,000, provided that the foregoing amount
shall be reduced by the percentage of the amount of any permanent reduction of the Total Revolving

 

62

Commitments pursuant to Section 2.17(a) over the Total Revolving Commitments in effect immediately
prior to such permanent reduction.

          6.17. Geysers Leverage Ratio. Permit the Geysers Leverage Ratio as at the last day of
any period of twelve months ending with any month set forth below to exceed the ratio set forth
below opposite such month:

	 	 	 
	Month	 	Geysers Leverage Ratio
	March 31, 2006
	 	7.00:1.00
	April 30, 2006
	 	7.25:1.00
	May 31, 2006
	 	7.25:1.00
	June 30, 2006
	 	7.25:1.00
	July 31, 2006
	 	7.25:1.00
	August 31, 2006
	 	7.25:1.00
	September 30, 2006
	 	7.25:1.00
	October 31, 2006
	 	7.50:1.00
	November 30, 2006
	 	8.00:1.00
	December 31, 2006
	 	8.50:1.00
	January 31, 2007
	 	8.50:1.00
	February 28, 2007
	 	8.75:1.00
	March 31, 2007
	 	8.75:1.00
	April 30, 2007
	 	9.00:1.00
	May 31, 2007
	 	9.00:1.00
	June 30, 2007
	 	9.00:1.00
	July 31, 2007
	 	9.00:1.00
	August 31, 2007
	 	9.00:1.00
	September 30, 2007
	 	9.00:1.00
	October 31, 2007
	 	9.00:1.00
	November 30, 2007
	 	9.00:1.00

          6.18. Geysers Interest Coverage Ratio. Permit the Geysers Interest Coverage Ratio for
any period of twelve months ending with any month set forth below to be less than the ratio set
forth below opposite such fiscal month:

	 	 	 
	Month	 	Geysers Interest Coverage Ratio
	March 31, 2006
	 	2.00:1.00
	April 30, 2006
	 	2.00:1.00
	May 31, 2006
	 	1.75:1.00
	June 30, 2006
	 	1.75:1.00
	July 31, 2006
	 	1.75:1.00
	August 31, 2006
	 	1.75:1.00
	September 30, 2006
	 	1.75:1.00
	October 31, 2006
	 	1.75:1.00
	November 30, 2006
	 	1.50:1.00
	December 31, 2006
	 	1.50:1.00
	January 31, 2007
	 	1.50:1.00
	February 28, 2007
	 	1.50:1.00
	March 31, 2007
	 	1.40:1.00

 

63

	 	 	 
	Month	 	Geysers Interest Coverage Ratio
	April 30. 2007
	 	1.40:1.00
	May 31, 2007
	 	1.40:1.00
	June 30, 2007
	 	1.40:1.00
	July 31, 2007
	 	1.40:1.00
	August 31, 2007
	 	1.40:1.00
	September 30, 2007
	 	1.40:1.00
	October 31, 2007
	 	1.40:1.00
	November 30, 2007
	 	1.40:1.00

          6.19. Amendments to Documents. Amend, supplement or modify, without the consent of the
Administrative Agents, in any material manner adverse to the interest of the Lenders (a), any
material project financing documents to which a Material Subsidiary is a party and (b) the CalBear
Documents.

          6.20. Control Agreements. On and after March 15, 2006, fail to provide the Collateral
Agent with executed control, blocked account, or similar agreements relating to all accounts
maintained by Borrower with Union Bank of California, in form and substance reasonably acceptable
to the Collateral Agent. Anytime after June 30, 2006, upon 90 days’ written notice to the
Borrower, the Collateral Agent may require the Borrower to maintain, and the Borrower shall not
fail to maintain, a cash management system that concentrates all unrestricted cash of the Borrower
and its Subsidiaries on a daily basis in the Concentration Account pursuant to arrangements and
documentation reasonably satisfactory to the Collateral Agent.

          6.21. Adequate Protection Payments. Without the prior consent of the Required Lenders
and the Administrative Agents, make any payments of adequate protection or otherwise with respect
to any Calpine Second Lien Debt (as such term is defined in the Final Order Authorizing Use of Cash
Collateral and Granting Adequate Protection, entered by the Bankruptcy Court on or about January
30, 2006 (the “Cash Collateral Order”), other than the two Periodic Cash Payments (as such term is
defined in the Cash Collateral Order).

SECTION 7

EVENTS OF DEFAULT

          If one or more of the following events (herein called “Events of Default”) shall occur
and be continuing:

          (a) The Borrower shall fail to (i) pay any principal under any Note or under this Agreement,
including without limitation, pursuant to Section 2.17 hereof, when due in accordance with the
terms thereof or hereof or to reimburse the Fronting Bank in accordance with Section 2.8(d) or (ii)
pay any interest on any Note or under this Agreement, or any other amount payable hereunder or
under any other Loan Document, within three (3) Business Days after any such interest or other
amount becomes due in accordance with the terms thereof or hereof; or

          (b) Any representation or warranty made or deemed made by any Loan Party herein or in any
other Loan Document or which is contained in any certificate, document or financial or other

 

64

statement furnished at any time under or in connection with this Agreement or any other Loan
Document shall prove to have been incorrect in any material respect on or as of the date made or
deemed made; or

          (c) Any material provision of this Agreement (including without limitation, Section 9) or any
other Loan Document shall cease to be valid and binding on the Loan Parties or cease to be in full
force and effect, or any Credit Party shall so assert in any pleading filed in any court; or

          (d) Any Loan Party shall default in the observance or performance of any covenant or other
agreement contained in Section 1.3, Section 5.4(a) (with respect to the Borrower), Section 5.7(a),
Section 5.11(b)(iii)(C) or Section 6 hereof or Section 5 of the Security and Pledge Agreement; or

          (e) Any Loan Party shall default in the observance or performance of any covenant or other
agreement contained in this Agreement or any other Loan Document (other than as provided in
paragraphs (a) through (d) of this Section 7), and such default shall continue unremedied for a
period of fifteen (15) days; or

          (f) Any Loan Party shall (i) default in any payment of principal of or interest on any
post-Petition Date Indebtedness permitted under Section 6.1 (other than as provided in Section
7(a)), or in the payment of any post-Petition Date Guarantee Obligation permitted under Section
6.3, in either case in an outstanding principal amount in excess of $5,000,000 beyond the period of
grace, if any, provided in the instrument or agreement under which such Indebtedness or Guarantee
Obligation was created; or (ii) default in the observance or performance of any other agreement or
condition relating to any such post-Petition Date Indebtedness or post-Petition Date Guarantee
Obligation or contained in any instrument or agreement evidencing, securing or relating thereto, or
any other event shall occur or condition exist, the effect of which default or other event or
condition is to cause, or to permit the holder or holders of such indebtedness or beneficiary or
beneficiaries of such Guarantee Obligation or a trustee or agent on behalf of such holder or
holders or beneficiary or beneficiaries to cause, with the giving of notice if required (but after
the expiration of all grace periods applicable thereto), such Indebtedness to become due prior to
its stated maturity or such Guarantee Obligation to become payable, provided,
however, this clause (ii) shall not apply to Indebtedness that becomes due solely as a
result of the voluntary sale or transfer of property or assets to the extent such sale or transfer
is permitted by the terms of such Indebtedness; or

          (g) Any of the Cases shall be dismissed or converted to a case under Chapter 7 of the
Bankruptcy Code; or

          (h) (i) An order of the Bankruptcy Court shall be entered granting another Superpriority
Claim or Lien pari passu with or senior to that granted to the Lenders and the
Collateral Agent pursuant to this Agreement and the Interim Order (or the Final Order, as
applicable); (ii) an order of the Bankruptcy Court shall be entered reversing, staying for a period
in excess of ten (10) days, vacating or otherwise amending, supplementing or modifying the Interim
Order (or the Final Order, as applicable) without the written consent of the Administrative Agents;
(iii) an order of a court of competent jurisdiction shall be entered terminating the use of Cash
Collateral by the Borrower or any Material Subsidiary; or (iv) an order of the Bankruptcy Court
shall be entered under Section 1106(b) of the Bankruptcy Code in any of the Cases appointing a
trustee, a responsible officer or an examiner having enlarged powers relating to the operation of
the business of the Loan Parties (i.e., powers beyond those set forth under Sections
1106(a)(3) and (4) of the Bankruptcy Code) and such order shall not be reversed or vacated within
thirty (30) days after the entry thereof; or

          (i) Any Global Entity shall make any payments (including any adequate protection payments)
relating to pre-Petition Date obligations or interests, in each case of any Loan Party, other than
(i) as permitted under the Interim Order (or the Final Order, as applicable); (ii) in respect of
accrued

 

65

payroll and related expenses and employee benefits as of the Petition Date; (iii) in
accordance with, and to the extent authorized by, orders reasonably satisfactory to the
Administrative Agents; (iv) as otherwise permitted under this Agreement, including pursuant to the
orders described in Section 4.1(d); (v) paying
dividends pursuant to the Preferred Equity Documents as in effect on the date hereof at any
time after Calpine CCFC Holdings, Inc. and its Subsidiaries (including without limitation, CCFC
Preferred Holdings LLC and its Subsidiaries) have become Debtors and Loan Parties in accordance
with Section 5.11(b) and have otherwise complied with the provisions thereof and so long as no
Default or Event of Default shall have occurred and is continuing; (vi) payments by a Global Entity
that is not a Debtor in respect of prepetition obligations of a Debtor for services and materials
that were used solely in the construction or maintenance of a project that is not a Debtor and such
payment is necessary to avoid the incurrence of a statutory lien against such project; and (vii)
payments in respect of prepetition obligations of a Debtor by a Global Entity that is not a Debtor
for common facilities or services to the extent necessary to ensure that such common facilities or
services remain available to such Global Entity and such Debtor; or

          (j) Except in respect of the transactions permitted under Section 6.5(a)(iii), the entry of an
order granting relief from the automatic stay without the affirmative consent of the Administrative
Agents so as to allow a third party to proceed against any property of any Loan Party which has a
value in excess of $5,000,000 in the aggregate; or

          (k) The filing of any pleading by any Global Entity seeking, or otherwise consenting to, any
of the matters set forth in paragraphs (g), (h) or (i) above in this Section 7; or

          (l) (i) One or more judgments or decrees required to be satisfied as an administrative expense
claim shall be entered after the Petition Date against any Credit Party involving in the aggregate
a liability (to the extent not paid or fully covered by insurance) of $5,000,000 or more and all
such judgments or decrees shall not have been vacated, stayed or bonded pending appeal within the
time required by the terms of such judgment or applicable law; or (ii) there shall be rendered
against any Loan Party a non-monetary judgment with respect to a post-Petition Date event which
causes or would reasonably be expected to cause a Material Adverse Effect; or

          (m) It shall be determined (whether by the Bankruptcy Court or by any other judicial or
administrative forum) that any Credit Party is liable for the payment of claims arising out of any
failure to comply (or to have complied) with applicable Environmental Laws or regulations the
payment of which could reasonably be expected to have a Material Adverse Effect; or

          (n) Any proceeding shall be commenced by any Loan Party seeking, or otherwise consenting to,
(i) the invalidation, subordination or challenging in any respect the Superpriority Claims and
Liens granted to secure the Obligations or (ii) any relief under Section 506(c) of the Bankruptcy
Code with respect to any Collateral; or

          (o) Any Loan Party files a Reorganization Plan that does not provide for the indefeasible
payment in full in cash on the effective date of such Reorganization Plan of the Obligations; or

          (p) (i) a default, event of default, acceleration event or similar event shall have occurred
and be continuing under any project financing documentation of any Material Subsidiary, the lenders
thereunder shall have taken foreclosure or acceleration action in respect thereof (including
without limitation, any interruption of distributions to any Credit Party, and such foreclosure or
acceleration action remains unstayed for a period of fifteen (15) days (or such Material Subsidiary
shall not, within such fifteen (15) days, have become a Debtor and a Loan Party in accordance with
Section

 

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5.11(b) and otherwise complied with the provisions thereof) or (ii) a “Voting Rights
Trigger Event”, default, event of default or similar event shall have occurred under the Preferred
Equity Documents except to the extent that (x) any such “Voting Rights Trigger Event” occurred
solely as a result of the commencement of the Cases and has been stayed and not exercised or (y) any such “Voting Rights
Trigger Event”, default, event of default or similar event has not resulted in a change of control
or similar event at CCFC Preferred Holdings, LLC or any of its Subsidiaries or in a foreclosure or
acceleration action by lenders of Indebtedness of CCFC Preferred Holdings, LLC or any of its
Subsidiaries; or

          (q) (i) Any Person shall engage in any “prohibited transaction” (as defined in Section 406 of
ERISA or Section 4975 of the Code) involving any Plan; (ii) any “accumulated funding deficiency”
(as defined in Section 302 of ERISA), whether or not waived, shall exist with respect to any Plan
or any Lien in favor of the PBGC or a Plan shall arise on the assets of any Global Entity or any
Commonly Controlled Entity; (iii) a Reportable Event shall occur with respect to, or proceedings
shall commence to have a trustee appointed, or a trustee shall be appointed, to administer or to
terminate, any Single Employer Plan, which Reportable Event or commencement of proceedings or
appointment of a trustee is likely to result in the termination of such Plan for purposes of Title
IV of ERISA; (iv) any Single Employer Plan shall terminate for purposes of Title IV of ERISA; (v)
any Global Entity or any Commonly Controlled Entity shall, or in the reasonable opinion of the
Required Lenders is likely to, incur any liability in connection with a withdrawal from, or the
Insolvency or ERISA Reorganization of, a Multiemployer Plan or (vi) any other event or condition
shall occur or exist with respect to a Plan; and in each case in clauses (i) through (vi) above,
such event or condition, together with all other such events or conditions, if any, could
reasonably be expected to have a Material Adverse Effect; or

          (r) There shall occur a Change of Control; or

          (s) (i) Payment shall made in respect of the Guarantee Obligations permitted under Section
6.3(g) in an amount in excess of $20,000,000 or (ii) demand shall made in respect of the Guarantee
Obligations permitted under Section 6.3(g) in an amount in excess of $20,000,000 and such demand
shall not have been revoked, rescinded or otherwise withdrawn within two Business Days of such
demand;

then, and in every such event and at any time thereafter during the continuance of such event, and
without further order of or application to the Bankruptcy Court, the applicable Administrative
Agent may, and, at the request of the Required Lenders, the applicable Administrative Agent or the
Collateral Agent (subject to the terms of the Security and Pledge Agreement), shall, by notice to
the Borrower (with a copy to counsel for any statutory committee appointed in the Cases and to the
United States Trustee for the Southern District of New York), take one or more of the following
actions, at the same or different times; provided that (a) with respect to clause (iv)
below and the enforcement of Liens or other remedies with respect to the Collateral under clause
(v) below, the Collateral Agent shall provide the Borrower (with a copy to counsel for any
statutory committee appointed in the Cases and to the United States Trustee for the Southern
District of New York) with five (5) Business Days’ written notice prior to taking the action
contemplated thereby: (i) in the case of the First Priority Agent, terminate forthwith the
Revolving Commitments; (ii) declare the Loans then outstanding to be forthwith due and payable,
whereupon the principal of the Loans, any Letter of Credit Outstandings constituting then drawn and
unreimbursed Letters of Credit, together with accrued interest thereon and any unpaid accrued Fees
and all other Obligations of the Borrower accrued hereunder and under any other Loan Document,
shall become forthwith due and payable, without presentment, demand, protest or any other notice of
any kind, all of which are hereby expressly waived by the Loan Parties, anything contained herein
or in any other Loan Document to the contrary notwithstanding; (iii) require the Loan Parties upon
demand to forthwith deposit in the L/C Cash Collateral Account cash in an amount such that the
aggregate amount on deposit in the L/C Cash Collateral Account is equal to 105% of the face amount
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Letter of Credit and, to the extent the Borrower shall fail to
furnish such funds as demanded by the First Priority Agent, the First Priority Agent shall be
authorized to debit the accounts of the Loan Parties maintained with the First Priority Agent in
such amount for the deposit of such amounts in the L/C Cash
Collateral Account; (iv) subject to the Interim Order (or the Final Order, as applicable), set-off
amounts in the L/C Cash Collateral Account, the Concentration Account or any other accounts of the
Loan Parties and apply such amounts to the Obligations of the Loan Parties hereunder and under the
other Loan Documents in accordance with the Security and Pledge Agreement; and (v) exercise,
subject to the Orders, any and all remedies under this Agreement, the Security and Pledge
Agreement, the Orders, and applicable law available to the Administrative Agents, the Collateral
Agent and the Lenders.

SECTION 8

THE AGENTS

          8.1. Appointment. Each First Priority Lender hereby irrevocably designates and
appoints the First Priority Agent as the agent of such Lender under this Agreement and the other
Loan Documents, and each such Lender irrevocably authorizes the First Priority Agent, in such
capacity, to take such action on its behalf under the provisions of this Agreement and the other
Loan Documents and to exercise such powers and perform such duties as are expressly delegated to
the Administrative Agent by the terms of this Agreement and the other Loan Documents, together with
such other powers as are reasonably incidental thereto. Each Second Priority Term Lender hereby
irrevocably designates and appoints the Second Priority Agent as the agent of such Lender under
this Agreement and the other Loan Documents, and each such Lender irrevocably authorizes the Second
Priority Agent, in such capacity, to take such action on its behalf under the provisions of this
Agreement and the other Loan Documents and to exercise such powers and perform such duties as are
expressly delegated to the Second Priority Agent by the terms of this Agreement and the other Loan
Documents, together with such other powers as are reasonably incidental thereto. Each Lender
hereby irrevocably designates and appoints the Collateral Agent as the agent of such Lender under
this Agreement and the other Loan Documents, and each such Lender irrevocably authorizes the
Collateral Agent, in such capacity, to take such action on its behalf under the provisions of this
Agreement and the other Loan Documents and to exercise such powers and perform such duties as are
expressly delegated to the Collateral Agent by the terms of this Agreement and the other Loan
Documents, together with such other powers as are reasonably incidental thereto. Notwithstanding
any provision to the contrary elsewhere in this Agreement, none of the Administrative Agents and
the Collateral Agent shall have any duties or responsibilities, except those expressly set forth
herein, or any fiduciary relationship with any Lender, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities shall be read into this Agreement or any other
Loan Document or otherwise exist against such Agent.

          8.2. Delegation of Duties(a) . (a) Each of the Administrative Agents and the
Collateral Agent may execute any of their duties under this Agreement and the other Loan Documents
by or through agents or attorneys-in-fact and shall be entitled to advice of counsel concerning all
matters pertaining to such duties. None of the Administrative Agents and the Collateral Agent
shall be responsible for the negligence or misconduct of any agents or attorneys in-fact selected
by it with reasonable care.

          (b) It is acknowledged and agreed that GE Capital shall act as Sub-Agent of the First Priority
Agent with respect to the administration of the Revolving Facility, the making of Revolving Loans
and Swingline Loans, the issuance and administration of Letters of Credit and the performance of
such other functions of the First Priority Agent under the Revolving Facility that are reasonably
related thereto, including, without limitation, the administration of, assignments of (including
the giving or withholding of consents with respect thereto), and the maintenance of the Register
for, the Revolving Facility, the Swingline Loans, the Letters of Credit and the Revolving Loans. Accordingly, for
(x) all

 

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purposes of this Section 8 and Section 11.5, (y) for the purpose of Section 11.6 (as it
pertains to assignments and participations of the Revolving Commitment and/or Revolving Loans,
including the giving or withholding of consents with respect thereto except with respect to
arrangements between DB or CS and an Elgibile Assignee in connection with the syndication process)
and (z) Section 15(g) of the Security and Pledge Agreement, references to the “Administative
Agents,” “First Priority Agent” and “Agents”, as applicable, shall, be deemed to include the
Sub-Agent.

          8.3. Exculpatory Provisions. Neither any Agent nor any of their respective officers,
directors, employees, agents, attorneys-in-fact or affiliates shall be (i) liable for any action
lawfully taken or omitted to be taken by it or such Person under or in connection with this
Agreement or any other Loan Document (except to the extent that any of the foregoing are found by a
final and nonappealable decision of a court of competent jurisdiction to have resulted from its or
such Person’s own gross negligence or willful misconduct) or (ii) responsible in any manner to any
of the Lenders for any recitals, statements, representations or warranties made by any Loan Party
or any officer thereof contained in this Agreement or any other Loan Document or in any
certificate, report, statement or other document referred to or provided for in, or received by the
Agents under or in connection with, this Agreement or any other Loan Document or for the value,
validity, effectiveness, genuineness, enforceability or sufficiency of this Agreement or any other
Loan Document or for any failure of any Loan Party a party thereto to perform its obligations
hereunder or thereunder. The Agents shall not be under any obligation to any Lender to ascertain
or to inquire as to the observance or performance of any of the agreements contained in, or
conditions of, this Agreement or any other Loan Document, or to inspect the properties, books or
records of any Loan Party.

          8.4. Reliance by Administrative Agents. Each Administrative Agent shall be entitled
to rely, and shall be fully protected in relying, upon any instrument, writing, resolution, notice,
consent, certificate, affidavit, letter, telecopy, telex or teletype message, statement, order or
other document or conversation believed by it to be genuine and correct and to have been signed,
sent or made by the proper Person or Persons and upon advice and statements of legal counsel
(including counsel to the Borrower), independent accountants and other experts reasonably selected
by such Administrative Agent. Each Administrative Agent may deem and treat the payee of any Note
as the owner thereof for all purposes unless a written notice of assignment, negotiation or
transfer thereof shall have been filed with such Administrative Agent. Each Administrative Agent
shall be fully justified in failing or refusing to take any action under this Agreement or any
other Loan Document unless such Administrative Agent shall first receive such advice or concurrence
of the Required Lenders (or, if so specified by this Agreement, all Lenders) as it deems
appropriate or it shall first be indemnified to its satisfaction by the Lenders against any and all
liability and expense that may be incurred by it by reason of taking or continuing to take any such
action. The Administrative Agents shall in all cases be fully protected in acting, or in
refraining from acting, under this Agreement and the other Loan Documents in accordance with a
request of the Required Lenders (or, if so specified by this Agreement or any other Loan Document,
the Majority Facility Lenders, Majority First Priority Lenders, Majority Second Priority Lenders or
all Lenders), and such request and any action taken or failure to act pursuant thereto shall be
binding upon all the Lenders and all future holders of the Loans.

          8.5. Notice of Default. No Administrative Agent shall be deemed to have knowledge or
notice of the occurrence of any Default or Event of Default unless such Administrative Agent has
received notice from a Lender or the Borrower referring to this Agreement, describing such Default
or Event of Default and stating that such
notice is a “notice of default”. In the event that either Administrative Agent receives such
a notice, such Administrative Agent shall give notice thereof to the other Administrative Agent the
Lenders. The applicable Administrative Agent shall take such action with respect to such Default
or Event of Default as shall be reasonably directed by the Required Lenders (or, if so specified by
this Agreement or any other Loan Document, the Majority Facility Lenders, Majority First

 

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Priority Lenders, Majority Second Priority Lenders or all Lenders); provided that unless and until
the applicable Administrative Agents shall have received such directions, such Administrative Agent
may (but shall not be obligated to) take such action, or refrain from taking such action, with
respect to such Default or Event of Default as it shall deem advisable in the best interests of the
Lenders.

          8.6. Non-Reliance on Agents and Other Lenders. Each Lender expressly acknowledges
that neither the Agents nor any of their respective officers, directors, employees, agents,
attorneys-in-fact or affiliates have made any representations or warranties to it and that no act
by any Agent hereafter taken, including any review of the affairs of a Loan Party or any affiliate
of a Loan Party, shall be deemed to constitute any representation or warranty by any Agent to any
Lender. Each Lender represents to the Agents that it has, independently and without reliance upon
any Agent or any other Lender, and based on such documents and information as it has deemed
appropriate, made its own appraisal of and investigation into the business, operations, property,
financial and other condition and creditworthiness of the Loan Parties and their affiliates and
made its own decision to make its Loans hereunder and enter into this Agreement. Each Lender also
represents that it will, independently and without reliance upon any Agent or any other Lender, and
based on such documents and information as it shall deem appropriate at the time, continue to make
its own credit analysis, appraisals and decisions in taking or not taking action under this
Agreement and the other Loan Documents, and to make such investigation as it deems necessary to
inform itself as to the business, operations, property, financial and other condition and
creditworthiness of the Loan Parties and their affiliates. Except for notices, reports and other
documents expressly required to be furnished to the Lenders by an Administrative Agent hereunder,
neither Administrative Agent shall have any duty or responsibility to provide any Lender with any
credit or other information concerning the business, operations, property, condition (financial or
otherwise), prospects or creditworthiness of any Loan Party or any affiliate of a Loan Party that
may come into the possession of either Administrative Agent or any of its officers, directors,
employees, agents, attorneys-in-fact or affiliates.

          8.7. Indemnification. The First Lien Lenders agree to indemnify the First Lien Agent
and the Second Lien Lenders agree to indemnify the Second Lien Agent each in its capacity as such
(to the extent not reimbursed by the Borrower and without limiting the obligation of the Borrower
to do so), ratably according to their respective Commitment Percentage in effect on the date on
which indemnification is sought under this Section (or, if indemnification is sought after the date
upon which the Commitments shall have terminated and the Loans shall have been paid in full,
ratably in accordance with such Commitment Percentage immediately prior to such date), from and
against any and all liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements of any kind whatsoever that may at any time (whether before
or after the payment of the Loans) be imposed on, incurred by or asserted against such Agent in any
way relating to or arising out of, the Commitments, this Agreement, any of the other Loan Documents
or any documents contemplated by or referred to herein or therein or the transactions contemplated
hereby or thereby or any action taken or omitted by such Agent under or in connection with any of
the foregoing; provided that no Lender shall be liable for the payment of any portion of
such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements that are found by a final and nonappealable decision of a court of
competent jurisdiction to have resulted from such Agent’s gross negligence or willful misconduct. The
agreements in this Section shall survive the payment of the Loans and all other amounts payable
hereunder.

          8.8. Agent in Its Individual Capacity. Each Agent and its affiliates may make loans
to, accept deposits from and generally engage in any kind of business with any Loan Party as though
such Agent were not an Agent. With respect to its Loans made or renewed by it and with respect to
any Letter of Credit issued or participated in by it, each Agent shall have the same rights and
powers under this Agreement and the other Loan Documents as any Lender and may exercise the same as
though it were not an Agent, and the terms “Lender” and “Lenders” shall include each Agent in its
individual capacity.

 

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          8.9. Successor Administrative Agents. An Administrative Agent may resign as
Administrative Agent upon ten (10) days’ notice to the Lenders and the Borrower. If an
Administrative Agent shall resign as Administrative Agent under this Agreement and the other Loan
Documents, then the Required Lenders shall appoint from among the Lenders a successor agent for the
Lenders, which successor agent shall (unless an Event of Default under Section 7(a) shall have
occurred and be continuing) be subject to approval by the Borrower (which approval shall not be
unreasonably withheld or delayed), whereupon such successor agent shall succeed to the rights,
powers and duties of the Administrative Agent, and the term “Administrative Agent” shall mean such
successor agent effective upon such appointment and approval, and the former Administrative Agent’s
rights, powers and duties as an Administrative Agent shall be terminated, without any other or
further act or deed on the part of such former Administrative Agent or any of the parties to this
Agreement or any holders of the Loans. If no successor agent has accepted appointment as an
Administrative Agent by the date that is ten (10) days following a retiring Administrative Agent’s
notice of resignation, the retiring Administrative Agent’s resignation shall nevertheless thereupon
become effective, and the Lenders shall assume and perform all of the duties of such Administrative
Agent hereunder until such time, if any, as the Required Lenders appoint a successor agent as
provided for above. After any retiring Administrative Agent’s resignation as Administrative Agent,
the provisions of this Section 8 shall inure to its benefit as to any actions taken or omitted to
be taken by it while it was an Administrative Agent under this Agreement and the other Loan
Documents.

          8.10. Syndication Agents and Documentation Agents. The Syndication Agents and
Documentation Agents shall not have any duties or responsibilities hereunder in its capacity as
such or any fiduciary relationship with any Lender, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities shall be read into this Agreement or any other
Loan Document or otherwise exist against the Syndication Agents and Documentation Agents.

          8.11. Collateral Security. The Collateral Agent will hold, administer and manage any
Collateral pledged from time to time hereunder either in its own name or as Collateral Agent, but
each Lender shall hold a direct, undivided pro-rata beneficial interest therein, on the basis of
its proportionate interest in the secured obligations, by reason of and as evidenced by this
Agreement and the other Loan Documents, subject to the priority of payments referenced in Section
15(g) of the Security and Pledge Agreement.

          8.12. Enforcement by the Administrative Agents. All rights of action under this Agreement and under the Notes and all rights to the
Collateral hereunder may be enforced by the Administrative Agents and the Collateral Agent and any
suit or proceeding instituted by an Administrative Agent or the Collateral Agent in furtherance of
such enforcement shall be brought in its name as Administrative Agent or Collateral Agent without
the necessity of joining as plaintiffs or defendants any other Lenders, and the recovery of any
judgment shall be for the benefit of Lenders subject to the expenses of the Administrative Agents
and the Collateral Agent.

 

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SECTION 9

GUARANTEE

          9.1. Guarantee. (a) Each of the Guarantors hereby, jointly and severally,
unconditionally and irrevocably, guarantees to the Collateral Agent, the Administrative Agents, for
the ratable benefit of the Lenders and their respective successors, indorsees, transferees and
assigns permitted hereunder, the prompt and complete payment and performance by the Borrower when
due (whether at the stated maturity, by acceleration or otherwise) of the Obligations.

          (b) Anything herein or in any other Loan Document to the contrary notwithstanding, the maximum
liability of each Guarantor under this Section 9.1 and under the other Loan Documents shall in no
event exceed the amount which is permitted under applicable federal and state laws relating to the
insolvency of debtors.

          (c) Each Guarantor agrees that the Obligations may at any time and from time to time exceed
the amount of the liability of such Guarantor hereunder without impairing the guarantee contained
in this Section 9 or affecting the rights and remedies of the Administrative Agents or any Lender
hereunder.

          (d) The guarantee contained in this Section 9 shall remain in full force and effect until all
the Obligations and the obligations of each Guarantor under the guarantee contained in this Section
9 shall have been satisfied by payment in full (other than contingent indemnification obligations
which have not been asserted), no Letter of Credit shall be outstanding and the Commitments shall
be terminated, notwithstanding that from time to time during the term of this Agreement the
Borrower may be free from any Obligations.

          (e) No payment made by the Borrower, any of the Guarantors, any other guarantor or any other
Person or received or collected by the Administrative Agents or any Lender from the Borrower, any
of the Guarantors, any other guarantor or any other Person by virtue of any action or proceeding or
any set-off or appropriation or application at any time or from time to time in reduction of or in
payment of the Obligations shall be deemed to modify, reduce, release or otherwise affect the
liability of any Guarantor hereunder which shall, notwithstanding any such payment (other than any
payment made by such Guarantor in respect of the Obligations or any payment received or collected
from such Guarantor in respect of the Obligations), remain liable for the Obligations up to the
maximum liability of such Guarantor hereunder until the Obligations are paid in full (other than
contingent indemnification obligations which have not been asserted), no Letter of Credit shall be
outstanding and the Commitments are terminated.

          9.2. Right of Contribution. Each Guarantor hereby agrees that to the extent that a Guarantor shall have paid more than
its proportionate share of any payment made hereunder, such Guarantor shall be entitled to seek and
receive contribution from and against any other Guarantor hereunder which has not paid its
proportionate share of such payment. Each Guarantor’s right of contribution shall be subject to
the terms and conditions of Section 9.3. The provisions of this Section 9.2 shall in no respect
limit the obligations and liabilities of any Guarantor to the Administrative Agents and the
Lenders, and each Guarantor shall remain liable to the Administrative Agents and the Lenders for
the full amount guaranteed by such Guarantor hereunder.

          9.3. No Subrogation. Notwithstanding any payment made by any Guarantor hereunder or
any set-off or application of funds of any Guarantor by the Administrative Agents or any Lender, no
Guarantor shall be entitled to be subrogated to any of the rights of the Administrative Agents

 

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or any Lender against the Borrower or any other Guarantor or any collateral security or guarantee or
right of offset held by the Administrative Agents or any Lender for the payment of the Obligations,
nor shall any Guarantor seek or be entitled to seek any contribution or reimbursement from the
Borrower or any other Guarantor in respect of payments made by such Guarantor hereunder, until all
amounts owing to the Administrative Agents and the Lenders by the Borrower on account of the
Obligations are paid in full, no Letter of Credit shall be outstanding and the Commitments are
terminated. If any amount shall be paid to any Guarantor on account of such subrogation rights at
any time when all of the Obligations shall not have been paid in full, such amount shall be held by
such Guarantor in trust for the Administrative Agents and the Lenders, segregated from other funds
of such Guarantor, and shall, forthwith upon receipt by such Guarantor, be turned over to the
Administrative Agents in the exact form received by such Guarantor (duly indorsed by such Guarantor
to the Administrative Agents, if required), to be applied against the Obligations, whether matured
or unmatured, in accordance with the terms of this Agreement.

          9.4. Amendments, etc. with respect to the Obligations. Each Guarantor shall remain
obligated hereunder notwithstanding that, without any reservation of rights against any Guarantor
and without notice to or further assent by any Guarantor, any demand for payment of any of the
Obligations made by the Administrative Agents or any Lender may be rescinded by the Administrative
Agents or such Lender and any of the Obligations continued, and the Obligations, or the liability
of any other Person upon or for any part thereof, or any collateral security or guarantee therefor
or right of offset with respect thereto, may, from time to time, in whole or in part, be renewed,
extended, amended, modified, accelerated, compromised, waived, surrendered or released by the
Administrative Agents or any Lender, and this Agreement and the other Loan Documents and any other
documents executed and delivered in connection herewith or therewith may be amended, modified,
supplemented or terminated, in whole or in part, as the Administrative Agents (or the Required
Lenders or all Lenders, as the case may be) may deem advisable from time to time, and any
collateral security, guarantee or right of offset at any time held by the Administrative Agents or
any Lender for the payment of the Obligations may be sold, exchanged, waived, surrendered or
released. Neither the Administrative Agents nor any Lender shall have any obligation to protect,
secure, perfect or insure any Lien at any time held by it as security for the Obligations or for
the guarantee contained in this Section 9 or any property subject thereto.

          9.5. Guarantee Absolute and Unconditional. Each Guarantor waives to the extent
permitted by law any and all notice of the creation, renewal, extension or accrual of any of the
Obligations and notice of or proof of reliance by the Administrative Agents or any Lender upon the
guarantee contained in this Section 9 or acceptance of the guarantee contained in this Section 9;
the Obligations, and any of them, shall conclusively be deemed to
have been created, contracted or incurred, or renewed, extended, amended or waived, in
reliance upon the guarantee contained in this Section 9; and all dealings between the Borrower and
any of the Guarantors, on the one hand, and the Administrative Agents and the Lenders, on the other
hand, likewise shall be conclusively presumed to have been had or consummated in reliance upon the
guarantee contained in this Section 9. Each Guarantor waives to the extent permitted by law
diligence, presentment, protest, demand for payment and notice of default or nonpayment to or upon
the Borrower or any of the Guarantors with respect to the Obligations. Each Guarantor understands
and agrees that the guarantee contained in this Section 9 shall be construed as a continuing,
absolute and unconditional guarantee of payment without regard to (a) the validity or
enforceability of this Agreement or any other Loan Document, any of the Obligations or any other
collateral security therefor or guarantee or right of offset with respect thereto at any time or
from time to time held by the Administrative Agents or any Lender, (b) any defense, set-off or
counterclaim (other than a defense of payment or performance) which may at any time be available to
or be asserted by the Borrower or any other Person against the Administrative Agents or any Lender,
or (c) any other circumstance whatsoever (with or without notice to or knowledge of the Borrower or
such Guarantor) which constitutes, or might be construed to constitute, an equitable or legal
discharge of the Borrower for the Obligations, or of such Guarantor under the guarantee contained
in this Section 9, in bankruptcy or in

 

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any other instance. When making any demand hereunder or
otherwise pursuing its rights and remedies hereunder against any Guarantor, the Administrative
Agents or any Lender may, but shall be under no obligation to, make a similar demand on or
otherwise pursue such rights and remedies as it may have against the Borrower, any other Guarantor
or any other Person or against any collateral security or guarantee for the Obligations or any
right of offset with respect thereto, and any failure by the Administrative Agents or any Lender to
make any such demand, to pursue such other rights or remedies or to collect any payments from the
Borrower, any other Guarantor or any other Person or to realize upon any such collateral security
or guarantee or to exercise any such right of offset, or any release of the Borrower, any other
Guarantor or any other Person or any such collateral security, guarantee or right of offset, shall
not relieve any Guarantor 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
Administrative Agents or any Lender against any Guarantor. For the purposes hereof “demand” shall
include the commencement and continuance of any legal proceedings.

          9.6. Reinstatement. The guarantee contained in this Section 9 shall continue to be
effective, or be reinstated, as the case may be, if at any time payment, or any part thereof, of
any of the Obligations is rescinded or must otherwise be restored or returned by the Administrative
Agents or any Lender upon the insolvency, bankruptcy, dissolution, liquidation or reorganization of
any Loan Party, or upon or as a result of the appointment of a receiver, intervenor or conservator
of, or trustee or similar officer for, any Loan Party or any substantial part of its property, or
otherwise, all as though such payments had not been made.

          9.7. Payments. Each Guarantor hereby guarantees that payments hereunder will be paid
to the applicable Administrative Agents without set-off or counterclaim in Dollars at its Funding
Office.

SECTION 10

[INTENTIONALLY OMITTED]

SECTION 11

MISCELLANEOUS

          11.1. Amendments and Waivers. (a) None of this Agreement, any Note, any other Loan
Document, nor any terms hereof or thereof may be amended, supplemented or modified except in
accordance with the provisions of this Section 11.1. The Required Lenders may, or, with the
written consent of the Required Lenders, the Administrative Agents may, from time to time, (I)
enter into with the Loan Parties written amendments, supplements or modifications hereto, to the
Notes and to the other Loan Documents for the purpose of adding any provisions to this Agreement,
the Notes or the other Loan Documents or changing in any manner the rights of the Lenders or of the
Loan Parties hereunder or thereunder or (II) waive, on such terms and conditions as the Required
Lenders or the Administrative Agents, as the case may be, may specify in such instrument, any of
the requirements of this Agreement, the Notes or the other Loan Documents or any Default or Event
of Default and its consequences; provided, however, that no such waiver and no such
amendment, supplement or modification shall (A) reduce the amount or extend the scheduled date of
any amortization payment or maturity of any Loan or other Extension of Credit or Note, or the date
for payment of any reimbursement obligations in respect of Letters of Credit or reduce the stated
rate of any interest or fee payable hereunder (provided, however, that only the
consent of the Required Lenders shall be necessary for the waiver of payment of default interest)
or extend the scheduled date of any payment thereof or increase the amount or extend the expiration
date of any Lender’s Commitment, or modify the Superpriority Claim status of the Lenders in

 

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respect of any Extensions of Credit, in each case without the consent of each Lender directly affected
thereby, (B) without the written consent of the Swingline Lender, amend, modify or waive any
provision of Section 2.6 or 2.7; (C) without the consent of all the Lenders, (i) amend, modify or
waive any provision of this Section 11.1 or any other provision of any Section hereof expressly
requiring the consent of all the Lenders, (ii) reduce the percentage specified in or otherwise
change the definition of Required Lenders and Supermajority Lenders or Majority Facility Lenders,
(iii) release all or substantially all of the Collateral for the Obligations, release all or
substantially all of the Guarantors or release the Superpriority Claim of the Administrative
Agents, the Collateral Agent and the Lenders in respect of all or substantially all of the Debtors
or (iv) consent to the assignment or transfer by any Loan Party of any of its rights and
obligations under this Agreement and the other Loan Documents, (D) without the consent of the
Majority Facility Lenders under the Revolving Facility, waive the condition precedent set forth in
Section 4.2(c), (E) amend, modify or waive any provision of Section 2.17(b) or 2.20 or Section
15(g) of the Security and Pledge Agreement without the written consent of the Majority Facility
Lenders in respect of each Facility adversely affected thereby, (F) amend, modify or waive any
provision of (i) Sections 2.8 through 2.10 without the consent of the Fronting Bank or (ii) Section
8 or any other provision of this Agreement or the other Loan Documents which affects, the rights,
duties or obligations of the Administrative Agents (including the Sub-Agent) without the written
consent of the Administrative Agents (including the Sub-Agent, solely to the extent any such action
would have the effect of amending the rights, duties or obligations of the Sub-Agent, in its
capacity as such) and (G) reduce the percentage specified in the definition of Majority Facility
Lenders with respect to any Facility without the written consent of all Lenders under such
Facility. Any such waiver and any such amendment, supplement or modification shall apply equally
to each of the Lenders and shall be binding upon the Loan Parties, the Lenders, the Administrative
Agents and all future holders of the Notes. In the case of any waiver, the Loan Parties, the
Lenders and the Administrative Agents shall be restored to their former position and rights
hereunder and under the outstanding Notes and any other Loan Documents, and any Default or Event of Default
waived shall be deemed to have not occurred or to be cured and not continuing, as the parties may
agree; but no such waiver shall extend to any subsequent or other Default or Event of Default, or
impair any right consequent thereon.

          (b) Notwithstanding anything to the contrary contained in Section 11.1(a), in the event that
the Borrower requests that this Agreement be modified or amended in a manner which would require
the unanimous consent of all of the Lenders and/or each Lender directly affected thereby and such
modification or amendment is agreed to by the Supermajority Lenders, then with the consent of the
Borrower and the Supermajority Lenders, the Borrower and the Supermajority Lenders shall be
permitted to amend the Agreement without the consent of the Lender or Lenders which did not agree
to the modification or amendment requested by the Borrower (such Lender or Lenders, the
“Minority Banks”) to provide for (w) the termination of the Commitment of each of the
Minority Banks, (x) the addition to this Agreement of one or more other financial institutions
(each of which shall be an Eligible Assignee), or an increase in the Commitment of one or more of
the Supermajority Lenders with consent of such Lender, so that the Total Commitment after giving
effect to such amendment shall be in the same amount as the Total Commitment immediately before
giving effect to such amendment, (y) if any Loans or other Extensions of Credit are outstanding at
the time of such amendment, the making of such additional Loans by such new financial institutions
or Supermajority Lender or Lenders, as the case may be, as may be necessary to repay in full the
outstanding Obligations of the Minority Banks immediately before giving effect to such amendment
and (z) such other modifications to this Agreement as may be appropriate.

          11.2. Notices. All notices, requests and demands to or upon the respective parties
hereto to be effective shall be in writing (including by telecopy), and, unless otherwise expressly
provided herein, shall be deemed to have been duly given or made when received, addressed as
follows in the case of the Loan Parties and the Administrative Agents, and as set forth in the
administrative questionnaire

 

75

delivered to the Administrative Agents in the case of the Lenders, or
to such other address as may be hereafter notified by the respective parties hereto and any future
holders of the Notes:

	 	 	 
	The Borrower and the Guarantors:

	 	Calpine Corporation
	 

	 	50 West San Fernando Street
	 

	 	San Jose, CA 95113
	 

	 	Attention: Chief Financial Officer
	 

	 	Telecopier No.: 408-995-0505
	 
	 	 
	 

	 	with copies (which shall not constitute notice) to:
	 
	 	 
	 

	 	50 West San Fernando Street
	 

	 	San Jose, CA 95113
	 

	 	Attention: General Counsel
	 

	 	Telecopier No.: 408-995-0505
	 
	 

	 	Kirkland & Ellis LLP
	 

	 	Citigroup Center

153 East 53rd Street
	 

	 	New York, NY 10022
	 

	 	Attention: Rick Cieri, Esq.
	 

	 	Telecopier No.: 212-446-4900
	 
	 	 
	The Administrative Agents:

	 	Deutsche Bank Trust Company Americas
	 

	 	Leveraged Loan Portfolio
	 

	 	60 Wall Street
	 

	 	New York, NY 10005
	 

	 	Attention: Marcus Tarkington
	 

	 	Telecopier No.: (212) 797-0070

 

76

	 	 	 
	 

	 	Credit Suisse
	 

	 	Eleven Madison Avenue
	 

	 	New York, NY 10010
	 

	 	Attention: James Moran
	 

	 	Telecopier No.: 212-743-1878
	 
	 	 
	 

	 	with a copy to:
	 
	 	 
	 

	 	Simpson Thacher & Bartlett LLP
	 

	 	425 Lexington Avenue
	 

	 	New York, NY 10017
	 

	 	Attention: Peter V. Pantaleo, Esq.
	 

	 	Telecopier No.: 212-455-2502
	 
	 	 
	The Sub-Agent, Fronting Bank
and Swingline Lender:

	 	General Electric Capital Corporation
	 

	 	6130 Stoneridge Mall Road
	 

	 	Pleasanton, CA 94588-3279
	 

	 	Attention: Lawrence Ridgway
	 

	 	Telecopier No.: 925-730-6496

          11.3. No Waiver; Cumulative Remedies. No failure to exercise and no delay in
exercising, on the part of the Administrative Agents or any Lender, any right, remedy, power or
privilege hereunder shall operate as a waiver thereof; nor shall any single or partial exercise of
any right, remedy, power or privilege hereunder preclude any other or further exercise thereof or
the exercise of any other right, remedy, power or privilege. The rights, remedies, powers and
privileges herein provided are cumulative and not exclusive of any rights, remedies, powers and
privileges provided by law.

          11.4. Survival of Representations and Warranties. All representations and warranties
made herein and in any document, certificate or statement delivered pursuant hereto or in
connection herewith shall survive the execution and delivery of this Agreement and the Notes.

          11.5. Payment of Expenses and Taxes. The Borrower agrees (a) to pay or reimburse each
Administrative Agent and each Lender for all its out-of-pocket costs and expenses reasonably
incurred in connection with the development, preparation and execution of, any amendment,
supplement or modification to, and the enforcement or preservation of any rights under, this
Agreement, the Notes, the other Loan Documents, the Orders and any other documents prepared in
connection herewith or therewith, and the consummation and administration of the
transactions contemplated hereby and thereby, and the reasonable fees and disbursements of
counsel to each Administrative Agent and the Collateral Agent and professionals engaged by the
Administrative Agents and the Collateral Agent, (b) to pay or reimburse each Administrative Agent,
the Collateral Agent and each Lender for all its costs and expenses reasonably incurred in
connection with the enforcement or preservation of any rights under this Agreement, the Notes, the
other Loan Documents, the Orders and any such other documents following the occurrence and during
the continuance of a Default or an Event of Default, including without limitation, the reasonable
fees and disbursements of counsel to each Administrative Agent, the Collateral Agent and each
Lender and professionals engaged by the Administrative Agents, the Collateral Agent and the
Lenders, (c) to pay, and indemnify and hold harmless each Lender, the Collateral Agent and each
Administrative Agent from, any and all recording and filing fees and any and all liabilities with
respect to, or resulting from any delay in paying, stamp, excise and other taxes, if any, which may
be payable or determined to be payable in connection with the execution and delivery of, or
consummation or

 

77

administration of any of the transactions contemplated by, or any amendment,
supplement or modification of, or any waiver or consent under or in respect of, this Agreement, the
Notes, the other Loan Documents, the Orders and any such other documents, (d) to pay all the actual
and reasonable out-of-pocket expenses of the Administrative Agents related to this Agreement, the
other Loan Documents, the Orders, the Loans or the Letters of Credit in connection with the Cases
(including without limitation, the on-going monitoring by the Administrative Agents of the Cases,
including attendance by each Administrative Agent and counsel at hearings or other proceedings and
the on-going review of documents filed with the Bankruptcy Court) and (e) to pay, and indemnify and
hold harmless each Lender, the Collateral Agent and each Administrative Agent (and their respective
directors, officers, employees and agents) from and against any and all other liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind or nature whatsoever with respect to the execution, delivery,
enforcement, performance, preservation of rights and administration of this Agreement, the Notes,
the other Loan Documents, the Orders or the use of the proceeds of the Extensions of Credit,
including without limitation, any of the foregoing relating to the violation of, noncompliance with
or liability under, any Environmental Law applicable to the operations of the Loan Parties or any
of their respective properties (all the foregoing in this clause (e), collectively, the
“indemnified liabilities”), provided that the Borrower shall have no obligation
hereunder to either Administrative Agent, the Collateral Agent or any Lender with respect to
indemnified liabilities determined by the final judgment of a court of competent jurisdiction to
have resulted from the gross negligence or willful misconduct of such Administrative Agent, the
Collateral Agent or such Lender or their respective directors, officers, employees and agents;
provided, further, that the Borrower shall in no event be responsible for punitive
damages pursuant to this Section 11.5 except such punitive damages required to be paid by any
indemnified party in respect of any indemnified liabilities. The agreements in this subsection
shall survive repayment of the Loans and all other Obligations payable hereunder.

          11.6. Successors and Assigns; Participations; Purchasing Lenders. (a) This Agreement
shall be binding upon and inure to the benefit of the Loan Parties, the Lenders, the Administrative
Agents, the Fronting Bank, all future holders of the Notes and their respective successors and
assigns, except that neither the Borrower nor any Guarantor may assign or transfer any of its
rights or obligations under this Agreement without the prior written consent of each Lender.

          (b) Any Lender may, without notice to or consent of the Administrative Agents and the
Borrower, in the ordinary course of its lending business and in accordance with applicable law, at
any time sell to one or more banks or other entities (“Participants”) participating
interests in any Loan owing to such Lender, any Note held by such Lender, any Commitment of such
Lender or any other interest of such Lender hereunder and under the other Loan Documents. In the
event of any such sale by a Lender of a participating interest to a Participant, such Lender’s
obligations under this Agreement to the other
parties to this Agreement shall remain unchanged, such Lender shall remain solely responsible
for the performance thereof, such Lender shall remain the holder of any such Note for all purposes
under this Agreement and the other Loan Documents, and the Borrower and the Administrative Agents
shall continue to deal solely and directly with such Lender in connection with such Lender’s rights
and obligations under this Agreement and the other Loan Documents. No Lender shall grant any
participation under which the Participant shall have the right to require such Lender to take or
omit to take any action hereunder or approve any amendment to or waiver of this Agreement or the
Notes or any other Loan Document, except to the extent such amendment or waiver would: (i) extend
the final maturity date of, or extend any date for payment of any principal, interest or fees
applicable to, the Loans, Letters of Credit or Commitments in which such Participant is
participating, (ii) reduce the interest rate or the amount of principal or fees applicable to the
Loans or the Letters of Credit in which such Participant is participating or (iii) release any Lien
granted pursuant to Section 2.28 hereof and the Interim Order (or the Final Order, as applicable)
on all or substantially all of the Collateral. The Borrower agrees that if amounts outstanding
under this Agreement and the Notes are due or unpaid, or shall have been declared or shall

 

78

have become due and payable upon the occurrence of an Event of Default, each Participant shall be deemed
to have the right of set-off in respect of its participating interest in amounts owing under this
Agreement and any Note to the same extent as if the amount of its participating interest were owing
directly to it as a Lender under this Agreement or any Note, provided that, in purchasing
such participating interest, such Participant shall be deemed to have agreed to share with the
Lenders the proceeds thereof as provided in Section 11.7(a) as fully as if it were a Lender
hereunder. The Borrower also agrees that each Participant shall be entitled to the benefits of
Sections 2.21, 2.22 and 2.23 with respect to its participation in the Commitments and the Loans
outstanding from time to time as if it were a Lender; and provided that the Participant and
the transferor Lender shall not be entitled to receive in the aggregate any greater amount pursuant
to such subsections than the transferor Lender would have been entitled to receive in respect of
the amount of the participation transferred by such transferor Lender to such Participant had no
such transfer occurred.

          (c) Any Lender may, in the ordinary course of its business of making or investing in loans and
in accordance with applicable law, at any time sell to any Lender or to one or more Eligible
Assignees (each a “Purchasing Lender”) all or any part of its rights and obligations under
this Agreement and the Notes pursuant to an Assignment and Acceptance, substantially in the form of
Exhibit D, executed by such Purchasing Lender, such transferor Lender (and, in the case of a
Purchasing Lender that is not then a Lender, by the applicable Administrative Agent) and delivered
to applicable Administrative Agent for its acceptance and recording in the Register;
provided that (i) other than in the case of a sale to a Purchasing Lender that is an
Affiliate of the transferor Lender or to another Lender, or to an Affiliate or Related Fund of any
Lender (collectively, a “Related Party Transfer”), the consent of the applicable
Administrative Agent shall be required (which consent shall not be unreasonably withheld or
delayed), (ii) if such Purchasing Lender is not then a Lender, such sale must be to either (A) a
commercial bank having total assets in excess of $5,000,000,000, (B) a finance company, insurance
company or other financial institution or fund which is regularly engaged in the making of,
purchasing or investing in, loans and having total assets in excess of $100,000,000 or (C) such
other Person approved by the applicable Administrative Agent (which approval shall not be
unreasonably withheld or delayed) (each, an “Eligible Assignee”), (iii) if such sale is not
to another Lender, Related Fund or Affiliate of any Lender, or does not involve all of the
transferor Lender’s rights and obligations under this Agreement, (A) the amount of the rights and
obligations so sold shall, unless otherwise agreed to in writing by the applicable Administrative
Agent, not be less than $1,000,000 and in each case to be an entity which is not restricted from
making future advances under a revolving credit facility or to an entity that has filed for relief
under the Bankruptcy Code or that is a financially distressed company and (B) after giving effect
to such assignment, the Commitment of each of the transferor Lender and the transferee Lender shall
be at least $1,000,000, or such lesser amount agreed to by the applicable Administrative Agent and
(iv) in the case of any sale under the Revolving Facility (other than to another Lender, Related
Fund or Affiliate of any Lender), the consent of the Fronting Bank and the Swingline Lender shall be required (except
the foregoing restrictions contained in clauses (i) through (iv) shall not be applicable to any
assignments between DB or CS and an Eligible Assignee in connection with the syndication process
and such minimum amounts shall be aggregated in respect of each Lender, an Affiliate of such Lender
and Related Funds of any Lender). Upon such execution, delivery, acceptance and recording of an
Assignment and Acceptance, from and after the effective date of such transfer determined pursuant
to and as defined in such Assignment and Acceptance, (x) the Purchasing Lender thereunder shall be
a party hereto and, to the extent provided in such Assignment and Acceptance, have the rights and
obligations of a Lender hereunder with a Commitment as set forth therein, and (y) the transferor
Lender thereunder shall, to the extent provided in such Assignment and Acceptance, be released from
its obligations under this Agreement (and, in the case of a Assignment and Acceptance covering all
or the remaining portion of a transferor Lender’s rights and obligations under this Agreement, such
transferor Lender shall cease to be a party hereto). Such Assignment and Acceptance shall be
deemed to amend this Agreement (including Schedule 1.1A hereof) to the extent, and only to the
extent, necessary to reflect the addition of such

 

79

Purchasing Lender and the resulting adjustment of
the Commitment Percentage and Commitment of each of the transferor Lender and the Purchasing Lender
arising from the purchase by such Purchasing Lender of all or a portion of the rights and
obligations of such transferor Lender under this Agreement and the Notes. To the extent requested
in writing by the transferor Lender or the Purchasing Lender on or prior to the effective date of
such transfer determined pursuant to such Assignment and Acceptance, the Borrower, at its own
expense, shall execute and deliver to the applicable Administrative Agent in exchange for the Note
of the transferor Lender a new Note to the order of such Purchasing Lender in an amount equal to
the Commitment assumed by it pursuant to such Assignment and Acceptance and, if the transferor
Lender has retained a Commitment hereunder, a new Note to the order of the transferor Lender in an
amount equal to the Commitment retained by it hereunder. Such new Notes shall be dated the Closing
Date and shall otherwise be in the form of the Note replaced thereby. To the extent the transferor
Lender requested a Note, the Note surrendered by the transferor Lender shall be returned by the
applicable Administrative Agent to the Borrower marked “cancelled”.

          (d) Each Administrative Agent, acting on behalf of the Borrower, shall maintain at its address
referred to in Section 11.2 a copy of each Assignment and Acceptance delivered to it and a register
(the “Register”) for the recordation of the names and addresses of the Lenders and the
Commitment of, and principal amount of the Loans owing to, each Lender from time to time. The
entries in the Register shall be conclusive, in the absence of manifest error, and the Borrower,
the Administrative Agents and the Lenders may treat each Person whose name is recorded in the
Register as the owner of the Loans recorded therein for all purposes of this Agreement. The
Register shall be available for inspection by the Borrower or any Lender at any reasonable time and
from time to time upon reasonable prior notice. Any assignment of any Loan whether or not
evidenced by a Note shall be effective only upon appropriate entries with respect thereto being
made in the Register (and each Note shall expressly so provide). Any assignment or transfer of all
or part of a Loan evidenced by a Note shall be registered on the Register only upon surrender for
registration of assignment or transfer of the Note evidencing such Loan, accompanied by a duly
executed Assignment and Acceptance, and thereupon one or more new Notes in the same aggregate
principal amount shall be issued to the designated Purchasing Lender and the old Notes shall be
returned by the applicable Administrative Agent to the Borrower marked “cancelled”.

          (e) Upon its receipt of an Assignment and Acceptance executed by a transferor Lender and a
Purchasing Lender (and, in the case of a Purchasing Lender that is not then a Lender, by the
applicable Administrative Agent, the Fronting Bank, the Swingline Lender and the Borrower to the
extent required under paragraph (c) above) together with payment to the Administrative Agent of a
registration and processing fee of $3,500 (except such fees shall not be payable with respect to
assignments by DB and CS), the applicable Administrative Agent shall (i) promptly accept such
Assignment and Acceptance, (ii) on the effective date of such transfer determined pursuant thereto
record the information contained
therein in the Register and (iii) give notice of such acceptance and recordation to the
Lenders and the Borrower.

          (f) Subject to Section 11.12, the Borrower authorizes each Lender to disclose to any
Participant or Purchasing Lender (each, a “Transferee”) and any prospective Transferee (in
each case which agrees to comply with the provisions of Section 11.12 hereof) any and all financial
information in such Lender’s possession concerning the Borrower and its Affiliates which has been
delivered to such Lender by or on behalf of the Borrower pursuant to this Agreement or any other
Loan Document or which has been delivered to such Lender by or on behalf of the Borrower in
connection with such Lender’s credit evaluation of the Borrower and its Affiliates prior to
becoming a party to this Agreement.

          (g) Nothing herein shall prohibit any Lender from pledging or assigning any Note to any
Federal Reserve Bank in accordance with applicable law. In the case of any Lender that is a fund
that invests in bank loans, such Lender may, without the consent of the Borrower or the
Administrative

 

80

Agents, assign or pledge all or any portion of its Notes or any other instrument
evidencing its rights as a Lender under this Agreement to any trustee for, or any other
representative of, holders of obligations owed or securities issued, by such fund, as security for
such obligations or securities; provided that any foreclosure or similar action by such
trustee or representative shall be subject to the provisions of this Section 11.6 concerning
assignments.

          11.7. Adjustments; Set-off. (a) If any Lender (a “Benefited Lender”) shall
at any time receive any payment of all or part of its Aggregate Outstandings of Revolving
Extensions of Credit, First Priority Term Loans or Second Priority Term Loans, or interest thereon,
or receive any collateral in respect thereof (whether voluntarily or involuntarily, by set-off or
otherwise), in a greater proportion than any such payment to or collateral received by any other
Lender, if any, in respect of such Extensions of Credit or Loans as it pertains to such other
Lender’s Aggregate Outstandings of Revolving Extensions of Credit, First Priority Term Loans or
Second Priority Term Loans, or interest thereon, such Benefited Lender shall purchase for cash from
the other Lenders a participating interest in such portion of each such other Lender’s Loans or the
Letter of Credit Outstandings owing to it, or shall provide such other Lenders with the benefits of
any such payment or collateral, or the proceeds thereof, as shall be necessary to cause such
Benefited Lender to share the excess payment or benefits of such payment or collateral or proceeds
ratably with each of the Lenders; provided, however, that if all or any portion of
such excess payment or benefits is thereafter recovered from such Benefited Lender, such purchase
shall be rescinded, and the purchase price and benefits returned, to the extent of such recovery,
but without interest.

          (b) Subject to (i) the Carve-Out, (ii) the Interim Order (or the Final Order, as applicable)
and (iii) the giving of the notice as described Section 7, notwithstanding the provisions of
Section 362 of the Bankruptcy Code and any other rights and remedies of the Lenders provided by
law, each Lender shall have the right upon the occurrence of an Event of Default to set-off and
apply against the Obligations, whether matured or unmatured, of the Loan Parties under this
Agreement, the Notes or any other Loan Document, any amount owing from such Lender to any Loan
Party at or at any time after, the happening of any Event of Default subject in each case to
Section 7 of this Agreement.

          11.8. Counterparts. This Agreement may be executed by one or more of the parties to
this Agreement on any number of separate counterparts, and all of said counterparts taken together
shall be deemed to constitute one and the same instrument.

          11.9. GOVERNING LAW. THIS AGREEMENT, THE NOTES AND THE OTHER LOAN DOCUMENTS AND THE
RIGHTS AND OBLIGATIONS OF THE PARTIES UNDER THIS AGREEMENT, THE NOTES AND THE OTHER LOAN DOCUMENTS
SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW
YORK AND, TO THE EXTENT APPLICABLE, THE BANKRUPTCY CODE.

          11.10. Submission To Jurisdiction; Waivers. Each party hereto hereby irrevocably and
unconditionally:

          (a) submits for itself and its property in any legal action or proceeding relating to this
Agreement and the other Loan Documents to which it is a party, or for recognition and enforcement
of any judgment in respect thereof, to the non-exclusive general jurisdiction of the Bankruptcy
Court and, if the Bankruptcy Court does not have (or abstains from) jurisdiction, to the
non-exclusive general jurisdiction of any State or Federal court of competent jurisdiction sitting
in New York County, New York;

          (b) consents that any such action or proceeding may be brought in such courts and waives any
objection that it may now or hereafter have to the venue of any such action or proceeding in

 

81

any such court or that such action or proceeding was brought in an inconvenient court and agrees not to
plead or claim the same;

          (c) agrees that service of process in any such action or proceeding may be effected by mailing
a copy thereof by registered or certified mail (or any substantially similar form of mail), postage
prepaid, to such party, as the case may be at its address set forth in Section 11.2 or at such
other address of which the Administrative Agent shall have been notified pursuant thereto;

          (d) agrees that nothing herein shall affect the right to effect service of process in any
other manner permitted by law or shall limit the right to sue in any other jurisdiction;

          (e) waives, to the maximum extent not prohibited by law, any right it may have to claim or
recover in any legal action or proceeding referred to in this Section any special, exemplary,
punitive or consequential damages; and

          (f) waives trial by jury in any legal action or proceeding referred to in this Section and any
counterclaim therein.

          11.11. Absence of Prejudice to the Lenders with Respect to Matters Before the Bankruptcy
Court. Each Loan Party acknowledges that the Bankruptcy Code and Federal Rules of Bankruptcy
Procedure require it to seek Bankruptcy Court authorization for certain matters that may also be
addressed in this Agreement. No Loan Party will without the express consent of the Administrative
Agents (a) mention in any pleading or argument before the Bankruptcy Court in support of, or in any
way relating to, a position that Bankruptcy Court authorization should be granted on the ground
that such authorization is permitted by this Agreement (unless a Person opposing any such pleading
or argument relies on this Agreement to assert or question the propriety of such) or (b) in any way
attempt to support a position before the Bankruptcy Court based on the provisions of this
Agreement. Each Administrative Agent or
any Lender shall be free to bring, oppose or support any matter before the Bankruptcy Court no
matter how treated in this Agreement.

          11.12. Confidentiality. Each Lender agrees to keep confidential all non-public
information provided to it by any Loan Party pursuant to this Agreement; provided that
nothing herein shall prevent any Lender from disclosing any such information (a) to the
Administrative Agents, the Sub-Agent, the Fronting Bank, or any other Lender, (b) to any Transferee
or prospective Transferee which agrees to comply with the provisions of this subsection, (c) to its
Affiliates, employees, directors, agents, attorneys, accountants and other professional advisors
who are bound by this or other confidentiality provisions (including professional ethics), (d) upon
the request or demand, or in accordance with the requirements (including reporting requirements),
of any Governmental Authority having jurisdiction over such Lender, provided that such
Lender shall use commercially reasonable efforts to notify the applicable Loan Party of such
disclosure, (e) in response to any court or other Governmental Authority or as may otherwise be
required pursuant to any Requirement of Law or other legal process, provided that such
Lender shall use commercially reasonable efforts to notify the applicable Loan Party of such
disclosure, (f) which has been publicly disclosed other than in breach of this Agreement, (g) in
connection with the exercise of any remedy under any Loan Document to the extent disclosure is
material to such claim or exercise of remedies, (h) which was available to the Administrative
Agents or such Lender prior to its disclosure to the Administrative Agents or such Lender, as the
case may be, by such Loan Party or (i) to any direct or indirect contractual counterparty in any
swap, hedge or similar agreement (or to any such contractual counterparty’s professional advisor),
so long as such contractual counterparty (or such professional advisor) agrees to be bound by the
provisions of this Section 11.12.

 

82

          11.13. U.S.A. Patriot Act. Each Lender that is subject to the requirements of the
Patriot Act hereby notifies the Borrower that pursuant to the requirements of the Patriot Act, it
is required to obtain, verify and record information that identifies the Borrower, which
information includes the name and address of the Borrower and other information that will allow
such Lender to identify the Borrower in accordance with the Patriot Act.

 

 

          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:	 	 

 

GUARANTORS:

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 L
P

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:  	 	 
	 

 

 

 

	 	 	 	 	 	 	 
	 	 	AGENTS AND LENDERS:	 	 
	 
	 	 	 	 	 	 
	 	 	DEUTSCHE BANK TRUST COMPANY AMERICAS,
	 	 	as Administrative Agent and as a Lender	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 

Name:
	 	 
	 

	 	 	 	Title: Managing Director	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	/s/  Marcus M. Tarkington	 	 
	 

	 	 	 	 

Name: Marcus M. Tarkington
	 	 
	 

	 	 	 	Title: Director	 	 

 

 

	 	 	 	 	 	 	 
	 	 	DEUTSCHE BANK SECURITIES INC., as Syndication Agents
	 
	 	 	 	 	 	 
	 

	 	By:	 	/s/  Thomas P. Lynch	 	 
	 

	 	 	 	 

Name: Thomas P. Lynch
	 	 
	 

	 	 	 	Title: Managing Director	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	/s/  Stephanie L. Perry	 	 
	 

	 	 	 	 

Name: Stephanie L. Perry
	 	 
	 

	 	 	 	Title: Director	 	 

 

	 	 	 	 	 
	 	CREDIT SUISSE, as a Lender

 	 
	 	By:  	/s/ James S. Finch
 	 
	 	 	Name:  	James S. Finch 	 
	 	 	Title:  	Managing Director 	 
	 
	 	 	 
	 	By:  	/s/
Lauri Sivaslian
 	 
	 	 	Name:  	Lauri Sivaslian 	 
	 	 	Title:  	Managing Director 	 
	 

 

 

	 	 	 	 	 

	 	 	 	 	 
	 	CREDIT SUISSE, Cayman Islands Branch, as Joint

Administrative Agent, Second Priority Agent and

Lender

 	 
	 	By:  	/s/ Thomas R. Cantello
 	 
	 	 	Name:  	Thomas R. Cantello 	 
	 	 	Title:  	Vice President 	 
	 
	 	 	 
	 	By:  	                  /s/ Gregory S. Richards
 	 
	 	 	Name:  	Gregory S. Richards 	 
	 	 	Title:  	Associate 	 

 

 

	 	 	 	 	 

	 	 	 	 	 
	 	GENERAL ELECTRIC CAPITAL
CORPORATION, as Sub-Agent, Joint First Priority Documentation Agent,
Joint Second Priority Documentation Agent and Lender

 	 
	 	By:  	/s/ Douglas A. Kelly
 	 
	 	 	Name:  	Douglas A. Kelly 	 
	 	 	Title:  	Duly Authorized Signatory 	 
	 

 

 

	 	 	 	 	 
	 	LANDESBANK HESSEN THURINGEN
GIROZENTRALE, NEW YORK BRANCH, as Joint First Priority Documentation
Agent and Lender

 	 
	 	By:  	/s/ David A. Leech
 	 
	 	 	Name:  	David A. Leech 	 
	 	 	Title:  	Senior Vice President Manager, Corporate Finance Corporate Finance Division 	 
	 
	 	 	 
	 	By:  	                  /s/ Erica A. Egan
 	 
	 	 	Name:  	Erica A. Egan 	 
	 	 	Title:  	Vice President
Corporate Finance Division
Structured Finance Dept. 	 
	 

 

 

	 	 	 	 	 
	 	HSH NORDBANK AG, NEW YORK BRANCH, as
Joint First Priority Documentation Agent and Lender  	 
	 
	 
	 	By:  	/s/ TK [Illegible]
 	 
	 	 	Name:  	[Illegible] 	 
	 	 	Title:  	Senior Vice President
HSH Nordbank AG 	 
	 
	 	 	 
	 	By:  	                  /s/ David Watson
 	 
	 	 	Name:  	David Watson 	 
	 	 	Title:  	Vice President
HSH Nordbank AG, New York Branch 	 
	 

 

 

	 	 	 	 	 
	 	BAYERISCHE LANDESBANK, as Joint Second Priority

Documentation Agent and Lender

 	 
	 	By:  	/s/ Norman McClave
 	 
	 	 	Name:  	Norman McClave 	 
	 	 	Title:  	First Vice President 	 
	 
	 	 	 
	 	By:  	                  /s/ Oliver S. Hildenbrand
 	 
	 	 	Name:  	Oliver S. Hildenbrand 	 
	 	 	Title:  	First Vice President 	 
	 

 

 

	 	 	 	 	 
	 	UNION BANK OF CALIFORNIA, as Joint
Second Priority Documentation Agent and Lender 

	 
	 	By:  	/s/ Bryan P. Read
 	 
	 	 	Name:  	Bryan P. Read 	 
	 	 	Title:  	Vice President

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00104-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00104-of-00352.parquet"}]]