Document:

ex10-1.htm

    Exhibit
10.1

     

    
      

      

    

    

     

    AMENDED
AND RESTATED CREDIT AGREEMENT

    

    dated as
of November 24, 2009

    

    among

    

    CALPINE
STEAMBOAT HOLDINGS, LLC

    (Borrower)

    

    

    
      	
              CALYON
      NEW YORK BRANCH

              (Lead
      Arranger, Co-Book Runner, Administrative Agent, Collateral Agent and
      Security Fund LC Issuer)

               

               

            	
              WESTLB
      AG, NEW YORK BRANCH

              (Lead
      Arranger, Co-Book Runner and Syndication Agent)

               

            
	
              COBANK
      ACB

              (Lead
      Arranger, Co-Book Runner and Co-Documentation Agent)

            	
              THE
      BANK OF TOKYO-MITSUBISHI UFJ, LTD., NEW YORK BRANCH

              (Lead
      Arranger, Co-Book Runner and Co-Documentation Agent)

               

               

            
	
              LANDESBANK
      HESSEN-THÜRINGEN

              (Lead
      Arranger)

            	
              NATIXIS,
      NEW YORK BRANCH

              (Lead
      Arranger)

               

               

            
	
              THE
      GOVERNOR & COMPANY OF THE BANK OF IRELAND

              (Lead
      Arranger)

               

            	
              BAYERISCHE
      HYPO- UND VEREINSBANK AG, NEW YORK BRANCH

              (Lead
      Arranger)

            

    

    

    and

    

    THE
FINANCIAL INSTITUTIONS PARTIES HERETO

    (Lenders)

    _________________________________

    

    Freeport
Energy Center

    241 MW
Cogeneration Facility

    Freeport,
Texas

    

    Mankato
Energy Center

    375 MW
Combined Cycle Electricity Generation Facility

    Blue
Earth County, Minnesota

    

      
        

      

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

    

     

    TABLE OF
CONTENTS

    

    
      	
              Page

            
	
              ARTICLE
      1 DEFINITIONS

            	
              2

            
	
              1.1

            	
              Definitions

            	
              2

            
	
              1.2

            	
              Rules
      of Interpretation

            	
              2

            
	
              ARTICLE
      2 THE CREDIT FACILITIES

            	
              2

            
	
              2.1

            	
              Term
      Loan Facility

            	
              2

            
	
              2.2

            	
              LC
      Facilities

            	
              11

            
	
              2.3

            	
              Fees

            	
              18

            
	
              2.4

            	
              LC
      Fees

            	
              18

            
	
              2.5

            	
              Other
      Payment Terms

            	
              19

            
	
              2.6

            	
              Pro
      Rata Treatment

            	
              23

            
	
              2.7

            	
              Change
      of Circumstances

            	
              24

            
	
              2.8

            	
              Funding
      Losses

            	
              27

            
	
              2.9

            	
              Alternate
      Office; Minimization of Costs

            	
              27

            
	
              ARTICLE
      3 CONDITIONS PRECEDENT

            	
              28

            
	
              3.1

            	
              Conditions
      Precedent to the Restatement Date

            	
              28

            
	
              3.2

            	
              Conditions
      Precedent to the Issuance, Renewal, Extension, or Increase in the amount
      of Letters of Credit

            	
              34

            
	
              ARTICLE
      4 REPRESENTATIONS AND WARRANTIES

            	
              35

            
	
              4.1

            	
              Organization

            	
              35

            
	
              4.2

            	
              Authorization;
      No Conflict

            	
              36

            
	
              4.3

            	
              Enforceability

            	
              38

            
	
              4.4

            	
              Compliance
      with Law

            	
              38

            
	
              4.5

            	
              Business,
      Contracts, Joint Ventures Etc.

            	
              38

            
	
              4.6

            	
              Adverse
      Change

            	
              39

            
	
              4.7

            	
              Investment
      Company Act

            	
              39

            
	
              4.8

            	
              ERISA

            	
              39

            
	
              4.9

            	
              Permits

            	
              39

            
	
              4.10

            	
              Hazardous
      Substances

            	
              40

            
	
              4.11

            	
              Litigation

            	
              41

            
	
              4.12

            	
              Labor
      Disputes and Acts of God

            	
              42

            
	
              4.13

            	
              Project
      Documents

            	
              42

            
	
              4.14

            	
              Disclosure

            	
              42

            
	
              4.15

            	
              Taxes

            	
              42

            
	
              4.16

            	
              Governmental
      Regulation

            	
              43

            
	
              4.17

            	
              Regulation
      U, Etc.

            	
              44

            
	
              4.18

            	
              Projections

            	
              44

            
	
              4.19

            	
              Financial
      Statements

            	
              44

            
	
              4.20

            	
              No
      Default

            	
              45

            
	
              4.21

            	
              Organizational
      ID Number; Location of Collateral

            	
              45

            
	
              4.22

            	
              Title
      and Liens

            	
              45

            
	
              4.23

            	
              Intellectual
      Property

            	
              45

            
	
              4.24

            	
              Collateral

            	
              46

            
	
              4.25

            	
              Sufficiency
      of Project Documents

            	
              46

            
	
              4.26

            	
              Proper
      Subdivision

            	
              47

            

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    
      	
              4.27

            	
              Flood
      Zone Disclosure

            	
              47

            
	
              4.28

            	
              Anti-terrorism
      laws

            	
              47

            
	
              4.29

            	
              Solvency

            	
              47

            
	
              ARTICLE
      5 AFFIRMATIVE COVENANTS

            	
              48

            
	
              5.1

            	
              Use
      of Proceeds and Project Revenues

            	
              48

            
	
              5.2

            	
              Payment

            	
              48

            
	
              5.3

            	
              Warranty
      of Title

            	
              49

            
	
              5.4

            	
              Notices

            	
              49

            
	
              5.5

            	
              Financial
      Statements

            	
              51

            
	
              5.6

            	
              Books,
      Records, Access

            	
              52

            
	
              5.7

            	
              Compliance
      with Laws, Instruments, Applicable Permits, Etc.

            	
              52

            
	
              5.8

            	
              Reports

            	
              52

            
	
              5.9

            	
              Existence,
      Conduct of Business, Properties, Etc.

            	
              53

            
	
              5.10

            	
              Debt
      Service Coverage Ratio

            	
              53

            
	
              5.11

            	
              Lender
      Meetings

            	
              53

            
	
              5.12

            	
              Operation
      and Maintenance of Projects; Annual Operating Budget

            	
              54

            
	
              5.13

            	
              Preservation
      of Rights; Further Assurances

            	
              55

            
	
              5.14

            	
              Additional
      Consents

            	
              56

            
	
              5.15

            	
              Maintenance
      of Insurance

            	
              57

            
	
              5.16

            	
              Taxes,
      Other Government Charges and Utility Charges

            	
              57

            
	
              5.17

            	
              Event
      of Eminent Domain

            	
              57

            
	
              5.18

            	
              Interest
      Rate Protection

            	
              57

            
	
              5.19

            	
              Special
      Purpose Entity

            	
              58

            
	
              5.20

            	
              The
      Patriot Act

            	
              59

            
	
              5.21

            	
              Certain
      Rights Under Dow Agreements

            	
              59

            
	
              5.22

            	
              Project
      Representative

            	
              59

            
	
              5.23

            	
              FEC
      Good Standing Certificate

            	
              59

            
	
              ARTICLE
      6 NEGATIVE COVENANTS

            	
              59

            
	
              6.1

            	
              Contingent
      Liabilities

            	
              60

            
	
              6.2

            	
              Limitations
      on Liens

            	
              60

            
	
              6.3

            	
              Indebtedness

            	
              60

            
	
              6.4

            	
              Sale
      or Lease of Assets

            	
              60

            
	
              6.5

            	
              Changes

            	
              61

            
	
              6.6

            	
              Distributions

            	
              61

            
	
              6.7

            	
              Investments

            	
              62

            
	
              6.8

            	
              Transactions
      With Affiliates; Subordination Agreements

            	
              62

            
	
              6.9

            	
              Regulations

            	
              62

            
	
              6.10

            	
              Partnerships,
      etc.

            	
              62

            
	
              6.11

            	
              Dissolution;
      Merger

            	
              62

            
	
              6.12

            	
              Amendments;
      Change Orders; Completion

            	
              63

            
	
              6.13

            	
              Name
      and Location; Fiscal Year

            	
              64

            
	
              6.14

            	
              Assignment

            	
              64

            
	
              6.15

            	
              Accounts

            	
              64

            
	
              6.16

            	
              Hazardous
      Substances

            	
              64

            
	
              6.17

            	
              Additional
      Project Documents

            	
              64

            
	
              6.18

            	
              Assignment
      By Third Parties

            	
              65

            
	
              6.19

            	
              Acquisition
      of Real Property

            	
              65

            

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    
      	
              6.20

            	
              Employee
      Benefit Plans

            	
              65

            
	
              6.21

            	
              No
      Merchant Sales

            	
              65

            
	
              6.22

            	
              Tax
      Election

            	
              66

            
	
              6.23

            	
              Tax
      Sharing Agreements

            	
              66

            
	
              6.24

            	
              Hedging
      Agreements

            	
              66

            
	
              6.25

            	
              Lease
      Transactions

            	
              66

            
	
              6.26

            	
              Capital
      Expenditures

            	
              66

            
	
              ARTICLE
      7 EVENTS OF DEFAULT; REMEDIES

            	
              66

            
	
              7.1

            	
              Events
      of Default

            	
              66

            
	
              7.2

            	
              Remedies

            	
              71

            
	
              ARTICLE
      8 SCOPE OF LIABILITY

            	
              73

            
	
              ARTICLE
      9 AGENTS; SUBSTITUTION

            	
              74

            
	
              9.1

            	
              Appointment,
      Powers and Immunities

            	
              74

            
	
              9.2

            	
              Reliance

            	
              76

            
	
              9.3

            	
              Non
      Reliance

            	
              76

            
	
              9.4

            	
              Defaults;
      Material Adverse Change

            	
              77

            
	
              9.5

            	
              Indemnification

            	
              77

            
	
              9.6

            	
              Successor
      Agent

            	
              78

            
	
              9.7

            	
              Authorization

            	
              79

            
	
              9.8

            	
              Other
      Roles

            	
              80

            
	
              9.9

            	
              Amendments;
      Waivers

            	
              80

            
	
              9.10

            	
              Withholding
      Tax

            	
              82

            
	
              9.11

            	
              General
      Provisions as to Payments

            	
              83

            
	
              9.12

            	
              Substitution
      of Lender

            	
              83

            
	
              9.13

            	
              Participation

            	
              84

            
	
              9.14

            	
              Transfer
      of Commitment

            	
              85

            
	
              9.15

            	
              Laws

            	
              86

            
	
              9.16

            	
              Assignability
      as Collateral

            	
              86

            
	
              9.17

            	
              Notices
      to Lenders

            	
              87

            
	
              9.18

            	
              Collateral
      Agent

            	
              87

            
	
              ARTICLE
      10 INDEPENDENT CONSULTANTS

            	
              87

            
	
              10.1

            	
              Removal
      and Fees

            	
              87

            
	
              10.2

            	
              Certification
      of Dates

            	
              88

            
	
              ARTICLE
      11 MISCELLANEOUS

            	
              88

            
	
              11.1

            	
              Addresses

            	
              88

            
	
              11.2

            	
              Right
      to Set Off

            	
              89

            
	
              11.3

            	
              Delay
      and Waiver

            	
              90

            
	
              11.4

            	
              Costs,
      Expenses and Attorneys’ Fees; Syndication

            	
              90

            
	
              11.5

            	
              Entire
      Agreement

            	
              91

            
	
              11.6

            	
              Governing
      Law

            	
              91

            
	
              11.7

            	
              Severability

            	
              91

            
	
              11.8

            	
              Headings

            	
              91

            
	
              11.9

            	
              Accounting
      Terms

            	
              92

            
	
              11.10

            	
              Additional
      Financing

            	
              92

            
	
              11.11

            	
              No
      Partnership, Etc.

            	
              92

            
	
              11.12

            	
              Deed
      of Trust/Collateral Documents

            	
              92

            
	
              11.13

            	
              Limitation
      on Liability

            	
              92

            

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    
      	
              11.14

            	
              Indemnity

            	
              93

            
	
              11.15

            	
              Waiver
      of Jury Trial

            	
              94

            
	
              11.16

            	
              Consent
      to Jurisdiction

            	
              94

            
	
              11.17

            	
              Knowledge
      and Attribution

            	
              95

            
	
              11.18

            	
              Successors
      and Assigns

            	
              95

            
	
              11.19

            	
              Counterparts

            	
              95

            
	
              11.20

            	
              Usury

            	
              95

            
	
              11.21

            	
              Survival

            	
              95

            
	
              11.22

            	
              Patriot
      Act Notice

            	
              95

            
	
              11.23

            	
              Treatment
      of Certain Information; Confidentiality

            	
              96

            
	
              11.24

            	
              Release
      of Project

            	
              97

            
	
              11.25

            	
              Project
      Expansion

            	
              98

            
	
              11.26

            	
              Communications

            	
              98

            

    

    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    Index of
Exhibits

    
      	
              Exhibit A

            	
              Definitions
      and Rules of Interpretation

            
	 
      	
              Notes
      and Letters of Credit

            
	
              Exhibit B-1

            	
              Form
      of Term Loan Note

            
	
              Exhibit
      B-2

            	
              Form
      of Security Fund LC

            
	
              Exhibit
      B-3

            	
              Form
      of Security Fund LC Note

            
	
              Exhibit
      B-4

            	
              Form
      of DSR Letter of Credit

            
	
              Exhibit
      B-5

            	
              Form
      of DSR LC Note

            
	 
      	
              Loan
      Disbursement Procedures

            
	
              Exhibit C-1

            	
              Form
      of Notice of Borrowing

            
	
              Exhibit C-2

            	
              Form
      of Notice of Conversion of Loan Type

            
	
              Exhibit C-3

            	
              Form
      of Notice of LC Activity

            
	
              Exhibit C-4

            	
              Form
      of Confirmation of Interest Period Selection

            
	 
      	
              Credit
      and Security-Related Documents

            
	
              Exhibit D-1

            	
              Form
      of Amended and Restated Depositary Agreement

            
	
              Exhibit D-2

            	
              Schedule
      of Security Filings

            
	
              Exhibit
      D-3

            	
              Form
      of Subordination Agreement

            
	
              Exhibit
      D-4

            	
              Form
      of FEC Amendment to Deed of Trust

            
	
              Exhibit
      D-5

            	
              Form
      of MEC Amendment to Mortgage

            
	 
      	
              Consents

            
	
              Exhibit E-1

            	
              Form
      of Consent for Contracting Party

            
	 
      	
              Closing
      Certificates

            
	
              Exhibit F-1

            	
              Form
      of Borrower’s Closing Certificate

            
	
              Exhibit
      F-2

            	
              Form
      of FEC’s Closing Certificate

            
	
              Exhibit
      F-3

            	
              Form
      of MEC’s Closing Certificate

            
	
              Exhibit F-4

            	
              Form
      of Insurance Consultant’s Certificate

            
	
              Exhibit F-5

            	
              Form
      of Power Market Consultant’s Certificate

            
	
              Exhibit F-6

            	
              Form
      of Independent Engineer’s Certificate

            
	 
      	
              Project
      Description Exhibits

            
	
              Exhibit G-1

            	
              Schedule
      of Applicable Permits

            
	
              Exhibit G-2

            	
              Initial
      O&M Budget

            
	
              Exhibit G-3

            	
              Base
      Case Project Projections

            
	
              Exhibit G-4

            	
              Pending
      Litigation

            
	
              Exhibit G-5

            	
              Hazardous
      Substances Disclosure

            
	
              Exhibit G-6

            	
              Template
      Operating Report

            
	
              Exhibit
      G-7

            	
              Tax
      Assessments

            
	
              Exhibit
      G-8

            	
              Intellectual
      Property

            
	 
      	
              Other

            
	
              Exhibit H

            	
              Lenders
      Proportionate Shares

            
	
              Exhibit I

            	
              Amortization
      Schedule

            
	
              Exhibit J

            	
              Form
      of Section 2.5.6 Certificate

            

    

    

    
      	
              Exhibit K

            	
              Insurance
      Requirements

            
	
              Exhibit L

            	
              Form
      of Confidentiality Agreement

            
	
              Exhibit
      M

            	
              Conversion
      to Limited Liability Company

            

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    This
AMENDED AND RESTATED CREDIT AGREEMENT, dated as of November 24, 2009 (this
“Agreement”),
is entered into among CALPINE STEAMBOAT HOLDINGS, LLC, a Delaware limited
liability company, as borrower (“Borrower”), THE
FINANCIAL INSTITUTIONS LISTED ON EXHIBIT H OR WHO
LATER BECOME A PARTY HERETO, as Lenders (the financial institutions party to
this Agreement being collectively referred to as the “Lenders”), CALYON NEW
YORK BRANCH, as a Lead Arranger, Co-Book Runner, administrative agent for the
Lenders (together with its permitted successors and assigns in such capacity,
“Administrative
Agent”), collateral agent for the Secured Parties (together with its
permitted successors and assigns in such capacity, “Collateral Agent”)
and as Security Fund LC Issuer, WESTLB AG, NEW YORK BRANCH, as a Lead Arranger,
Co-Book Runner and Syndication Agent, COBANK ACB, as a Lead Arranger, Co-Book
Runner, Co-Documentation Agent and DSR LC Issuer, THE BANK OF TOKYO-MITSUBISHI
UFJ, LTD., NEW YORK BRANCH, as a Lead Arranger, Co-Book Runner and
Co-Documentation Agent, LANDESBANK HESSEN-THÜRINGEN, as a Lead Arranger,
NATIXIS, NEW YORK BRANCH, as a Lead Arranger, THE GOVERNOR & COMPANY OF THE
BANK OF IRELAND, as a Lead Arranger, and BAYERISCHE HYPO- UND VEREINSBANK AG,
NEW YORK BRANCH, as a Lead Arranger.

     

    RECITALS

     

    A.           Borrower
is the direct 100% owner of Mankato Energy Center, LLC (“MEC”), the owner of a
combined cycle electric generating facility, capable of generating approximately
375 MW of electric power, located in Blue Earth County, Minnesota (the “Mankato
Project”).

     

    B.           Borrower
is also the direct 100% owner of Freeport Energy Center, LLC (“FEC” and together
with MEC, the “Project
Companies”), the owner of a 241 MW cogeneration facility located on an
8-acre site inside the Plant B industrial complex owned by The Dow Chemical
Company in Freeport, Texas (the “Freeport Project”
and, together with the Mankato Project, the “Projects”).

     

    C.           On
the Closing Date, Borrower, Administrative Agent and certain of the Existing
Lenders entered into the Existing Credit Agreement, pursuant to which the
Existing Lenders agreed to make loans to Borrower or to extend credit to
Borrower, as and to the extent specified in the Existing Credit
Agreement.

     

    D.           Borrower
desires that certain of the Existing Lenders and the other parties hereto agree
to amend and restate the Existing Credit Agreement in its entirety and to extend
or provide, as applicable, upon the terms and subject to the conditions set
forth herein and in the other Credit Documents, certain credit facilities,
consisting of (i) a Term Loan facility in an aggregate principal amount of
$465,000,000, (ii) a Security Fund LC facility with an aggregate Stated Amount
of up to $11,000,000, and (iii) a DSR Letter of Credit facility with an
aggregate Stated Amount of up to $22,500,000.

     

    E.           The
credit facilities provided hereunder will continue to be (i) secured by, among
other things, the grant to Collateral Agent, for the benefit of the Secured
Parties, of a first

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    priority
Lien on the Collateral (subject to Permitted Liens), and (ii) guaranteed by the
Project Companies.

     

    F.           The
Lenders are willing to provide the credit facilities described herein upon the
terms and subject to the conditions set forth herein and in the other Credit
Documents, and the Existing Lenders under the Existing Credit Agreement have, on
or prior to the Restatement Date, unanimously approved the Amendment Agreement
and the execution of this Agreement.

     

    G.           It
is the intent of the parties hereto (i) to renew, extend, increase and modify
the Loans and Commitments described in the Existing Credit Agreement and the
Liens securing the same, all in accordance with the Credit Documents, and (ii)
that this Agreement not constitute a novation of the obligations and liabilities
of the parties under the Existing Credit Agreement and rather that this
Agreement amend and restate in its entirety the Existing Credit
Agreement.

     

    AGREEMENT

     

    In
consideration of the agreements herein and in the other Credit Documents and in
reliance upon the representations and warranties set forth herein and therein,
the parties hereto agree as follows:

     

    ARTICLE
1

     

    DEFINITIONS

     

    1.1    Definitions.  Except
as otherwise expressly provided, capitalized terms used in this Agreement
(including its exhibits and schedules) shall have the meanings given to such
terms in Exhibit A.

     

    1.2    Rules of
Interpretation.  Except
as otherwise expressly provided, the rules of interpretation set forth in Exhibit A shall
apply to this Agreement and the other Credit Documents.

     

    ARTICLE
2

     

    THE
CREDIT FACILITIES

     

    2.1    Term Loan
Facility.

     

    2.1.1   Generally.

     

    (a)   Term Loans; Term Loan
Commitments.

     

    (i)           As
of the Restatement Date and immediately prior to giving effect to the
transactions contemplated hereby, the parties hereto acknowledge and agree that
each Existing Lender holds Term Loans in such aggregate principal amount as set
forth under the caption “Existing Credit Agreement Loans” on Exhibit
H.

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

    (ii)           Subject
to the terms and conditions set forth in this Agreement and in reliance upon the
representations and warranties of Borrower set forth herein, each of the
Continuing Lenders agrees to continue its Term Loans in such aggregate principal
amount as set forth under the caption “Continuing Term Loans” on Exhibit H (the “Continuing Term
Loans”).

     

    (iii)           Subject
to the terms and conditions set forth in this Agreement and in reliance upon the
representations and warranties of Borrower set forth herein, each New Lender
severally agrees to make to Borrower, on the Restatement Date, a term loan in an
aggregate principal amount not to exceed such Lender’s respective unfunded Term
Loan Commitment as set forth under the caption “New Term Loans” on Exhibit H (the “New Term
Loans”).

     

    (iv)           Subject
to the terms and conditions set forth in this Agreement and in reliance upon the
representations and warranties of Borrower set forth herein, each Increasing
Lender severally agrees to make to Borrower, on the Restatement Date, a term
loan in an aggregate principal amount not to exceed such Lender’s respective
Additional Term Loan Commitment as set forth under the caption “Additional Term
Loans” on Exhibit
H (the “Additional Term
Loans” and, together with the Continuing Term Loans and the New Term
Loans, the “Term
Loans” and each a “Term
Loan”).

     

    (v)           As
of the Restatement Date and after giving effect to the transactions contemplated
hereunder, the aggregate of all of the Lenders’ Term Loan Commitments shall not
exceed $465,000,000 (the “Total Term Loan
Commitment”), of which $448,163,354.45 has already been funded through
the making of Term Loans under the Existing Credit Agreement that will be
continued by, or assumed and continued by, Lenders hereunder.

     

    (b)   Term Loan
Interest.  Subject to Section 2.5.3, Borrower shall pay
interest on the unpaid principal amount of each Term Loan from the Restatement
Date until the repayment or prepayment thereof at one of the following rates per
annum:

     

    (i)           With
respect to the principal portion of such Term Loan which is, and during such
periods as such Term Loan is, a Base Rate Term Loan, at a rate per annum equal
to the Base Rate (such rate to change from time to time as the Base Rate shall
change) plus the
applicable Rate Margin minus 1.00%; provided that, other
than with respect to any Base Rate Term Loans made, converted or deemed made or
deemed converted pursuant to Section 2.7, in no event shall the sum of the Base
Rate and the Rate Margin with respect to such Base Rate Term Loan minus 1.00% be less than the
sum of the LIBO Rate (which for the purposes of determining interest rate
pricing only, shall be calculated assuming an Interest Period of three months
without regard to the actual Interest Period selected by Borrower pursuant to
Section 2.1.2(c)) and the Rate Margin which would be applicable to such Term
Loan if such Term Loan were a LIBOR Term Loan.

     

    (ii)           With
respect to the principal portion of such Term Loan which is, and during such
periods as such Term Loan is, a LIBOR Term Loan, at a rate per annum during each
Interest Period for such LIBOR Term Loan equal to the LIBO Rate (which for the
purposes

    
      
         

      

      
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    of
determining interest rate pricing only, and only until such time as the LIBO
Rate for one or two month Interest Periods adequately and fairly reflects the
Lenders’ costs of making or maintaining LIBOR Loans (as determined in good faith
by Lenders having Proportionate Shares which in the aggregate exceed 70%), shall
be calculated assuming an Interest Period of three months without regard to the
actual Interest Period selected by Borrower pursuant to Section 2.1.2(c)) plus the applicable Rate
Margin.

     

    (c)   Term Loan Principal
Payment.  On each Principal Repayment Date, Borrower shall
repay to Administrative Agent, for the account of each Lender, the aggregate
unpaid principal amount of the Term Loan made by such Lender in installments in
accordance with the repayment schedule set forth on Exhibit I, with
any remaining unpaid principal, interest, fees and costs due and payable on the
Maturity Date.

     

    (d)   Notice of
Borrowing.  Borrower shall request any Term Loans to be funded on
the Restatement Date by delivering to Administrative Agent a written notice in
the form of Exhibit
C-1, appropriately completed (a “Notice of
Borrowing”), at least one Banking Day prior to the Restatement
Date.  Such Notice of Borrowing shall be revocable if Borrower
exercises its right to rescind all Step One Assignment Agreements and the Step
Two Assignment Agreements (each as defined in the Amendment Agreement) as
provided in Section 3(c) of the Amendment Agreement.

     

    2.1.2   Interest Provisions Relating to All
Loans.

     

    (a)   Applicable Interest
Rate.  On the Restatement Date and immediately after giving
effect to the transactions contemplated hereby, all of the Term Loans shall be
Base Rate Term Loans.  The basis for determining the interest rate
with respect to any Loan may be changed from time to time as specified in a
Notice of Conversion of Loan Type delivered pursuant to
Section 2.1.5.  If on any day a Loan is outstanding with respect
to which notice has not been delivered to Administrative Agent in accordance
with the terms of this Agreement specifying the applicable basis for determining
the rate of interest, then for that day such Loan shall bear interest determined
by reference to the Base Rate.  Borrower shall not request, and the
Lenders shall not be obligated to make, LIBOR Loans at any time an Event of
Default exists. Administrative Agent shall promptly notify each Lender of the
contents of each Notice of Conversion of Loan Type.

     

    (b)    Interest Payment
Dates.  Borrower shall pay accrued interest on the unpaid
principal amount of each Loan (i) in the case of each Base Rate Loan, on
the last Banking Day of each calendar quarter, (ii) in the case of each
LIBOR Loan, on the last day of each Interest Period related to such LIBOR Loan
and, with respect to Interest Periods longer than three months, the last Banking
Day of each third month in which such LIBOR Loan is outstanding, and
(iii) in all cases, upon repayment or prepayment (to the extent thereof and
including any Optional Prepayments or Mandatory Prepayments), upon conversion
from one Type of Loan to another Type of Loan and at maturity (whether by
acceleration or otherwise).

     

    
      
         

      

      
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    (c)   LIBOR Loan Interest
Periods.

     

    (i)           Each
Interest Period selected by Borrower for all LIBOR Loans shall be one, three or
six months.  Notwithstanding anything to the contrary in the preceding
sentence, (A) any Interest Period which would otherwise end on a day which
is not a Banking Day shall be extended to the next succeeding Banking Day unless
such next Banking Day falls in another calendar month, in which case such
Interest Period shall end on the immediately preceding Banking Day, (B) any
Interest Period which begins on the last Banking 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 Banking Day of a
calendar month, (C) Borrower may not select Interest Periods which would
leave a greater principal amount of Loans subject to Interest Periods ending
after a date upon which Loans are or may be required to be repaid (including the
Maturity Date and each Principal Repayment Date) than the principal amount of
Loans scheduled to be outstanding after such date, (D) any Interest Period
for a Term Loan which would otherwise end after the Maturity Date shall end on
the Maturity Date, (E) LIBOR Loans for each Interest Period shall be in the
minimum amount of $500,000 or an integral multiple of $100,000 in excess
thereof, (F) Borrower may not at any time have outstanding more than six
different Interest Periods relating to LIBOR Loans, and (G) Borrower shall
select Types and Interest Periods for Term Loans corresponding to the “types”
and “interest periods” used for floating rate payments in the Interest Rate
Agreements so as to create, to the greatest extent possible and subject to
Section 5.18.1, a complete hedge.

     

    (ii)           Borrower
may contact Administrative Agent at any time prior to the end of an Interest
Period for a quotation of Interest Rates in effect at such time for given
Interest Periods, and Administrative Agent shall promptly provide such
quotation.  Subject to Section 2.1.2(c)(i), Borrower may select an
Interest Period telephonically within the time periods specified in
Section 2.1.5, which selection shall be irrevocable on and after
commencement of the applicable Minimum Notice Period.  Borrower shall
confirm such telephonic notice to Administrative Agent by hand delivery or
facsimile or other electronic transmission on the day such notice is given by
delivery to Administrative Agent of a notice in substantially the form of Exhibit C-4,
appropriately completed (a “Confirmation of Interest
Period Selection”).  If Borrower fails to notify Administrative
Agent of the next Interest Period for any LIBOR Loans in accordance with this
Section 2.1.2(c)(ii), such Loans shall automatically convert to Base Rate
Loans on the last day of the current Interest Period
therefor.  Administrative Agent shall as soon as practicable (and, in
any case, within two Banking Days after delivery of a Confirmation of Interest
Period Selection) notify Borrower of each determination of the Interest Rate
applicable to each Loan.

     

    (d)   Interest
Computations.  All computations of interest on Base Rate Loans
shall be based upon a year of 365 days or, in the case of a leap year, 366 days,
shall be payable for the actual days elapsed (including the first day but
excluding the last day), and shall be adjusted in accordance with any changes in
the Base Rate to take effect on the beginning of the day of such change in the
Base Rate.  All computations of interest on LIBOR Loans shall be based
upon a year of 360 days and shall be payable for the actual days elapsed
(including the

     

    
      
         

      

      
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    first day
but excluding the last day).  Borrower agrees that all computations by
Administrative Agent of interest shall be conclusive and binding in the absence
of manifest error.

     

    2.1.3   Promissory
Notes.  The obligation of Borrower to repay the Loans made by a
Lender and to pay interest thereon at the rates provided herein shall, upon the
written request of such Lender, be evidenced by promissory notes in the form of
Exhibit B-1
(individually, a “Term
Note” and, collectively, the “Term Notes”), Exhibit B-3
(individually, a “Security Fund LC Loan
Note” and, collectively, the “Security Fund LC Loan
Notes”), and Exhibit B-5
(individually, a “DSR
LC Note” and, collectively, the “DSR LC Notes”), each
payable to the order of such requesting Lender and in the principal amount of
such Lender’s Term Loan Commitment, Security Fund LC Commitment or DSR LC
Commitment, respectively.  Borrower authorizes each such requesting
Lender to record on the schedule annexed to such Lender’s Note or Notes, the
date and amount of each Loan made by such requesting Lender, and each payment or
prepayment of principal thereunder and agrees that all such notations shall
constitute prima facie
evidence of the matters noted; provided that in the
event of any inconsistency between the records or books of Administrative Agent
and any Lender’s records or Notes, the records of Administrative Agent shall be
conclusive and binding in the absence of manifest error.  Borrower
further authorizes each such requesting Lender to attach to and make a part of
such requesting Lender’s Note or Notes continuations of the schedule attached
thereto as necessary.  No failure to make any such notations, nor any
errors in making any such notations, shall affect the validity of Borrower’s
obligations to repay the full unpaid principal amount of the Loans or the duties
of Borrower hereunder or thereunder.  Upon the payment in full in cash
of the aggregate principal amount of, and all accrued and unpaid interest on,
the Loans, the Lenders holding such Notes shall promptly mark the applicable
Notes cancelled and return such cancelled Notes to Borrower.

     

    2.1.4   Loan Funding.

     

    (a)   Lender
Funding.  Each New Lender and each Increasing Lender shall,
before 1:00 p.m. on the Restatement Date, make available to Administrative Agent
by wire transfer of immediately available funds in Dollars to the account of
Administrative Agent most recently designated by it for such purpose, the New
Term Loan or Additional Term Loan, as applicable, attributable to such New
Lender or Increasing Lender as set forth on Exhibit
H.  Subject to the foregoing and the satisfaction or waiver of
the conditions precedent set forth in Section 3.1, Administrative Agent shall
make available to Borrower the New Term Loans and the Additional Term Loans
described in the Notice of Borrowing in Dollars and in immediately available
funds, and shall deposit or disburse, or shall cause to be deposited or
disbursed, the proceeds of such New Term Loans and Additional Term Loans as set
forth in the Funds Flow Memorandum.  The failure of any New Lender or
Increasing Lender to make such New Term Loan or Additional Term Loan shall not
relieve any other Lender of its obligation hereunder to make or continue (as the
case may be) its Term Loan on the Restatement Date.  No Lender shall
be responsible for the failure of any other Lender to make the Term Loan to be
made by such other Lender on the Restatement Date.

     

    
      
         

      

      
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    (b)   Failure of Lender to
Fund.  Unless Administrative Agent shall have been notified by
any New Lender or Increasing Lender prior to the Restatement Date that such New
Lender or Increasing Lender does not intend to make available to Administrative
Agent the amount of its applicable New Term Loan or Additional Term Loan (as the
case may be), Administrative Agent may assume that such New Lender or Increasing
Lender has made such amount available to Administrative Agent on the Restatement
Date in accordance with the prior paragraph and Administrative Agent may, in its
sole discretion and in reliance upon such assumption, make available to Borrower
a corresponding amount on such date.  If such corresponding amount is
not in fact made available to Administrative Agent by such New Lender or
Increasing Lender, Administrative Agent shall be entitled to recover such
corresponding amount on demand (and, in any event, within two Banking Days from
the Restatement Date) from such New Lender or Increasing Lender together with
interest thereon, for each day from the applicable date of such Borrowing until
the date such amount is paid to Administrative Agent, at the Federal Funds Rate
for the first two Banking Days after such date.  If such New Lender or
Increasing Lender pays such amount to Administrative Agent, then such amount
(excluding any interest paid to Administrative Agent thereon) shall constitute
such Lender’s New Term Loan or Additional Term Loan (as the case may
be).  If such New Lender or Increasing Lender does not pay such
corresponding amount forthwith upon Administrative Agent’s demand therefor or
within two Banking Days from the Restatement Date, Administrative Agent shall
promptly notify Borrower and Borrower shall immediately pay such corresponding
amount to Administrative Agent together with interest thereon, for each day from
the Restatement Date until the date such amount is paid to Administrative Agent,
at the rate then payable under this Agreement for Base Rate
Loans.  Nothing in this Section 2.1.4(b) shall be deemed to
relieve any Lender from its obligation to fulfill its obligations hereunder or
to prejudice any rights that Borrower may have against any Lender as a result of
any default by such Lender hereunder.

     

    2.1.5   Conversion of
Loans.  Borrower may convert Loans from one Type of Loan to
another Type of Loan; provided that
(a) any conversion of LIBOR Loans into Base Rate Loans shall be effective
on, and only on, the first day after expiration of an Interest Period for such
LIBOR Loans, and (b) Loans shall be converted only in amounts of $500,000
and increments of $100,000 in excess
thereof.  Borrower shall request such a conversion by delivering to
Administrative Agent a written notice in the form of Exhibit C-2,
appropriately completed (a “Notice of Conversion of Loan
Type”), which contains or specifies, among other things:

     

    (i)           the
Loans, or portion thereof, which are to be converted;

     

    (ii)           the
Type of Loans into which such Loans, or portion thereof, are to be
converted;

     

    (iii)           if
such Loans are to be converted into LIBOR Loans, the initial Interest Period
selected by Borrower for such Loans (which Interest Period shall be selected in
accordance with Section 2.1.2(c));

     

    
      
         

      

      
        7

        
          

        

      

      
         

      

    

    (iv)           the
proposed date of the requested conversion (which shall be a Banking Day and
otherwise in accordance with this Section 2.1.5); and

     

    (v)           if
Base Rate Loans are to be converted to LIBOR Loans, a certification by Borrower
that no Event of Default has occurred and is continuing.

     

    Borrower
shall so deliver each Notice of Conversion of Loan Type so as to provide at
least the applicable Minimum Notice Period.  Any Notice of Conversion
of Loan Type may be modified or revoked by Borrower through the Banking Day
prior to the Minimum Notice Period, and shall thereafter be
irrevocable.  Each Notice of Conversion of Loan Type shall be
delivered in the manner provided in Section 11.1.  Administrative
Agent shall promptly notify each Lender of the contents of each Notice of
Conversion of Loan Type.

     

    2.1.6   Prepayments.

     

    (a)   Terms of All
Prepayments.

     

    (i)           Upon
the prepayment of any Loan (whether such prepayment is an Optional Prepayment or
a Mandatory Prepayment), Borrower shall pay to Administrative Agent for the
account of the Lender which made such Loan or Hedge Bank, as applicable,
(A) all accrued interest to the date of such prepayment on the amount of
such Loan prepaid, (B) all accrued fees to the date of such prepayment
relating to the amount of such Loan being prepaid, (C) to the extent
required by the terms of the applicable Interest Rate Agreement, all Hedge
Breaking Fees owed by Borrower to such Hedge Bank as a result of such
prepayment, and (D) if such prepayment is the prepayment of a LIBOR Loan on
a day other than the last day of an Interest Period for such LIBOR Loan, all
Liquidation Costs incurred by such Lender as a result of such prepayment
(pursuant to the terms of Section 2.8).

     

    (ii)           Notwithstanding
the foregoing, but only in respect of any Mandatory Prepayment, Borrower shall
have the right, by giving five Banking Days’ notice to Administrative Agent, in
lieu of prepaying a LIBOR Loan on a day other than the last day of an Interest
Period for such LIBOR Loan, to deposit or cause Administrative Agent to deposit
into an account to be held by Depositary Agent (which account shall be subjected
to the Lien of the Collateral Documents in a manner reasonably satisfactory to
Collateral Agent) an amount equal to the LIBOR Loans to be
prepaid.  Such funds shall be held in such account until the
expiration of the Interest Period applicable to the LIBOR Loan to be prepaid at
which time the amount deposited in such account shall be used to prepay such
LIBOR Loan and any interest accrued on such amount shall be deposited into the
Revenue Account.  The deposit of amounts into such account shall not
constitute a prepayment of Loans and all Loans to be prepaid using the proceeds
from such account shall continue to accrue interest at the then applicable
interest rate for such Loans until actually prepaid.  All amounts in
such account shall only be invested in Permitted Investments as directed by and
at the expense and risk of Borrower.

     

    (iii)           Except
as otherwise specifically set forth herein, (A) all prepayments of Term Loans
shall be applied to reduce the remaining payments required under

     

    
      
         

      

      
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    Section 2.1.1(c)
(1) with respect to Mandatory Prepayments, in inverse order of maturity and (2)
with respect to Optional Prepayments, on a pro rata basis to remaining
amortization payments and the payments at final maturity thereof, and (B) any
prepayment of Term Loans, DSR LC Loans or Security Fund LC Loans, respectively,
shall be applied first to any Term Loans, DSR LC Loans or Security Fund LC
Loans, as applicable, that are Base Rate Loans and then to any Term Loans, DSR
LC Loans or Security Fund LC Loans, as applicable, that are LIBOR
Loans.

     

    (b)   Optional
Prepayments.

     

    (i)           Borrower
may, at its option and without premium or penalty, upon five Banking Days’
notice to Administrative Agent, prepay (i) any Term Loans in whole or from time
to time in part in minimum amounts of $1,000,000 or an incremental multiple of
$100,000 in excess thereof (provided that such
minimum amounts shall not apply to a prepayment of all outstanding Term Loans),
(ii) any Security Fund LC Loans in whole or from time to time in part in
minimum amounts of $1,000,000 or an incremental multiple of $100,000 in excess
thereof (provided that such
minimum amounts shall not apply to a prepayment of all outstanding Security Fund
LC Loans or to the extent that such Security Fund LC Loan is being repaid
pursuant to Section 3.1(b)(vi) or (ix) of the Depositary Agreement) or (iii) any
DSR LC Loans in whole or from time to time in part in minimum amounts of
$1,000,000 or an incremental multiple of $100,000 in excess thereof (provided that such
minimum amounts shall not apply to a prepayment of all DSR LC Loans or except to
the extent that such DSR LC Loan is being repaid pursuant to Section 3.1(b)(vi)
of the Depositary Agreement) (each, an “Optional
Prepayment”).

     

    (ii)           Any
Optional Prepayments shall be applied (A) first, to any
outstanding Security Fund LC Loans, if any, until, the aggregate principal
amount of Security Fund LC Loans outstanding is (1) an amount such that the
Relative Proportion of the Security Fund LC Exposure as of such Monthly Payment
Date equals the Relative Proportion thereof on the Restatement Date or (2) zero
Dollars, whichever occurs first; (B) second, outstanding
DSR LC Loans, if any, until all DSR LC Loans have been repaid in full; and (C)
third, subject
to Sections 2.1.6(a) and clause (i) of this Section 2.1.6(b), as Borrower may
elect in its sole discretion.

     

    (c)   Mandatory
Prepayments.

     

    (i)           Borrower
shall make the following mandatory prepayments (each, a “Mandatory
Prepayment”):  (A) in the event of any termination of all of
the Security Fund LC Commitments or DSR LC Commitments, Borrower shall, on the
date of such termination, repay or prepay all of its outstanding Security Fund
LC Loans or DSR LC Loans, as applicable, and terminate and return for
cancellation any outstanding Security Fund LC or DSR Letter of Credit, as
applicable.  If as a result of any partial reduction of the Security
Fund LC Commitments or DSR LC Commitments, the aggregate Security Fund LC
Exposure or DSR LC Exposure, as applicable, would exceed the aggregate Security
Fund LC Commitments or DSR LC Commitments, as applicable, after giving effect
thereto, then Borrower shall, on the date of such reduction, repay or prepay
Security Fund LC Loans or DSR LC Loans, as applicable, in an amount sufficient
to eliminate such excess; and (B) as and when contemplated by Section
11.24

    
      
         

      

      
        9

        
          

        

      

      
         

      

    

    of this
Agreement, Sections 3.1(b)(xi), 3.9(b) or 3.10(b)(ii) of the Depositary
Agreement, or any other provision of this Agreement or any other Credit
Document.

     

    (ii)           Any
Mandatory Prepayments shall be applied, subject to Section 2.1.6(a)(iii), (A)
first, to any
outstanding Security Fund LC Loans, if any, until, the aggregate principal
amount of Security Fund LC Loans outstanding is (1) an amount such that the
Relative Proportion of the Security Fund LC Exposure as of such Monthly Payment
Date equals the Relative Proportion thereof on the Restatement Date or (2) zero
Dollars, whichever occurs first; (B) second, outstanding
Term Loans until all Term Loans have been repaid in full; (C) third, outstanding
DSR LC Loans, if any, until all DSR LC Loans have been repaid in full;; (D)
fourth,
outstanding Security Fund LC Loans until all Security Fund LC Loans have been
repaid in full, and (E) fifth on a pro rata basis to cash
collateralize the Security Fund LC and the DSR Letters of Credit.

     

    (d)  Reduction of
Commitments.

     

    (i)           Borrower
may at any time permanently terminate, or from time to time permanently reduce,
the DSR LC Commitments or Security Fund LC Commitments; provided that (A)
each reduction of the DSR LC Commitments or Security Fund LC Commitments, as
applicable, shall be in an amount that is an integral multiple of $100,000 and
not less than $1,000,000 (or, if less, the remaining amount of the DSR LC
Commitments or Security Fund LC Commitments, as applicable), (B) Borrower shall
not voluntarily terminate or reduce the DSR LC Commitments or Security Fund LC
Commitments, if, after giving effect to any concurrent prepayment of DSR LC
Loans or Security Fund LC Loans or termination and cancellation of any DSR
Letter of Credit or Security Fund LC, as applicable, in accordance with this
Section 2.1.6, the DSR LC Exposure or Security Fund LC Exposure, as applicable,
would exceed the total DSR LC Commitments or Security Fund LC Commitments, as
applicable, and (C) Borrower shall not voluntarily terminate or reduce the
DSR LC Commitments unless, after giving effect thereto, the Debt Service Reserve
Account remains funded up to the DSR Required Balance.

     

    (ii)           Borrower
shall notify Administrative Agent in writing of any election to terminate or
reduce Commitments under the foregoing clause at least three Banking Days prior
to the effective date of such termination or reduction, specifying such election
and the effective date thereof.  Promptly following receipt of any
such notice, Administrative Agent shall advise the Lenders of the contents
thereof.  Each notice delivered by Borrower pursuant to this clause
(ii) shall be irrevocable.  Any termination or reduction of
Commitments shall be permanent; provided that a
notice of termination of Commitments delivered by Borrower may state that such
notice is conditioned upon the effectiveness of other credit facilities, in
which case such notice may be revoked by Borrower (by notice to Administrative
Agent on or prior to the specified effective date) if such condition is not
satisfied.  Each reduction of Commitments shall be made ratably among
the Lenders participating in the applicable Loan facility in accordance with
their respective Proportionate Shares.

     

    
      
         

      

      
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    2.1.7   Register.  Administrative
Agent on behalf of Borrower  shall maintain, at its address referred
to in Section 11.1, a register for the recordation of the names and
addresses of the Lenders, the Commitments and Loans of each Lender from time to
time and the name of each Lender which holds a Note (the “Register”).  The
Register shall be available for inspection by Borrower or any Lender at any
reasonable time and from time to time upon reasonable prior
notice.  Administrative Agent shall record in the Register
(a) the Commitments and the Loans from time to time of each Lender,
(b) the interest rates applicable to all Loans and the effective dates of
all changes thereto, (c) the Interest Period for each LIBOR Loan,
(d) the date and amount of any principal or interest due and payable or to
become due and payable from Borrower to each Lender hereunder, (e) each
repayment or prepayment in respect of the principal amount of the Loans of each
Lender, (f) the amount of any sum received by Administrative Agent
hereunder for the account of the Lenders and each Lender’s share thereof, and
(g) such other information as Administrative Agent may determine is necessary
for the administering of the Loans and this Agreement.  Any such
recording shall be conclusive and binding in the absence of manifest error;
provided that
neither the failure to make any such recordation, nor any error in such
recordation, shall affect the Borrower’s Obligations in respect of any
applicable Loans or otherwise; and provided, further, that in the
event of any inconsistency between the Register and any Lender’s records, the
Register shall govern absent manifest error.

     

    2.1.8   No
Re-Borrowing.  Borrower may not re-borrow the principal amount
of any Loan repaid or prepaid pursuant hereto; provided that amounts
of prepaid DSR LC Loans may be re-borrowed and the DSR LC Commitments shall not
be reduced as a result of any cash collateralization or
prepayment.  To the extent that any DSR LC Commitment was reduced as a
result of any issuance of DSR LC Loans, such DSR LC Commitment shall be
reinstated as a result of any prepayment of such DSR LC Loans.

     

    2.2    LC
Facilities.

     

    2.2.1   Letter of Credit Commitments and
Issuance

     

    (a)   Security Fund LC
Commitments.  The initial Dollar amount of each Lender’s
Security Fund LC Commitment on the Restatement Date is set forth under the
caption “Security Fund LC Commitments” on Exhibit
H.  The aggregate amount of the Security Fund LC Commitments on
the Restatement Date is $11,000,000 (the “Total Security Fund LC
Commitment”).

     

    (b)   DSR LC
Commitments.  The initial Dollar amount of each Lender’s DSR LC
Commitment on the Restatement Date is set forth under the caption “DSR LC
Commitments” on Exhibit
H.  The aggregate amount of the DSR LC Commitments on the
Restatement Date is $22,500,000 (the “Total DSR LC
Commitment”).

     

    2.2.2   Issuance of the Security Fund
LC.  The parties hereto acknowledge that, pursuant to the
Existing Credit Agreement, Security Fund LC Issuer has issued a letter of credit
in the form of Exhibit B-2 (the
“Security Fund
LC”) for the account of Borrower and for the benefit of NSP, in the
initial Stated Amount of $18,250,000, as such amount was
subsequently

    
      
         

      

      
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     revised
pursuant to Amendment No. 1 to the Security Fund LC, dated December 23, 2005,
Amendment No. 2 to the Security Fund LC, dated October 8, 2009, Amendment No. 3
to the Security Fund LC, dated October 20, 2009, and Amendment No. 4 to the
Security Fund LC, dated October 20, 2009, such that the Stated Amount of the
Security Fund LC as of the date hereof is $11,000,000.  The Security
Fund LC shall be made available solely in lieu of the “HGC” portion of the
Security Fund pursuant to Section 11.1 of the Power Purchase
Agreement.  If such section requires or permits that the stated amount
of the Security Fund LC be modified, based on the Sponsor’s Credit Rating (as
defined in the Power Purchase Agreement) changing, Borrower shall request of
Security Fund LC Issuer (and, if a reduction, NSP) to effect such change, and
Security Fund LC Issuer shall effect such change, it being understood that the
Stated Amount of the Security Fund LCs shall never exceed the Total Security
Fund LC Commitment.

     

    2.2.3   Issuance of DSR Letters of
Credit.  Subject to the terms and conditions set forth in this
Agreement, Borrower may request the issuance of an irrevocable letter of credit
substantially in the form of Exhibit B-4 (the
“DSR Letter of
Credit”) for its own account, at any time and from time to time prior to
the applicable Maturity Date.  Such DSR Letter of Credit may be issued
solely to satisfy Borrower’s obligation to maintain the DSR Required Balance, it
being understood that the Stated Amount of the DSR Letters of Credit shall never
exceed the Total DSR LC Commitment.

     

    2.2.4   Notice of Issuance of Letter of
Credit, Amendment, Renewal, Extension; Certain Conditions.

     

    (a)   To request the issuance of a
Letter of Credit (or the amendment, renewal (other than an automatic renewal in
accordance with clause (c) below) or extension of an outstanding Letter of
Credit), Borrower shall hand deliver or transmit by telecopy (or transmit by
electronic communication, if arrangements for doing so have been approved by the
applicable LC Issuer) to such LC Issuer and Administrative Agent (three Banking
Days in advance of the requested date of issuance, amendment, renewal or
extension or, with respect to any issuance, amendment, renewal or extension to
take place on the Restatement Date, one Banking Day in advance of the
Restatement Date) a Notice of LC Activity requesting the issuance of a Letter of
Credit, or identifying the Letter of Credit to be amended, renewed or extended,
and specifying the date of issuance, amendment, renewal or extension (which
shall be a Banking Day at least three Banking Days after the form of such Letter
of Credit or amendment, renewal or extension has been agreed by Borrower, the
applicable LC Issuer and Administrative Agent or, with respect to any issuance,
amendment, renewal or extension to take place on the Restatement Date, one
Banking Day in advance of the Restatement Date), the date on which such Letter
of Credit is to expire and such other information as shall be necessary to
issue, amend, renew or extend such Letter of Credit.  If requested by
a LC Issuer, Borrower also shall submit a Letter of Credit application on such
LC Issuer’s standard form in connection with any request for a Letter of
Credit.  In the event of any inconsistency between the terms and
conditions of this Agreement and the terms and conditions of any form of letter
of credit application or other agreement submitted by Borrower to, or entered
into by Borrower with, the applicable LC Issuer relating to a Letter of Credit,
the terms and conditions of this Agreement shall control.

    
      
         

      

      
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    (b)   A Letter of Credit shall be
issued, amended, renewed or extended only if (and upon issuance, amendment,
renewal or extension of each Letter of Credit Borrower shall be deemed to
represent and warrant that), after giving effect to such issuance, amendment,
renewal or extension, the total DSR LC Exposure or Security Fund LC
Exposure, as applicable, shall not exceed the total DSR LC Commitments or
Security Fund LC Commitment, as applicable.

     

    (c)   Each Letter of Credit shall
expire at or prior to the close of business on the earlier of (i) the date
one year after the date of the issuance of such Letter of Credit (or, in the
case of any renewal or extension thereof, one year after such renewal or
extension) and (ii) the applicable Maturity Date; provided that any
Letter of Credit with a one-year tenor may provide for the automatic renewal
thereof for additional one-year periods (which, in no event, shall extend beyond
the date referred to in clause (ii) of this clause (c)).

     

    2.2.5   LC Loans.

     

    (a)   If a LC Issuer makes any
Drawing Payment, Borrower shall reimburse such Drawing Payment by paying to
Administrative Agent an amount equal to such Drawing Payment in Dollars, not
later than 3:00 p.m., New York City time, on the Banking Day immediately
following the date Borrower receives notice of such Drawing Payment; provided that so long
as no Event of Default has occurred and is continuing, any Drawing Payment shall
be deemed to be a request by Borrower for a Borrowing in an aggregate amount
equal to the amount of Borrower’s LC Reimbursement Obligation with respect to
the Security Fund LC (a “Security Fund LC
Loan”) or the DSR Letters of Credit (a “DSR LC Loan”), as
applicable, and, to the extent so financed, Borrower’s LC Reimbursement
Obligation shall be discharged and replaced by the resulting LC
Loan.  Such requested amount shall be reduced, if necessary, such that
the aggregate amount of applicable LC Exposure does not exceed the aggregate
applicable LC Commitments, with the amount of such Drawing Payment that is not
covered by LC Loans becoming due and payable on demand.  With respect
to any LC Reimbursement Obligation that is not financed with an LC Loan because
an Event of Default has occurred and is continuing, such LC Reimbursement
Obligation shall be due and payable on demand (together with interest) and shall
bear interest as provided in Section 2.5.3.  The LC Loans made
pursuant to this Section 2.2.5(a) shall initially be Base Rate
Loans.

     

    (b)   If Borrower fails to
reimburse any Drawing Payment not covered or financed by LC Loans as
contemplated by clause (a), then Administrative Agent shall promptly notify the
applicable LC Issuer(s) and each other Lender of the applicable Drawing Payment,
the payment then due from Borrower and, in the case of a Lender, such Lender’s
Proportionate Share thereof.  Promptly following receipt of such
notice, each Lender shall pay to Administrative Agent in Dollars, its
Proportionate Share of the payment then due from Borrower, by wire transfer of
immediately available funds, in Dollars, by 1:00 p.m., New York City time on the
proposed date of such Borrowing, to the account of Administrative Agent most
recently designated by it for such purpose by notice to the Lenders (and Section
2.1.4 shall apply, mutatis mutandis, to the payment
obligations of the Lenders), and Administrative Agent shall promptly pay to the
applicable LC Issuer(s) in Dollars, the amounts so received by it
from

    
      
         

      

      
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     the
Lenders.  Promptly following receipt by Administrative Agent of any
payment from Borrower pursuant to this paragraph, Administrative Agent shall
distribute such payment to the applicable LC Issuer(s) or, to the extent that
Lenders have made payments pursuant to this paragraph to reimburse the
applicable LC Issuer(s), then to such Lenders and such LC Issuer(s) as their
interests may appear.  Any payment made by a Lender pursuant to this
paragraph to reimburse a LC Issuer for any Drawing Payment (other than the
funding of a Borrowing as contemplated by clause (a) above) shall not constitute
a Loan and shall not relieve Borrower of its LC Reimbursement Obligation with
respect to such Drawing Payment.

     

    (c)   In the event that multiple
DSR LC Issuers have issued multiple DSR Letters of Credit, Administrative Agent
shall allocate any Drawing Payment in respect of the DSR Letters of Credit among
the DSR Letters of Credit such that such Drawing Payment is borne pro rata among
the DSR LC Issuers based on the relative Stated Amount of DSR Letters of Credit
held by each such DSR LC Issuer.

     

    2.2.6   Reimbursement Obligations
Absolute.  The obligation of Borrower to reimburse any Drawing
Payment as provided in Section 2.2.5 shall be absolute, unconditional and
irrevocable, and shall be performed strictly in accordance with the terms of
this Agreement under any and all circumstances whatsoever and irrespective of
(a) any lack of validity or enforceability of any Letter of Credit or this
Agreement, or any term or provision therein, (b) any draft or other
document presented under a Letter of Credit proving to be forged, fraudulent or
invalid in any respect or any statement therein being untrue or inaccurate in
any respect, (c) payment by a LC Issuer under a Letter of Credit against
presentation of a draft or other document that does not comply with the terms of
such Letter of Credit, (d) any amendment or waiver of or any consent to
departure from all or any terms of any of the Operative Documents, (e) the
existence of any claim, setoff, defense or other right which Borrower may have
at any time against the beneficiary of such Letter of Credit (or any Persons for
whom such beneficiary may be acting), the applicable LC Issuer, Administrative
Agent, any Lender or any other Person, whether in connection with this
Agreement, the transactions contemplated hereby, by any other Operative Document
or by any unrelated transaction, (f) any breach of contract or dispute
among or between Borrower, a LC Issuer, Administrative Agent, any Lender or any
other Person, (g) any non-application or misapplication by the beneficiary
of a Letter of Credit of the proceeds of any Drawing Payment or any other act or
omission of such beneficiary in connection with such Letter of Credit,
(h) any failure to preserve or protect any Collateral, any failure to
perfect or preserve the perfection of any Lien thereon, or the release of any of
the Collateral securing the performance or observance of the terms of this
Agreement or any of the other Credit Documents, (i) the failure of any
Lender to make an LC Loan as contemplated by Section 2.2.5, or (j) any
other event or circumstance whatsoever, whether or not similar to any of the
foregoing, that might, but for the provisions of this Section 2.2.6, constitute
a legal or equitable discharge of, or provide a right of setoff against,
Borrower’s obligations hereunder; provided that, in
each case, payment by a LC Issuer shall not have constituted gross negligence or
willful misconduct.  Neither Administrative Agent, the Lenders nor the
applicable LC Issuer, nor any of their Related Parties, shall have any liability
or responsibility by reason of or in connection with the issuance or transfer of
any Letter of Credit or any payment or failure to make any payment thereunder
(irrespective of any of the circumstances referred to in the preceding
sentence), or any error,

    
      
         

      

      
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    omission,
interruption, loss or delay in transmission or delivery of any draft, notice or
other communication under or relating to any Letter of Credit (including any
document required to make a drawing thereunder), any error in interpretation of
technical terms or any consequence arising from causes beyond the control of a
LC Issuer; provided that nothing
contained herein shall be construed to excuse a LC Issuer from liability to
Borrower to the extent of any direct damages (as opposed to consequential
damages, claims in respect of which are hereby waived by Borrower to the extent
permitted by applicable law) suffered by Borrower that are determined by a court
having jurisdiction to have been caused by (i) such LC Issuer’s failure to
exercise care when determining whether drafts and other documents presented
under a Letter of Credit comply with the terms thereof or (ii) such LC
Issuer’s refusal to issue a Letter of Credit in accordance with the terms of
this Agreement.  The parties hereto expressly agree that, in the
absence of gross negligence or willful misconduct on the part of a LC Issuer,
such LC Issuer shall be deemed to have exercised care in each such determination
and each refusal to issue a Letter of Credit.  In furtherance of the
foregoing and without limiting the generality thereof, the parties agree that,
with respect to documents presented which appear on their face to be in
substantial compliance with the terms of a Letter of Credit, a LC Issuer may, in
its sole discretion, either accept and make payment upon such documents without
responsibility for further investigation, regardless of any notice or
information to the contrary, or refuse to accept and make payment upon such
documents if such documents are not in strict compliance with the terms of such
Letter of Credit.

     

    2.2.7   Disbursement
Procedures.  A LC Issuer shall, promptly following its receipt
thereof, examine all documents purporting to represent a demand for payment
under a Letter of Credit.  Each LC Issuer shall promptly notify
Administrative Agent and Borrower by telephone (confirmed by telecopy or other
electronic transmission) of such demand for payment and whether such LC Issuer
has made or will make a Drawing Payment thereunder; provided that any
failure to give or delay in giving such notice shall not relieve Borrower of its
obligation to reimburse the applicable LC Issuer and the Lenders with respect to
any such Drawing Payment.

     

    2.2.8   Interim
Interest.  If a LC Issuer shall make any Drawing Payment, then,
unless Borrower shall reimburse such Drawing Payment in full on the date such
Drawing Payment is made, the unpaid amount thereof shall bear interest, for each
day from and including the date such Drawing Payment is made to but excluding
the date that Borrower reimburses such Drawing Payment (including by the making
of a Borrowing), at the rate per annum then applicable to
Base Rate LC Loans or LIBOR LC Loans, at the election of Borrower; provided that if such
Drawing Payment is not reimbursed by Borrower when due pursuant to Section
2.2.5, then Section 2.5.3 shall apply.  Interest accrued pursuant to
this Section 2.2.8 shall be for the account of the applicable LC Issuer, except
that interest accrued on and after the date of payment by any Lender pursuant to
Section 2.2.5 to reimburse a LC Issuer shall be for the account of such Lender
to the extent of such payment.

     

    2.2.9   LC Loan
Interest.  Borrower shall pay interest on the unpaid principal
amount of each LC Loan from the date of the applicable Drawing Payment until the
maturity or repayment thereof at the following rates per annum:

     

    
      
         

      

      
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    (a)   with respect to the
principal portion of such LC Loan which is, and during such periods as such LC
Loan is, a Base Rate LC Loan, at a rate per annum equal to the Base Rate (such
rate to change from time to time as the Base Rate shall change) plus the applicable Rate
Margin minus 0.50%;
provided that,
other than with respect to any Base Rate LC Loan made or deemed made pursuant to
Section 2.7, in no event shall the sum of the Base Rate and the Rate Margin with
respect to such Base Rate Loan minus 0.50% be less than the
sum of the LIBO Rate (which for the purposes of determining interest rate
pricing only shall be calculated assuming an Interest Period of three months
without regard to the actual Interest Period selected by Borrower pursuant to
Section 2.1.2(c)) and the Rate Margin which would be applicable to such LC Loan
if such LC Loan were a LIBOR LC Loan; and

     

    (b)   with respect to the
principal portion of such LC Loan which is, and during such periods as such LC
Loan is, a LIBOR LC Loan, at a rate per annum during each Interest Period for
such LIBOR LC Loan equal to the LIBO Rate (which for the purposes of determining
interest rate pricing only, and only until such time as the LIBO Rate for one or
two month Interest Periods adequately and fairly reflects the Lenders costs of
making or maintaining LIBOR Loans (as determined in good faith by Lenders having
Proportionate Shares which in the aggregate exceed 70%), shall be calculated
assuming an Interest Period of three months without regard to the actual
Interest Period selected by Borrower pursuant to Section 2.1.2(c)) plus the applicable Rate
Margin plus
0.50%.

     

    2.2.10   Reduction and Reinstatement of
Stated Amount.  The Stated Amount of any Letter of Credit shall
be reduced by the amount of Drawing Payments made in respect thereof. Borrower
may not reduce the Stated Amount of any DSR Letter of Credit if, after giving
effect to such reduction, the Debt Service Reserve Account would not be funded
to the DSR Required Balance. Borrower may not reduce the Stated Amount of any
Security Fund LC if, after giving effect to such reduction, Borrower would not
be in compliance with the Power Purchase Agreement.

     

    2.2.11   Cash
Collateralization.  If any Event of Default shall occur and be
continuing, (a) in the case of an Event of Default described in Section
7.1.2, on the Banking Day, or (b) in the case of any other Event of
Default, on the third Banking Day, in each case following the date on which
Borrower receives notice from Administrative Agent in accordance with Section
7.2 demanding the deposit of cash collateral pursuant to this paragraph,
Borrower shall deposit in an account with Administrative Agent, in the name of
Administrative Agent and for the benefit of the Lenders, an amount in Dollars in
cash equal to 102.5% of the total LC Exposure as of such date plus any accrued
and unpaid interest thereon; provided that, upon
the occurrence and continuance of any Event of Default with respect to Borrower
described in Section 7.1.2, the obligation to deposit such cash collateral shall
become effective immediately, and such deposit shall become immediately due and
payable in Dollars, without demand or other notice of any kind.  Each
such deposit pursuant to this paragraph shall be held by Administrative Agent as
collateral for the payment and performance of the obligations of Borrower under
this Agreement.  Administrative Agent shall have exclusive dominion
and control, including the exclusive right of withdrawal, over such
account.  Other than any interest earned on the investment of such
deposits, which investments shall be made at the option and sole discretion
of

    
      
         

      

      
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    (i) for
so long as an Event of Default shall be continuing, Administrative Agent and
(ii) at any other time, Borrower, in each case, in Permitted Investments
and at the risk and expense of Borrower, such deposits shall not bear
interest.  Interest or profits, if any, on such investments shall
accumulate in such account.  Moneys in such account shall be applied
by Administrative Agent to reimburse the applicable LC Issuer(s) for Drawing
Payments for which any such LC Issuer has not been reimbursed and, to the extent
not so applied, shall be held for the satisfaction of Borrower’s obligation to
repay any LC Loans at such time or, if the maturity of the Loans has been
accelerated (but subject to the consent of Administrative Agent in accordance
with Section 7.2), be applied to satisfy other obligations of Borrower under
this Agreement.  If Borrower is required to provide an amount of cash
collateral hereunder as a result of the occurrence and continuance of an Event
of Default, such amount (to the extent not applied as aforesaid) shall be
returned to Borrower within three Banking Days after all Events of Default have
been cured or waived.

     

    2.2.12   Additional LC
Issuers.  From time to time, Borrower may by notice to
Administrative Agent designate up to one other Lender (in addition to Calyon New
York Branch (with respect to the Security Fund LC) and CoBank, ACB, with respect
to the DSR Letters of Credit) that agrees (in its sole discretion) to act in
such capacity and is reasonably satisfactory to Administrative Agent as a LC
Issuer.  Each such additional LC Issuer shall execute a counterpart of
this Agreement in such capacity upon the approval of Administrative Agent (which
approval shall not be unreasonably withheld or delayed) and shall thereafter be,
as applicable, a DSR LC Issuer  or Security Fund LC Issuer hereunder
for all purposes; provided that
Borrower may designate such other Lender to act as a Security Fund LC Issuer
only if (a) the existing Security Fund LC Issuer no longer satisfies the
requirements to issue a “Letter of Credit” under Section 11.1 of the Power
Purchase Agreement, and (b) the new Security Fund LC Issuer satisfies the
requirements to issue a “Letter of Credit” under Section 11.1 of the Power
Purchase Agreement.

     

    2.2.13   Reporting.  Unless
otherwise requested by Administrative Agent, each LC Issuer shall
(a) provide to Administrative Agent copies of any notice received from
Borrower pursuant to Section 2.2.4 no later than the next Banking Day after
receipt thereof and (b) report in writing to Administrative Agent (who
shall in turn promptly provide notice of same to all Lenders) (i) on or
prior to each Banking Day on which such LC Issuer expects to issue, amend, renew
or extend any Letter of Credit, the date of such issuance, amendment, renewal or
extension, and the aggregate face amount of the Letters of Credit to be issued,
amended, renewed or extended by it and outstanding after giving effect to such
issuance, amendment, renewal or extension occurred (and whether the amount
thereof changed), and such LC Issuer shall be permitted to issue, amend, renew
or extend such Letter of Credit if Administrative Agent shall not have advised
such LC Issuer  that such issuance, amendment renewal or extension
would not be in conformity with the requirements of this Agreement, (ii) on
each Banking Day on which such LC Issuer  makes any Drawing Payment,
the date of such Drawing Payment and the amount of such Drawing Payment and
(iii) on any other Banking Day, such other information as Administrative
Agent shall reasonably request, including but not limited to prompt verification
of such information as may be requested by Administrative Agent.

     

    
      
         

      

      
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    2.2.14   Replacement
of a LC Issuer.  A LC Issuer may be replaced at any time by
written agreement among Borrower, Administrative Agent and the successor LC
Issuer.  Administrative Agent shall notify the Lenders of any such
replacement of a LC Issuer.  At the time any such replacement shall
become effective, Borrower shall pay all unpaid fees accrued for the account of
the replaced LC Issuer pursuant to Section 2.4.  From and after the
effective date of any such replacement, (a) the successor LC Issuer shall
have all the rights and obligations of the replaced LC Issuer under this
Agreement with respect to Letter of Credit to be issued thereafter, and
(b) references herein to the term “DSR LC Issuer”, “Security Fund LC
Issuer” or “LC Issuer”, as applicable, shall be deemed to refer to such
successor or to any previous LC Issuer, or to such successor and all previous LC
Issuers, as the context shall require.  After the replacement of a LC
Issuer hereunder, the replaced LC Issuer shall remain a party hereto and shall
continue to have all the rights and obligations of such LC Issuer under this
Agreement with respect to any Letter of Credit issued by it prior to such
replacement but shall not be required to issue any additional DSR Letter of
Credit or Security Fund LC, as applicable.

     

    2.3    Fees.

     

    2.3.1   Agents’
Fees.  Borrower shall pay to Administrative Agent solely for
Administrative Agent’s and Collateral Agent’s account the fees and other amounts
described in the Agency Fee Letter.

     

    2.3.2   Commitment
Fees.  On each Quarterly Payment Date, Borrower shall pay to
Administrative Agent, for the benefit of the Lenders, accruing from the
Restatement Date or the first day of the Payment Period, as the case may be, a
commitment fee (the “Commitment Fee”) for
such quarter (or portion thereof) then ending equal to the product of
(a) the sum of the daily average Unutilized Security Fund LC Commitment for
such Payment Period (or portion thereof) plus the daily average
Unutilized DSR LC Commitment for such Payment Period (or portion thereof) multiplied by (b) a
fraction, the numerator of which is the number of days in that calendar quarter
(or portion thereof) and the denominator of which is 360 multiplied by (c) 1.00%,
payable quarterly in arrears.

     

    2.4    LC Fees.

     

    2.4.1   LC Fee.  On each
Quarterly Payment Date, Borrower shall pay to Administrative Agent, for the
benefit of the Lenders, accruing from the Restatement Date or the first day of
the Payment Period, as the case may be, a letter of credit participation fee
(the “LC Fee”)
for such quarter (or portion thereof) then ending equal to the product of
(a) the sum of the daily average Stated Amount of the Security Fund LC for
such Payment Period (or portion thereof) plus the daily average Stated
Amount of any DSR Letters of Credit for such Payment Period (or portion thereof)
multiplied by
(b) a fraction, the numerator of which is the number of days in that
calendar quarter (or portion thereof) and the denominator of which is 360,
multiplied by (c) the applicable Rate Margin.

     

    2.4.2   Fronting Fee.  On
each Quarterly Payment Date, Borrower shall pay to Administrative Agent, solely
for each LC Issuer’s account, accruing from the Restatement
Date

    
      
         

      

      
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     or
the first day of the Payment Period, as the case may be, a letter of credit
fronting fee (“Fronting Fee”) for
such Payment Period (or portion thereof) then ending equal to the product of
(a) the sum of the daily average Stated Amount of the Security Fund LC
plus the daily average
Stated Amount of any DSR Letters of Credit for such Payment Period (or portion
thereof)  multiplied
by (b) 0.30% multiplied by (c) a fraction, the numerator of
which is the number of days in that calendar quarter (or portion thereof) and
the denominator of which is 360.

     

    2.5    Other Payment
Terms.

     

    2.5.1   Place and
Manner.  Except as otherwise provided in the Lead Arrangers Fee
Letter, Agency Fee Letter or any other provision contained in any of the Credit
Documents, Borrower shall make all payments due to any Lender, any LC Issuer,
Collateral Agent or Administrative Agent hereunder to Administrative Agent, for
the account of such Lender, such LC Issuer, Collateral Agent or Administrative
Agent (as the case may be), to the account in the name of Loan Servicing,
Account No. 01-88179-2145-00, ABA No. 026-008-073,
Reference:  Calpine Steamboat Holdings, LLC, or such other account as
Administrative Agent shall notify Borrower from time to time, in Dollars and in
immediately available funds not later than 12:00 noon on the date on which
such payment is due.  Any payment made after such time on any day
shall be deemed received on the Banking Day after such payment is
received.  Administrative Agent shall disburse to each Lender, each LC
Issuer or Collateral Agent (as the case may be) each such payment received by
Administrative Agent for such Lender, such LC Issuer or Collateral Agent (as the
case may be), such disbursement to occur on the day such payment is received if
received by 12:00 noon or if otherwise reasonably possible, or otherwise on
the next Banking Day.

     

    2.5.2   Date.  Whenever any
payment due hereunder shall fall due on a day other than a Banking Day, such
payment shall be made on the next succeeding Banking Day, and such extension of
time shall be included in the computation of interest or fees, as the case may
be, without duplication of any interest or fees so paid in the next subsequent
calculation of interest or fees payable.

     

    2.5.3   Default
Interest.  Notwithstanding anything to the contrary herein,
upon the occurrence and during the continuation of any Event of Default, the
outstanding principal amount of all Loans and, to the extent permitted by
applicable Legal Requirements, any accrued but unpaid interest payments thereon
and any accrued but unpaid fees, and other amounts hereunder, shall thereafter
bear interest (including post-petition interest in any proceeding under
applicable Bankruptcy Laws) payable upon demand, and the LC Fees shall be
increased, at a rate that is (a) 2% per annum in excess of the interest
rate and LC Fees then otherwise payable under this Agreement with respect to the
applicable Loans, Security Fund LC and DSR Letter of Credit, or (b) in the
case of any such fees and other amounts, at a rate that is 2% per annum in
excess of the interest rate then otherwise payable under this Agreement for Base
Rate Loans (the “Default Rate”); provided that, in the
case of LIBOR Loans, upon the expiration of the Interest Period in effect at the
time any such increase in interest rate is effective, such LIBOR Loans shall
thereupon become Base Rate Loans and shall thereafter bear interest payable upon
demand at a rate that is 2% per annum in excess of the interest rate then
otherwise payable under this

    
      
         

      

      
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    Agreement
for Base Rate Loans, (it being understood that from and after the date on which
all Events of Default have been waived by the Lenders pursuant to Section 9.9,
the Default Rate shall no longer apply).

     

    2.5.4   Net of
Taxes, Etc.

     

    (a)   Taxes.  Any
and all payments to or for the benefit of any Secured Party by or on behalf of
Borrower hereunder or under any other Credit Document shall be made free and
clear of and without deduction or withholding, setoff or counterclaim of any
kind whatsoever and in such amounts as may be necessary in order that all such
payments, after deduction for or on account of any present or future taxes,
levies, imposts, deductions, charges or withholdings, and all liabilities with
respect thereto ((A) excluding net income, franchise and branch profits taxes,
which include taxes imposed on or measured by the net income, net profits or
capital of such Secured Party by any jurisdiction or any political subdivision
or taxing authority thereof or therein as a result of a connection between such
Secured Party and such jurisdiction or political subdivision, unless such
connection results solely from such Secured Party’s executing, delivering or
performing its obligations or receiving a payment under, or enforcing, this
Agreement or any Note and (B) excluding any withholding tax imposed by the
United States that is in effect and would apply to amounts payable hereunder to
such Secured Party at the time such Secured Party becomes a party to this
Agreement (or such Secured Party designates a new lending office) except to the
extent that such Lender or other recipient (or its assignor, if any) was
entitled, at the time of the designation of a new lending office (or assignment)
to receive additional amounts from Borrower with respect to such withholding tax
pursuant to this Section 2.5.4(a)) (all such non-excluded taxes, levies,
imposts, deductions, charges, withholdings and liabilities being hereinafter
referred to as “Taxes”), shall be
equal to the amounts otherwise specified to be paid under this Agreement and the
other Credit Documents.  If any Taxes are required to be deducted or
withheld from or in respect of any sum payable by or on behalf of Borrower
hereunder or under any other Credit Document to any Secured Party, (i) the
sum payable shall be increased as may be necessary so that after all required
deductions or withholdings (including deductions or withholdings applicable to
additional sums payable under this Section 2.5.4), such Secured Party
receives an amount equal to the sum it would have received had no such
deductions or withholdings been made, (ii) Borrower shall make (or cause to
be made) such deductions or withholdings, and (iii) Borrower shall pay (or
cause to be paid) the full amount deducted or withheld to the relevant taxation
authority or other authority in accordance with applicable Legal
Requirements.  In addition, Borrower agrees to pay any present or
future stamp, recording or documentary taxes and any other excise or property
taxes, charges or similar levies (and interest, fines, penalties and additions
related thereto) (not including income, branch profits or franchise taxes) that
arise from any payment made hereunder or under any other Credit Document or from
the execution or delivery or otherwise with respect to this Agreement or any
other Credit Document (hereinafter referred to as “Other
Taxes”).

     

    (b)   Tax
Indemnity.  Borrower shall indemnify each Secured Party for and
hold it harmless against the full amount of Taxes and Other Taxes (including any
Taxes or Other Taxes imposed by any jurisdiction on amounts payable under this
Section 2.5.4) paid by any

    
      
         

      

      
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    Secured
Party or its Affiliate, or any liability (including penalties, interest and
expenses) arising therefrom or with respect thereto, whether or not such Taxes
or Other Taxes were correctly or legally asserted; provided that
Borrower shall not be obligated to indemnify any Secured Party for any
penalties, interest or expenses relating to Taxes or Other Taxes arising from
such Secured Party’s gross negligence or willful misconduct.  Each
Secured Party agrees to give written notice to Borrower of the assertion of any
claim against such Secured Party relating to such Taxes or Other Taxes as
promptly as is practicable after being notified of such assertion, and in no
event later than 180 days after the principal officer of such Secured Party
responsible for administering this Agreement obtains knowledge thereof; provided that any
Secured Party’s failure to notify Borrower of such assertion within such
180 day period shall not relieve Borrower of its obligation under this
Section 2.5.4(b) with respect to Taxes or Other Taxes, penalties, interest
or expenses arising prior to the end of such period, but shall relieve Borrower
of its obligations under this Section 2.5.4(b) with respect to Taxes or
Other Taxes, penalties, interest or expenses between the end of such period and
such time as Borrower receives notice from such Lender as provided
herein.  Payments by Borrower pursuant to this indemnification shall
be made within 30 days from the date such Secured Party makes written
demand therefor (submitted through Administrative Agent), which demand shall be
accompanied by a certificate describing in reasonable detail the basis
thereof.

     

    (c)   Notice.  Within
30 days after the date of any payment of Taxes or Other Taxes by or on
behalf of Borrower, Borrower shall furnish to Administrative Agent, at its
address referred to in Section 11.1, the original or a certified copy of a
receipt evidencing payment thereof or, if such receipt is not obtainable, other
evidence of such payment reasonably satisfactory to Administrative
Agent.  Borrower shall compensate each Secured Party for all
reasonable losses and expenses sustained by such Secured Party as a result of
any failure by Borrower to so furnish such copy of such receipt.

     

    (d)   Conduit
Financing.  Notwithstanding anything to the contrary contained
in this Section 2.5.4, if a Secured Party is a conduit entity participating
in a conduit financing arrangement (as defined in Section 7701(l) of the
Code and the Treasury Regulations issued thereunder) with respect to any
payments made by Borrower under this Agreement and under any Note, Borrower
shall not be obligated to pay additional amounts to such Secured Party pursuant
to this Section 2.5.4 to the extent that the amount of Taxes exceeds the
amount that would have otherwise been payable were such Secured Party not a
conduit entity participating in a conduit financing arrangement.

     

    (e)   Reimbursement by Secured
Parties.  If any Secured Party receives an indemnification
payment pursuant to Section 2.5.4(b) and if such Secured Party is able, in
its sole opinion, to apply or otherwise take advantage of any refund or tax
credit arising out of or in conjunction with any Taxes or Other Taxes which give
rise to such indemnification, such Secured Party shall, to the extent that in
its sole opinion it can do so without prejudice to the retention of the amount
of such refund or credit and without any other adverse tax consequences for such
Secured Party, reimburse to Borrower at such time as such tax refund or credit
shall have actually been received by such Secured Party such amount as the
Secured Party shall, in its sole opinion, have determined to be attributable to
the relevant Taxes or Other Taxes and as will

    
      
         

      

      
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    leave
such Secured Party in no better or worse position than it would have been in if
the payment of such Taxes or Other Taxes had not been required, provided, however,
that if the Secured Party is required to repay all or any portion of any refund
or any interest thereon to such Governmental Authority or to forfeit all or any
portion of such credit, then, upon the request of such Secured Party, the
Borrower agrees to repay such Secured Party, as soon as reasonably practicable,
the amount of the refund required to be paid to such Governmental Authority by
such Secured Party or the amount of such credit that is required to be
forfeited, in each case plus any penalties, interest or other charges imposed by
such Governmental Authority with respect to such refund or credit, as the case
may be.  Nothing in this Section 2.5.4(e) shall oblige any
Secured Party to disclose to Borrower or any other Person any information
regarding its tax affairs or tax computations, or shall interfere with Secured
Party’s absolute discretion to arrange its tax affairs in whatever manner it
thinks fit.  In particular, no Secured Party shall be under any
obligation to claim relief from its corporate profits or similar tax liability
in credits or deductions available to it and, if it does claim, the extent,
order and manner in which it does so shall be at its absolute
discretion.

     

    (f)   Survival of
Obligations.  The obligations of Borrower under this
Section 2.5.4 shall survive the termination of this Agreement and the
repayment of Borrower’s Obligations.

     

    2.5.5   Application of
Payments.  Except as otherwise expressly provided herein or in
the other Credit Documents, payments made under this Agreement or the other
Credit Documents and other amounts received by Administrative Agent, Collateral
Agent, Depositary Agent, the LC Issuers or the Lenders under this Agreement or
the other Credit Documents shall first be applied to any fees, costs, charges or
expenses payable to Administrative Agent, Collateral Agent, Depositary Agent,
the LC Issuers or the Lenders hereunder or under the other Credit Documents,
next to any accrued but unpaid interest then due and owing, then to outstanding
principal then due and owing or otherwise to be prepaid (in each case, such
application to be made on a pro rata basis among such
applicable Persons), and any surplus then remaining shall be paid to the
Borrower Parties or their successors or assigns or to whomsoever may be lawfully
entitled to receive the same, or as a court of competent jurisdiction may
direct.

     

    2.5.6   Withholding Exemption
Certificates.  Administrative Agent on the Restatement Date,
each Lender upon becoming a Lender, each LC Issuer upon becoming an LC Issuer,
and each Person to which any Lender grants a participation (or otherwise
transfers its interest in this Agreement) agree that they will deliver to
Administrative Agent and Borrower either (a) if such Lender or Person is a
United States person (as such term is defined in Section 7701(a)(30) of the
Code), an executed copy of a United States Internal Revenue Service Form W-9, or
(b) if such Lender or Person is not a United States person (as such term is
defined in Section 7701(a)(30) of the Code), two duly completed copies of United
States Internal Revenue Service Form W-8BEN, W-8ECI, W-8EXP or W-8IMY or
successor applicable form, as the case may be (certifying therein an entitlement
to an exemption from or reduction in, United States withholding taxes) plus, in
the case of a Lender or a Person using the so-called “portfolio interest
exemption,” a duly completed and executed non-bank certificate in the form of
Exhibit J,
if applicable (a “Section 2.5.6
Certificate”).  Each Lender or LC Issuer which delivers to
Borrower and Administrative Agent a Form W-9, W-8BEN, W-8ECI, W-8EXP or W-8IMY
and a Section 2.5.6 Certificate, as the case may be, pursuant to the preceding
sentence further 

     

    
      
        
        

      

      
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undertakes
to deliver to Borrower and Administrative Agent further copies of the
Form W-9, W-8BEN, W-8ECI W-8EXP or W-8IMY, or successor applicable forms,
or other manner of certification or procedure, and a Section 2.5.6 Certificate,
as the case may be, on or before the date that any such form or certificate
expires or becomes obsolete or within a reasonable time after gaining knowledge
of the occurrence of any event requiring a change in the most recent forms
previously delivered by it to Borrower, and such extensions or renewals thereof
as may reasonably be requested by Borrower, certifying in the case of a Form
W-9, W-8BEN or W-8ECI, W-8EXP or W-8IMY and a Section 2.5.6 Certificate, as the
case may be, that such Lender or LC Issuer is entitled to receive payments under
this Agreement without deduction or withholding of any United States federal
income taxes, or at a reduced rate, unless in any such cases any change in
treaty, law, regulation or the circumstance of any Borrower Party or Affiliate
of any Borrower Party (other than an Affiliate that is a Secured Party) or any
designation of  a new lending office or assignment described in the
exception contained in clause (B) of Section 2.5.4(a) has occurred prior to the
date on which any such delivery would otherwise be required which renders all
such forms or certificates inapplicable or which would prevent a Lender or LC
Issuer from duly completing and delivering any such form or certificate with
respect to it and such Lender or LC Issuer advises Borrower that it is not
capable of receiving payments without any deduction or withholding of United
States federal income tax or at a reduced rate.  Borrower shall not be
obligated, however, to pay any additional amounts in respect of United States
federal income tax pursuant to Section 2.5.4 (or make an indemnification
payment pursuant to Section 2.5.4) to any Lender or LC Issuer (including
any entity to which any Lender or LC Issuer sells, assigns, grants a
participation in, or otherwise transfers its rights under this Agreement) if the
obligation to pay such additional amounts (or such indemnification) would not
have arisen but for a failure of such Lender to comply with its obligations
under this Section 2.5.6.  Notwithstanding any other provision of
this Section 2.5.6, no Person shall be required to deliver any form pursuant to
this Section 2.5.6 that such Person is not legally able to
deliver.

    

     

    2.5.7   Defaulting
Lender.  Anything herein to the contrary notwithstanding,
during such period as a Lender is a Defaulting Lender, such Defaulting Lender
will not be entitled to any fees accruing during such period pursuant to
Sections 2.3 and Section 2.4 (without prejudice to the rights of the Lenders
other than Defaulting Lenders in respect of such fees).

     

    2.6    Pro Rata
Treatment.

     

    2.6.1   Borrowings, Commitment Reductions,
Etc.  Except as otherwise provided herein, (a) each
Borrowing consisting of Security Fund LC Loans, DSR LC Loans or each Drawing
Payment under any Letter of Credit and each reduction of the Total Security Fund
LC Commitment or Total DSR LC Commitment shall be made or allocated among the
Lenders pro rata
according to their respective Proportionate Shares of such Loans or Commitments,
as the case may be, (b) each payment of principal of and interest on Term
Loans, Security Fund LC Loans or DSR LC Loans shall be made or shared among the
Lenders holding such Loans pro
rata according to their respective unpaid principal amounts of such Loans
held by such Lenders, (c) each payment of Commitment Fees shall be shared
among the Lenders pro
rata according to

    
      
         

      

      
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     (i) their
respective Proportionate Shares of the Commitments held by such Lenders to which
such fees apply, and (ii) in respect of each Lender which becomes a party
to this Agreement hereunder after the Restatement Date, the date upon which such
Lender so became a party hereunder, and (d) each payment of LC Fees shall be
made or shared among the Lenders holding such Loans pro rata according to their
respective Proportionate Shares of the Commitments held by such Lenders to which
such fees apply.

     

    2.6.2   Sharing of Payments,
Etc.  If any Lender or LC Issuer shall obtain any payment
(whether voluntary, involuntary, through the exercise of any right of setoff, or
otherwise) on account of its Loans or participations in Drawing Payments
resulting in such Lender or LC Issuer receiving payment of a greater proportion
of the aggregate amount of its Loans or participations in Drawing Payments and
accrued interest thereon under the applicable facility than the proportion
received by any other Lender or LC Issuer with respect to such facility, then
the Lender or LC Issuer receiving such greater proportion shall forthwith
purchase from the other Lenders or LC Issuer such participations in the Loans or
Drawing Payments, as the case may be, as shall be necessary to cause such
purchasing Lender or LC Issuer to share the excess payment ratably with each of
them; provided
that if all or any portion of such excess payment is thereafter recovered from
such purchasing Lender or LC Issuer, such purchase from such Lender or LC Issuer
shall be rescinded and each other Lender or LC Issuer shall repay to the
purchasing Lender of LC Issuer the purchase price to the extent of such recovery
together with an amount equal to such other Lender’s or LC Issuer’s
proportionate share of the applicable facility (according to the proportion of
(a) the amount of such other Lender’s or LC Issuer’s required repayment to
(b) the total amount so recovered from the purchasing Lender or LC Issuer)
of any interest or other amount paid or payable by the purchasing Lender or LC
Issuer in respect of the total amount so recovered.  Borrower agrees
that any Lender or LC Issuer so purchasing a participation from another Lender
or LC Issuer pursuant to this Section 2.6.2 may, to the fullest extent
permitted by law, exercise all its rights of payment (including the right of
setoff) with respect to such participation as fully as if such Lender or LC
Issuer was the direct creditor of Borrower in the amount of such
participation.

     

    2.7    Change of
Circumstances.

     

    2.7.1   Inability to Determine
Rates.  If, on or before the first day of any Interest Period
for any LIBOR Loans, (a) Lenders having Proportionate Shares which in the
aggregate exceed 30% determine in good faith (which determination shall, absent
manifest error, be final, conclusive and binding upon all parties hereto but
shall be made only after consultation with Borrower and Administrative
Agent)  that the LIBO Rate for such Interest Period will not
adequately and fairly reflect such Lenders’ cost of making or maintaining LIBOR
Loans for such Interest Period as a result of contingencies occurring before or
after the date of this Agreement which adversely affect the London interbank
market for dollar deposits or the position of such Lender in that market, then,
and in any such event, such Lenders shall be “Affected Lenders” and
shall on that day give notice to Borrower and Administrative Agent of such
determination (which notice Administrative Agent shall promptly transmit to each
other Lender on a redacted basis such that the identity of the Affected Lenders
is confidential).  Thereafter, (i) the obligation of the Affected
Lenders to make Loans as, or to convert Loans to, LIBOR Loans shall be
suspended

    
      
         

      

      
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    until
such notice shall be withdrawn by the Affected Lenders (which such Affected
Lenders shall do at the earliest practicable date), and (ii) to the extent such
determination by the Affected Lenders relates to a LIBOR Loan then being
requested by Borrower pursuant to a Notice of Conversion of Loan Type, the
Affected Lenders shall make such Loan as (or convert such Loan to, as the case
may be) a Base Rate Loan.  Except as provided in the immediately
preceding sentence, nothing in this Section 2.7.1 shall affect the obligation of
any Lender other than the Affected Lenders to make or maintain Loans as, or to
convert Loans to, LIBOR Loans in accordance with the terms of this Agreement, it
being understood that Administrative Agent shall have no obligation to disclose
the identity of the Affected Lenders to any other Person.

     

    2.7.2   Illegality.  If any
Lender reasonably determines that, after the date of this Agreement, the
adoption of any Governmental Rule, any change in any Governmental Rule or the
application or requirements thereof (whether such change occurs in accordance
with the terms of such Governmental Rule as enacted, as a result of amendment,
or otherwise), any change in the interpretation or administration of any
Governmental Rule by any Governmental Authority, or compliance by any Lender or
Borrower with any request or directive (whether or not having the force of law,
but if not having the force of law, being of a type with which a Lender
customarily complies) of any Governmental Authority (a “Change of Law”) shall
make it unlawful or impossible for any Lender to make or maintain any LIBOR
Loan, then upon notice thereof by such Lender to Borrower through Administrative
Agent, (a) Borrower’s right to request the making of or conversion to, and
the Lender’s obligations to make or convert to, LIBOR Loans shall be suspended
until such Lender notifies Borrower and Administrative Agent that the
circumstances giving rise to such determination no longer exist, and
(b) Borrower shall, upon demand from such Lender (with a copy to
Administrative Agent), either (i) pursuant to Section 2.1.5 convert
any then outstanding LIBOR Loans into Base Rate Loans at the end of the current
Interest Periods for such Loans, or (ii) immediately repay LIBOR Loans
pursuant to Section 2.1.6 or convert LIBOR Loans into Base Rate Loans if
such Lender shall notify Borrower that such Lender may not lawfully continue to
fund and maintain such Loans.  Upon any such conversion, Borrower
shall also pay accrued interest on the amount so converted.  Any
conversion or prepayment of LIBOR Loans made pursuant to the preceding sentence
prior to the last day of an Interest Period for such Loans shall be deemed a
prepayment thereof for purposes of Section 2.8.

     

    2.7.3   Increased
Costs.  If, after the date of this Agreement, any Change of
Law:

     

    (a)   shall impose, modify or hold
applicable any reserve, special deposit or similar requirement (without
duplication of any reserve requirement included within the applicable Interest
Rate through the definition of “Reserve Requirement”) against assets held by,
deposits or other liabilities in or for the account of, advances or loans by, or
any other acquisition of funds by any Lender for any LIBOR Loan; or

     

    (b)   shall impose on any Lender
or the London interbank market any other condition affecting this Agreement or
any LIBOR Loan, Commitment or participation in any Letter of
Credit;

     

    
      
         

      

      
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    and the
effect of any of the foregoing is to increase the cost (other than any cost
relating to any taxes) to such Lender of making, issuing, creating, renewing,
participating in (subject to the limitations in Section 9.12) or
maintaining any such LIBOR Loan, Commitment or Letter of Credit in respect
thereof or to reduce any amount receivable by such Lender hereunder, then
Borrower shall from time to time, within 10 days after demand by such
Lender, pay to such Lender additional amounts sufficient to reimburse such
Lender for such increased costs or to compensate such Lender for such reduced
amounts.  A certificate setting forth in reasonable detail the amount
of such increased costs or reduced amounts and the basis for determination of
such amount, submitted by such Lender to Borrower, shall, in the absence of
manifest error, be conclusive and binding on Borrower as to the amount of such
increased costs or reduced amounts for purposes of this Agreement.

     

    2.7.4   Capital
Requirements.  If any Lender determines that (a) any
Change of Law after the date of this Agreement regarding capital requirements
has or would have the effect of reducing the rate of return on the capital of
such Lender, or the Lending Office of such Lender or such Lender’s Parent
Company, if any, as a consequence of the Loans, the Commitments, participation
in Letters of Credit to a level below that which such Lender or LC Issuer or
such Lender’s or LC Issuer’s Parent Company could have achieved but for such
Change in Law (taking into account such Lender’s or such Person’s policies with
respect to capital adequacy), then Borrower shall pay to such Lender or such
Person, within 10 days after delivery of demand by such Lender or such
Person, such amounts as such Lender or such Person shall reasonably determine
are necessary to compensate such Lender or such Person for the increased costs
to such Lender or such Person of such increased capital.  A
certificate of such Lender or such Person, setting forth in reasonable detail
the computation of any such increased costs, delivered to Borrower by such
Lender or such Person shall, in the absence of manifest error, be conclusive and
binding on Borrower as to the amount of such increased costs or reduced amounts
for purposes of this Agreement.

     

    2.7.5   Notice; Participating Lenders’
Rights.  Each Lender shall notify Borrower of any event
occurring after the date of this Agreement that will entitle such Lender to
compensation pursuant to this Section 2.7, promptly, and in no event later
than 180 days after the principal officer of such Lender responsible for
administering this Agreement obtains knowledge thereof; provided that any
Lender’s failure to notify Borrower within such 180 day period shall not
relieve Borrower of its obligation under this Section 2.7 with respect to
claims arising prior to the end of such period, but shall relieve Borrower of
its obligations under this Section 2.7 with respect to the time between the
end of such period and such time as Borrower receives notice from the indemnitee
as provided herein; and provided, further, that if the
Change in Law giving rise to such increased costs or reductions is retroactive,
then the 180 day period referred to above shall be extended to include the
period of retroactive effect thereof.  No Person purchasing from a
Lender a participation in any Commitment (as opposed to an assignment) shall be
entitled to any payment from or on behalf of Borrower pursuant to
Section 2.7.3 or Section 2.7.4 which would be in excess of the
applicable proportionate amount (based on the portion of the Commitment in which
such Person is participating) which would then be payable to such Lender if such
Lender had not sold a participation in that portion of the
Commitment.

     

    
      
         

      

      
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    2.8    Funding
Losses.  If
Borrower shall (a) repay or prepay any LIBOR Loans on any day other than
the last day of an Interest Period for such Loans (whether an Optional
Prepayment or a Mandatory Prepayment), (b) fail to convert any Loans into
LIBOR Loans in accordance with a Notice of Conversion of Loan Type delivered to
Administrative Agent (whether as a result of the failure to satisfy any
applicable conditions or otherwise) after such Notice of Conversion of Loan Type
has become irrevocable, (c) fail to continue a LIBOR Loan in accordance
with a Confirmation of Interest Period Selection delivered to Administrative
Agent, or (d)  fail to make any prepayment in accordance with any notice of
prepayment delivered to Administrative Agent, then Borrower shall, within
10 days after demand by any Lender, reimburse such Lender for all
reasonable costs and losses incurred by such Lender as a result of such
repayment, prepayment or failure (“Liquidation
Costs”).  Borrower understands that such costs and losses may
include losses incurred by a Lender as a result of funding and other contracts
entered into by such Lender to fund LIBOR Loans (other than non-receipt of the
margin applicable to such LIBOR Loans).  Each Lender demanding payment
under this Section 2.8 shall deliver to Borrower a certificate setting
forth in reasonable detail the basis for and the amount of costs and losses for
which demand is made.  Such a certificate so delivered to Borrower
shall, in the absence of manifest error, be conclusive and binding as to the
amount of such loss for purposes of this Agreement.

     

    2.9    Alternate Office;
Minimization of Costs.

     

    2.9.1   To the
extent reasonably possible, each Lender shall designate an alternative Lending
Office with respect to its LIBOR Loans and otherwise take any reasonable actions
to reduce any liability of Borrower to any Lender under Sections 2.5.4,
2.7.3, 2.7.4 or 2.8, or to avoid the unavailability of any Type of Loans under
Section 2.7.2 so long as (in the case of the designation of an alternative
Lending Office) such Lender, in the reasonable judgment of such Lender,
determines that (a) such designation is not disadvantageous to such Lender
in any material respect and (b) such actions would eliminate or reduce
liability to such Lender; provided, that no
Lender shall be required to designate an alternative Lending Office if such
designation requires internal credit approval until such time as such Lender
receives such internal credit approval.  Borrower hereby agrees to pay
all reasonable costs and expenses incurred by any Lender in connection with any
such designation or actions within 10 Banking Days of demand thereof to
Borrower.

     

    2.9.2   If and
with respect to each occasion that any Lender has failed to consent to a
proposed amendment, waiver, discharge or termination which pursuant to the terms
of Section 9.9 requires the consent of all of the Lenders affected and with
respect to which the Required Lenders shall have granted their consent, a Lender
either makes a demand for compensation pursuant to Sections 2.5.4, 2.7.3 or
2.7.4 or is unable to fund LIBOR Loans pursuant to Section 2.7.2 or is a
Defaulting Lender, then Borrower may, upon at least five Banking Days’ prior
irrevocable written notice to each of such Lender and Administrative Agent, in
whole permanently replace the Loans and Commitments of such Lender; provided that
Borrower shall replace LC Loans and LC Commitments with the LC Loans and LC
Commitments of a commercial bank reasonably satisfactory to the applicable LC
Issuer (provided that any
existing Lenders shall be deemed to be reasonably
satisfactory).  Such

    
      
         

      

      
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    replacement
Lender shall upon the effective date of replacement purchase the Borrower’s
Obligations hereunder owed to such replaced Lender for the aggregate amount
thereof and shall thereupon for all purposes become a “Lender” hereunder. Such
notice from Borrower shall specify an effective date for the replacement of such
Lender’s Loans and Commitments, which date shall not be later than the
fourteenth day after the day such notice is given. On the effective date of any
replacement of such Lender’s Loans and Commitments pursuant to this
Section 2.9.2, Borrower shall pay to Administrative Agent for the account
of such Lender (a) any fees due to such Lender to the date of such
replacement, (b) the principal of and accrued interest on the principal
amount of outstanding Loans held by such Lender to the date of such replacement
(such amount to be represented by the purchase of the Borrower’s Obligations
hereunder of such replaced Lender by the replacing Lender and not as a
prepayment of such Loans), and (c) the amount or amounts due to such Lender
pursuant to each of Sections 2.5.4, 2.7.3 or 2.7.4, as applicable, and any
other amount then payable hereunder to such Lender. Borrower will remain liable
to such replaced Lender for any Liquidation Costs that such Lender sustains or
incurs as a consequence of the purchase of such Lender’s Loans (unless such
Lender has defaulted on its obligation to fund a Loan
hereunder).  Upon the effective date of the purchase of any Lender’s
Loans owed to such Lender and termination of such Lender’s Commitments pursuant
to this Section 2.9.2, such Lender shall cease to be a Lender hereunder. No
such termination of any such Lender’s Commitments and the purchase of such
Lender’s Loans pursuant to this Section 2.9.2 shall affect (i) any
liability or obligation of Borrower or any other Lender to such terminated
Lender, or any liability or obligation of such terminated Lender to Borrower or
any other Lender, which accrued on or prior to the date of such termination, or
(ii) such terminated Lender’s rights hereunder in respect of any such
liability or obligation.  Nothing in this Section shall be deemed
to prejudice any rights that Borrower may have against any Lender that is a
Defaulting Lender.

     

    2.9.3   Upon
written notice to Administrative Agent, any Lender may designate a Lending
Office other than the Lending Office most recently designated to Administrative
Agent and may assign all of its interests under the Credit Documents and its
Notes (if any) to such Lending Office; provided that such
designation and assignment do not at the time of such designation and assignment
increase the reasonably foreseeable liability of Borrower under
Section 2.5.4, 2.7.3 or 2.7.4 or make an Interest Rate option unavailable
pursuant to Section 2.7.2.

     

    ARTICLE
3

     

    CONDITIONS
PRECEDENT

     

    3.1    Conditions
Precedent to the Restatement Date.  The
obligation of each Lender to enter into this Agreement, the effectiveness of
this Agreement, the obligation of the Lenders to continue, or make, the Term
Loans under this Agreement, and the obligation of any LC Issuer to continue, or
issue, any Letter of Credit hereunder is subject to the prior satisfaction of
each of the following conditions (unless waived in writing by Administrative
Agent with the consent of the Lenders) (the date such conditions precedent are
so satisfied or waived being referred to as the “Restatement
Date”):

     

    
      
         

      

      
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    3.1.1   Resolutions.  Delivery
to the Lead Arrangers of a copy of one or more resolutions or other
authorizations, in form and substance reasonably satisfactory to the Lead
Arrangers, of Holdings and each Borrower Party that is a party to a Restatement
Date Operative Document certified by a Responsible Officer of Holdings or each
such Borrower Party as being in full force and effect on the Restatement Date,
authorizing, as applicable and among other things, the Borrowings herein
provided for, the granting or continuation of the Liens under the Collateral
Documents, delivery and performance of this Agreement and the other Restatement
Date Operative Documents and any instruments or agreements required hereunder or
thereunder to which Holdings or such Borrower Party is a party.

     

    3.1.2   Incumbency.  Delivery
to the Lead Arrangers and the Depositary Agent of a certificate, in form and
substance reasonably satisfactory to the Lead Arrangers, from Holdings and each
Borrower Party entering into a Restatement Date Operative Document signed by the
appropriate authorized officer or manager of Holdings or each such Borrower
Party and dated as of the Restatement Date, as to the incumbency of the natural
Persons authorized to execute and deliver this Agreement and the other
Restatement Date Operative Documents and any instruments or agreements required
hereunder or thereunder to which Holdings or such Borrower Party is a
party.

     

    3.1.3   Formation
Documents.  Delivery to the Lead Arrangers of (a) copies
of the articles of incorporation, certificate of incorporation, charter or other
state certified constituent documents of Holdings and each Borrower Party
entering into a Restatement Date Operative Document, certified by the secretary
of state of Holdings’ or such Borrower Party’s state of incorporation or
formation, as applicable, and (b) copies of the bylaws, limited liability
company operating agreement or other comparable constituent documents, if
applicable, of Holdings and each Borrower Party entering into a Restatement Date
Operative Document, certified by a Responsible Officer of Holdings or such
Borrower Party as being true, correct and complete on the Restatement
Date.

     

    3.1.4   Good Standing
Certificates.  Delivery to the Lead Arrangers of good standing
certificates in a form customarily issued by (a) the secretary of state of the
state in which Holdings and each Borrower Party is formed or incorporated, as
applicable, (b) in the case of each Borrower Party (other than FEC) which
is a party to a FEC Major Project Document, the Secretary of the State of Texas
or the Comptroller of the State of Texas, as the case may be, and (c) in
the case of each Borrower which is a party to a MEC Major Project Document, the
Secretary of State of the State of Minnesota, in each case dated a date
reasonably close prior to the Restatement Date.

     

    3.1.5   Third Party
Approvals.  The Lead Arrangers shall have received all
information and copies of all documents and copies of any approval by any Person
(including any Governmental Authority) reasonably required in connection with
any transaction herein contemplated or contemplated in any other Credit
Document, which the Lead Arrangers may reasonably have requested in connection
herewith.

     

    
      
         

      

      
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    3.1.6   Credit Documents and Project
Documents.  Delivery to the Lead Arrangers of (a) executed
originals of this Agreement and each other Credit Document (including the
Interest Rate Agreements contemplated by Section 5.18.1) to be executed on the
Restatement Date and any supplements or amendments thereto, all of which shall
be in form and substance reasonably satisfactory to the Lenders, (b) a
certified list of, and true, correct and complete copies of, each FEC Project
Document (other than any FEC Project Document which is only incidental to the
leasing, ownership, operation and maintenance of the Freeport Project) executed
on or prior to the Restatement Date (together with any supplements or amendments
thereto), all of which shall have been duly authorized, executed and delivered
by the parties thereto, and all of which FEC Project Documents shall be
certified by a Responsible Officer of FEC as being true, complete and correct
and in full force and effect on the Restatement Date pursuant to the certificate
delivered pursuant to Section 3.1.7, (c) a certified list of, and
true, correct and complete copies of, each MEC Project Document (other than any
MEC Project Document which is only incidental to the leasing, ownership,
operation and maintenance of the Mankato Project) executed on or prior to the
Restatement Date (together with any supplements or amendments thereto, all of
which shall have been duly authorized, executed and delivered by the parties
thereto, and all of which MEC Project Documents shall be certified by a
Responsible Officer of MEC as being true, complete and correct and in full force
and effect on the Restatement Date pursuant to the certificate delivered
pursuant to Section 3.1.7 and (d) true, correct and complete copies of the
CES PPA (FEC) and the related guaranty from Calpine, the Administrative Services
Agreement and the Emissions Attributes Agreement executed on or prior to the
Restatement Date (together with any supplements or amendments thereto), all of
which shall have been duly authorized, executed and delivered by the parties
thereto, have been certified by a Responsible Officer of the Borrower as being
true, complete and correct and in full force and effect on the Restatement Date
pursuant to the certificate delivered pursuant to Section 3.1.7 and are
each in form and substance reasonably satisfactory to the Lead
Arrangers.

     

    3.1.7   Closing
Certificates.

     

    (a)   Certificate of
Borrower.  Delivery to the Lead Arrangers of a certificate,
dated as of the Restatement Date, duly executed by a Responsible Officer of
Borrower, in substantially the form of Exhibit F-1.

     

    (b)   Certificate of
FEC.  Borrower shall cause FEC to deliver to the Lead Arrangers
a certificate, dated as of the Restatement Date, duly executed by a Responsible
Officer of FEC, in substantially the form of Exhibit F-2.

     

    (c)   Certificate of
MEC.  Borrower shall cause MEC to deliver to the Lead Arrangers a
certificate, dated as of the Restatement Date, duly executed by a Responsible
Officer of MEC, in substantially the form of Exhibit F-3.

     

    3.1.8   Legal
Opinions.  Delivery to the Lead Arrangers of legal opinions of
counsel to the Calpine Entities entering into Restatement Date Operative
Documents, in each case in form and substance reasonably satisfactory to the
Lead Arrangers.

     

    
      
         

      

      
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    3.1.9   Certificate of Insurance
Consultant.  Delivery to the Lead Arrangers of the Insurance
Consultant’s certificate dated as of the Restatement Date and in substantially
the form of Exhibit F-4,
together with the Insurance Consultant’s report, in form and substance
reasonably satisfactory to the Lenders, attached thereto.

     

    3.1.10   Insurance.  Insurance
complying with terms and conditions set forth in Exhibit K shall
be in full force and effect and the Lead Arrangers and the Insurance Consultant
shall have received (a) a certificate from FEC and MEC’s insurance
broker(s), dated as of the Restatement Date and in form and substance reasonably
satisfactory to the Lead Arrangers, (i) identifying underwriters, type of
insurance, insurance limits and policy terms, (ii) listing the special
provisions required as set forth in Exhibit K,
(iii) describing the insurance obtained and (iv) stating that such
insurance is in full force and effect and that all premiums then due thereon
have been paid and that, in the opinion of such broker(s), such insurance
complies with the terms and conditions set forth in Exhibit K, and
(b) certified copies of all policies evidencing such insurance (or a
binder, commitment or certificates signed by the insurer or a broker authorized
to bind the insurer), each in form and substance reasonably satisfactory to the
Lead Arrangers.  In addition to the foregoing,
Borrower shall have implemented each of the actions, items, coverages and other
recommendations set forth in Section 6.1 (except Section 6.1.4) of the Insurance
Consultant’s report delivered pursuant to Section 3.1.9 to the reasonable
satisfaction of the Lead Arrangers.

     

    3.1.11   Certificate of the Independent
Engineer.  Delivery to the Lead Arrangers of the Independent
Engineer’s certificate, dated as of the Restatement Date and in substantially
the form of Exhibit F-6,
together with the Independent Engineer’s report, in form and substance
reasonably satisfactory to the Lead Arrangers, attached thereto.

     

    3.1.12   Certificate of Power Market
Consultant.  Delivery to the Lead Arrangers of the Power Market
Consultant’s certificate, dated as of the Restatement Date and in substantially
the form of Exhibit F-5,
together with the Power Market Consultant’s report, in form and substance
reasonably satisfactory to the Lead Arrangers, attached thereto.

     

    3.1.13   Payment of Interest and
Fees.  All taxes, fees and other costs payable in connection
with the execution, delivery, recordation and filing of the documents and
instruments referred to in this Section 3.1 and due on the Restatement Date
shall have been paid in full or, as approved by the Lenders, provided
for.  Borrower shall have paid (or caused to be paid) all outstanding
amounts due, as of the Restatement Date, and owing to (a) the Lenders,
Administrative Agent, Collateral Agent, the LC Issuers or the Lead Arrangers
under any fee or other letter, including without limitation the Agency Fee
Letter, the Lead Arrangers Fee Letter and the Mandate Letter or pursuant to
Section 2.3.1, (b) the Lenders’ attorneys and consultants (including the
Independent Consultants) and the Title Insurers for all services rendered and
billed prior to the Restatement Date, (c) the Depositary Agent under the
Depositary Agreement, (d) Administrative Agent for any other amounts
required to be paid or deposited by Borrower on the Restatement Date, (e) the
Existing Lenders all accrued and unpaid interest, fees and Liquidation Costs
under the Existing Credit Agreement, and (f) the Hedge Banks all applicable
Hedge Breaking Fees under the Interest Rate Agreements (it being understood that
if the Interest

    
      
         

      

      
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    Rate
Agreements in effect immediately prior to the Restatement Date are novated to
the Hedge Banks as of the Restatement Date, then no Hedge Breaking Fees are
anticipated to be due and payable).  In addition, Borrower shall have
provided, to any Lender that has so requested in writing at least one Banking
Day prior to the Restatement Date, documentation reasonably satisfactory to
Borrower and such Lender regarding the description or designation of any fees
payable to such Lender pursuant to the foregoing clause (a); provided that
Borrower shall not be responsible for making any determination or verification
with respect to the description or designation of fees requested by any such
Lender, and shall not have any liability to any such Lender as a result of the
delivery of such documentation.

     

    3.1.14   Financial
Statements.  Delivery to the Lead Arrangers of accurate and
complete copies of the most recent (a) audited annual financial statements
of Borrower for the year ended December 31, 2008, (b) unaudited annual financial
statements of each Borrower Party (other than Borrower) for the year ended
December 31, 2008, and (c) unaudited quarterly financial statements for
each Borrower Party for the quarter ended September 30, 2009, together with, in
the case of each Borrower Party, a certificate from the appropriate Responsible
Officer thereof, dated as of the Restatement Date and in substantially the form
of Exhibit F-2 (in
the case of FEC), Exhibit F-3 (in
the case of MEC), stating that no Material Adverse Change in the consolidated
assets, liabilities, operations or financial condition of such Person has
occurred from those set forth in the most recent financial statements provided
to the Lead Arrangers.

     

    3.1.15   UCC
Reports.  Delivery to the Lead Arrangers of a UCC report of a
date no less recent than 20 days before the Restatement Date for each of
the jurisdictions in which the UCC-1 financing statements and the fixture
filings are intended to be filed in respect of the Collateral, showing that upon
due filing or recordation (assuming such filing or recordation occurred on the
date of such respective reports), as the case may be, the security interests
created under the Collateral Documents, with respect to such Collateral, will be
prior to all other financing statements, future filings or other security
documents wherein the security interest is perfected by filing or recording in
respect of the Collateral.

     

    3.1.16   Base Case Project
Projections.  Delivery to the Lead Arrangers of the Base Case
Project Projections of operating expenses and cash flow for each Project in the
form of Exhibit G-3,
which Base Case Project Projections shall be in form and substance satisfactory
to the Lead Arrangers.

     

    3.1.17   A.L.T.A.
Surveys.  Administrative Agent shall have received A.L.T.A.
surveys of the Sites (which surveys shall be reasonably current and in form and
substance reasonably satisfactory to the Administrative Agent and the Title
Insurer), certified to FEC or MEC, as applicable, Administrative Agent and the
Title Insurer by a licensed Texas surveyor (in the case of the Freeport Project)
or a licensed Minnesota surveyor (in the case of the Mankato Project) reasonably
satisfactory to the Administrative Agent, showing, among other things,
(a) as to the Sites, the location and dimensions thereof (including
(i) the location of all means of access thereto and all easements or
encumbrances relating thereto, and (ii) the perimeter within which all
improvements are located), (b) the existing utility facilities servicing
the Projects (including water, electricity, fuel, telephone, sanitary sewer and
storm water distribution and detention

    
      
         

      

      
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    facilities),
(c) other than Permitted Liens, no existing or contemplated improvements
encroach or interfere with adjacent property or existing easements or other
rights (whether on, above or below ground), and that there are no gaps, gores,
projections, protrusions or other survey defects, (d) whether the MEC Site
or the FEC Site or any portion thereof is located in a special flood hazard
zone, and (e) no other matters constituting a defect in title other than
Title Exceptions; provided that the
matters described in clauses (a)(ii) and (d) above may be shown by
separate maps, surveys or other information reasonably satisfactory to the
Administrative Agent, and the surveyor shall not be required to certify as to
the location of any easements, improvements, encroachments utilities or other
matters which do not exist as of the Restatement Date.  For purposes
of clarification, the Borrower shall not be required to provide an A.L.T.A.
survey of the Access Easement Tract (as defined in the FEC Deed of
Trust).

     

    3.1.18   Title Policies. Delivery to
the Lead Arrangers of a lender’s A.L.T.A. extended coverage policy of title
insurance with respect to the Mankato Project and a Mortgagee Policy (Form T-2)
of Title Insurance with respect to the Freeport Project (collectively, the
“Title
Policies”) (with any standard coverage exception reasonably acceptable to
the Lead Arrangers but without a mechanics’ and materialmen’s exception included
therein (except where applicable Governmental Rules prevent the deletion of such
exception), in which case Borrower shall provide such information and
indemnities as are necessary to cause the Title Insurer to issue such
affirmative coverage for mechanics’ and materialmen’s liens as is not precluded
by Governmental Rules in form and substance reasonably satisfactory to the
Lenders, together with such endorsements thereto as are reasonably required by
the Lead Arrangers and otherwise available in the applicable state (including
affirmative coverage in the Mankato Project Title Policy insuring that the NSP:
Subordinated Mortgage is subordinate to the MEC Mortgage), or the unconditional
and irrevocable commitment of the Title Insurer to issue such policies, dated as
of the Restatement Date, in an amount equal to $139,130,500 for the Freeport
Project and $140,563,000 for the Mankato Project (with such reinsurance as is
reasonably satisfactory to the Lead Arrangers) issued by the applicable Title
Insurer in form and substance satisfactory to the Lead Arrangers, insuring (or
agreeing to insure), among other things, that:

     

    (a)   FEC has good and
indefeasible right to occupy and use the FEC Site and the FEC Easements as
lessee and easement holder, in each case free and clear of all Liens and
exceptions to title whatsoever, other than (i) the Title Exceptions, and
(ii) Permitted Liens described in clauses (a) and (b) of the definition
thereof and such Liens or other exceptions to title as are reasonably
satisfactory to the Administrative Agent;

     

    (b)   MEC has a good, marketable
and insurable (i) fee simple interest in the MEC Site, and
(ii) easement interest in the MEC Easements, in each case free and clear of
Liens or other exceptions to title, other than (A) the Title Exceptions,
and (B) such Liens or other exceptions to title as are reasonably
satisfactory to the Administrative Agent;

     

    (c)   the FEC Deed of Trust is a
valid first lien on FEC’s leasehold interest in the FEC Mortgaged Property, free
and clear of all Liens and exceptions to title whatsoever, other than
(i) the Title Exceptions, and (ii) such Liens or other exceptions to
title as are reasonably satisfactory to the Administrative Agent;
and

    
      
         

      

      
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    (d)   the MEC Mortgage is a valid
first lien on MEC’s interest in the MEC Mortgaged Property, free and clear of
all Liens and exceptions to title whatsoever, other than (i) the Title
Exceptions, and (ii) Permitted Liens described in clauses (a) and (b) of
the definition thereof and such Liens or other exceptions to title as are
reasonably satisfactory to the Administrative Agent.

     

    3.1.19   Representations and
Warranties.  Each representation and warranty of each Borrower
Party and each other Calpine Entity under the Credit Documents shall be true and
correct as of the Restatement Date, except to the extent that such
representations and warranties are stated to be made as of a specific date, in
which case they shall be true and correct as of such date.

     

    3.1.20   No Default.  No
Event of Default or Inchoate Default shall have occurred and be continuing as of
the Restatement Date.

     

    3.1.21   PPA Security
Fund.  The Security Fund shall have been provided to NSP in
compliance with all applicable requirements under the Power Purchase Agreement
and shall be in full force and effect.

     

    3.1.22   Notice to
NSP.  Borrower shall have certified to the Lead Arrangers (in
form and substance reasonably satisfactory to the Lead Arrangers) that all
notices required to be given by MEC under the Power Purchase Agreement in
connection with this Agreement and the transactions contemplated hereby have
been delivered.

     

    3.1.23   Account
Balances.  All of the amounts on deposit (i) in the FEC and MEC
revenue accounts existing prior to the Restatement Date shall be transferred to
the Revenue Account, (ii) in the FEC and MEC operation and maintenance accounts
existing prior to the Restatement Date shall be transferred to the applicable
O&M Account, and (iii) in the FEC and MEC major maintenance reserve accounts
existing prior to the Restatement Date shall be transferred to the applicable
Major Maintenance Reserve Accounts.

     

    3.1.24   Amendment
Agreement.  The Amendment Agreement shall have been duly
executed and delivered by each of the parties thereto, and shall be
unconditionally effective.

     

    3.1.25   Conversion of FEC to
LLC.  Immediately prior to or on the Restatement Date, each of
the actions set forth on Exhibit M (such
actions collectively, the “Reorganization”)
shall have been consummated.

     

    3.1.26   Notice of
Borrowing.  Borrower shall have delivered the Notice of
Borrowing to Administrative Agent in accordance with the procedure specified in
Section 2.1.1(d).

     

    3.2    Conditions
Precedent to the Issuance, Renewal, Extension, or Increase in the amount of
Letters of Credit.  The
obligation of any LC Issuer to issue, renew, extend or increase the amount of a
Letter of Credit, is subject to the prior satisfaction (or

     

    
      
         

      

      
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    written
waiver by Administrative Agent with the consent of the Required Lenders) of each
of the following conditions:

     

    3.2.1   Representations and
Warranties.  Each representation and warranty made by or on
behalf of Borrower and each Benefiting Project Company in any of the Credit
Documents (other than representations and warranties relating solely to a
Project Company which is not a Benefiting Project Company, it being understood
that each Project Company is a Benefiting Project Company with respect to the
DSR LC Loan) shall be true and correct in all material respects as if made on
the date of such Credit Event, unless such representation or warranty expressly
relates solely to an earlier date.

     

    3.2.2   No Default.  No
Event of Default or Inchoate Default shall have occurred and be continuing or
will result from such Credit Event.

     

    3.2.3   No Material Adverse
Change.  Since the Restatement Date, no Material Adverse Change
shall have occurred and be continuing.

     

    3.2.4   Notice of LC
Activity.  Borrower shall have delivered a Notice of LC
Activity to Administrative Agent in accordance with the procedures specified in
Section 2.2.4

     

    ARTICLE
4

     

    REPRESENTATIONS
AND WARRANTIES

     

    Borrower
makes the following representations and warranties on behalf of each Borrower
Party to and in favor of the Secured Parties as of the Restatement Date (unless
such representation and warranty expressly relates solely to another time) and,
to the extent set forth in Article 3, as of the date of each Credit Event
(unless such representation and warranty is stated to be made as of a specific
date):

     

    4.1    Organization.

     

    4.1.1     Borrower
is (a) a limited liability company duly formed, validly existing and in
good standing under the laws of the State of Delaware, and (b) is duly
qualified as a foreign limited liability company, and is in good standing, in
each other jurisdiction in which such qualification is required by law, except
where the failure to so qualify or be in good standing could not reasonably be
expected to have a Material Adverse Effect.  Borrower has all
requisite limited liability company power and authority to (i) own or hold
under lease and operate the property it purports to own or hold under lease,
(ii) carry on its business as now being conducted and as now proposed to be
conducted in respect of the Projects, (iii) execute, deliver and perform
each Operative Document to which it is a party, and (iv) take each action
as may be necessary to consummate the transactions contemplated
thereunder.

     

    4.1.2   (a) The
capital of Borrower is adequate for the business and undertakings of Borrower;
(b) except to the extent provided in the Depositary Agreement, Borrower’s
funds and assets are not, and will not be, commingled with those of any other
entity (for the avoidance of doubt, the parties hereto acknowledge that (i) the
NERC identification for the Mankato Project

    
      
         

      

      
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    is in the
name of the Sponsor, and (ii) the NERC identification and the general operating
permits for the Freeport Project are in the name of Dow); (c) the Governing
Documents of Borrower require it to maintain proper books of account and minutes
of meetings and other proceedings of its directors; and (d) Borrower has
not entered into any transactions or conducted any business unrelated to the
transactions contemplated by the Operative Documents.

     

    4.1.3   Immediately
after the completion of the Reorganization, FEC will be (a) a limited
liability company duly formed, validly existing and in good standing under the
laws of the State of Delaware, and (b) duly qualified as a foreign limited
liability company, and is in good standing, in each jurisdiction in which such
qualification is required by law, except where the failure to so qualify or be
in good standing could not reasonably be expected to have a Material Adverse
Effect.  Immediately after the completion of the Reorganization, FEC
will have all requisite limited liability company power and authority to
(i) own or hold under lease and operate the property it purports to own or
hold under lease, (ii) carry on its business as now being conducted and as
now proposed to be conducted in respect of the Freeport Project,
(iii) execute, deliver and perform each Operative Document to which it is a
party, and (iv) take each action as may be necessary to consummate the
transactions contemplated thereunder.  Immediately after the
completion of the Reorganization, FEC will be directly wholly-owned by
Borrower.

     

    4.1.4   MEC is
(a) a limited liability company duly formed, validly existing and in good
standing under the laws of the State of Delaware, and (b) is duly qualified
as a foreign limited liability company, and is in good standing, in each
jurisdiction in which such qualification is required by law, except where the
failure to so qualify or be in good standing could not reasonably be expected to
have a Material Adverse Effect.  MEC has all requisite limited
liability company power and authority to (i) own or hold under lease and
operate the property it purports to own or hold under lease, (ii) carry on
its business as now being conducted and as now proposed to be conducted in
respect of the Mankato Project, (iii) execute, deliver and perform each
Operative Document to which it is a party, and (iv) take each action as may
be necessary to consummate the transactions contemplated
thereunder.  MEC is directly wholly-owned by Borrower.

     

    4.2    Authorization; No
Conflict.

     

    4.2.1   Borrower
has duly authorized, executed and delivered each Operative Document to which
Borrower is a party (or such Operative Documents have been duly and validly
assigned to Borrower and Borrower has authorized the assumption thereof, and has
assumed the obligations of the assignor thereunder) and neither Borrower’s
execution and delivery thereof nor its consummation of the transactions
contemplated thereby nor its compliance with the terms thereof (a) does or
will contravene in any material respect any of its Governing Documents, (b) does
or will contravene any Legal Requirement applicable to or binding on Borrower or
any of its properties which could reasonably be expected to have a Material
Adverse Effect, (c) does or will contravene in any material respect or
result in any material breach of or constitute any material default under, or
result in or require the creation of any Lien (other than Permitted Liens) upon
any of its property under, any material agreement or instrument to which it is a
party or by which it or any of its properties may be bound or
affected,

    
      
         

      

      
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    or
(d) does or will require any material consent or approval of any Person,
and with respect to any Governmental Authority, does or will require any
material registration with, or notice to, or any other action of, with or by any
applicable Governmental Authority, in each case which has not already been
obtained and disclosed in writing to Administrative Agent (except (i) any
Permits that are not yet Applicable Permits, (ii) such as are required by
securities, regulatory or applicable law in connection with an exercise of
remedies, (iii) as set forth on Exhibit G-1 and
the filing of any required continuation statements in respect thereof or (iv)
otherwise provided in Section 4.9).

     

    4.2.2   FEC has
duly authorized, executed and delivered each Operative Document to which FEC is
a party and neither FEC’s execution and delivery thereof nor its consummation of
the transactions contemplated thereby nor its compliance with the terms thereof
(a) does or will contravene in any material respect any of its Governing
Documents, (b) does or will contravene any Legal Requirement applicable to or
binding on FEC or any of its properties which could reasonably be expected to
have a Material Adverse Effect, (c) does or will contravene in any material
respect or result in any material breach of or constitute any material default
under, or result in or require the creation of any Lien (other than Permitted
Liens) upon any of its property under, any material agreement or instrument to
which it is a party or by which it or any of its properties may be bound or
affected, or (d) does or will require the consent or approval of any
Person, and with respect to any Governmental Authority, does or will require any
registration with, or notice to, or any other action of, with or by any
applicable Governmental Authority, in each case which has not already been
obtained and disclosed in writing to Administrative Agent (except (i) any
Permits that are not yet Applicable Permits, (ii) such as are required by
securities, regulatory or applicable law in connection with an exercise of
remedies, (iii) as set forth on Exhibit G-1 and
the filing of any required continuation statements in respect thereof or (iv)
otherwise provided in Section 4.9).

     

    4.2.3   MEC has
duly authorized, executed and delivered each Operative Document to which MEC is
a party (or such Operative Documents have been duly and validly assigned to MEC
and MEC has authorized the assumption thereof, and has assumed the obligations
of the assignor thereunder) and neither MEC’s execution and delivery thereof nor
its consummation of the transactions contemplated thereby nor its compliance
with the terms thereof (a) does or will contravene in any material respect
any of its Governing Documents, (b) any Legal Requirement applicable to or
binding on MEC or any of its properties which could reasonably be expected to
have a Material Adverse Effect, (c) does or will contravene in any material
respect or result in any material breach of or constitute any material default
under, or result in or require the creation of any Lien (other than Permitted
Liens) upon any of its property under, any material agreement or instrument to
which it is a party or by which it or any of its properties may be bound or
affected, or (d) does or will require the consent or approval of any
Person, and with respect to any Governmental Authority, does or will require any
registration with, or notice to, or any other action of, with or by any
applicable Governmental Authority, in each case which has not already been
obtained and disclosed in writing to Administrative Agent (except (i) any
Permits that are not yet Applicable Permits, (ii) such as are required by
securities, regulatory or applicable law in connection with an exercise of
remedies, (iii) as set forth on

     

    
      
         

      

      
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    Exhibit G-1 and
the filing of any required continuation statements in respect thereof or (iv)
otherwise provided in Section 4.9).

     

    4.3    Enforceability.

     

    4.3.1   Each of
the Operative Documents to which Borrower is a party is a legal, valid and
binding obligation of Borrower, enforceable against Borrower in accordance with
its terms, except to the extent that enforceability may be limited by (a)
applicable bankruptcy, insolvency, moratorium, reorganization or other similar
laws affecting the enforcement of creditors’ rights, (b) the effect of general
equitable principles (regardless of whether such enforceability is considered in
a proceeding in equity or at law) or (c) implied covenants of good faith and
fair dealing.

     

    4.3.2   Each of
the Operative Documents to which FEC is a party is a legal, valid and binding
obligation of FEC, enforceable against FEC in accordance with its terms, except
to the extent that enforceability may be limited by (a) applicable bankruptcy,
insolvency, moratorium, reorganization or other similar laws affecting the
enforcement of creditors’ rights, (b) the effect of general equitable principles
(regardless of whether such enforceability is considered in a proceeding in
equity or at law) or (c) implied covenants of good faith and fair
dealing.

     

    4.3.3   Each of
the Operative Documents to which MEC is a party is a legal, valid and binding
obligation of MEC, enforceable against MEC in accordance with its terms, except
to the extent that enforceability may be limited by (a) applicable bankruptcy,
insolvency, moratorium, reorganization or other similar laws affecting the
enforcement of creditors’ rights, (b) the effect of general equitable principles
(regardless of whether such enforceability is considered in a proceeding in
equity or at law) or (c) implied covenants of good faith and fair
dealing.

     

    4.4    Compliance with
Law.  Except
as otherwise have been delivered to Administrative Agent or set forth on Exhibit G-5, (a)
there are no material violations by any Borrower Party of any currently
applicable Legal Requirement (except any Hazardous Substance Laws), and (b) no
notices of any material violation of any currently applicable Legal Requirement
(except any Hazardous Substance Laws) relating to a Project or a Site have been
issued, entered or received by any Borrower Party.

     

    4.5    Business,
Contracts, Joint Ventures Etc.

     

    4.5.1   Borrower
has not conducted any business other than the business contemplated by the
Operative Documents, and Borrower is not a party to or bound by any material
contract other than the Operative Documents to which it is a party.

     

    4.5.2   Borrower
is not a general partner or a limited partner in any general or limited
partnership or a joint venturer in any joint venture other than the sole member
of MEC.

     

    
      
         

      

      
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    4.5.3   Borrower
does not have any Subsidiaries other than FEC and MEC (and prior to the
Reorganization, Calpine Freeport GP, LLC and Calpine Freeport LP,
LLC).

     

    4.5.4   FEC has
not conducted any business other than the business contemplated by the Operative
Documents, and FEC is not a party to or bound by any material contract other
than the Operative Documents to which it is a party and its
Permits.

     

    4.5.5   FEC is
not a general partner or a limited partner in any general or limited partnership
or a joint venturer in any joint venture.

     

    4.5.6   FEC
does not have any Subsidiaries.

     

    4.5.7   MEC has
not conducted any business other than the business contemplated by the Operative
Documents, and MEC is not a party to or bound by any material contract other
than the Operative Documents to which it is a party and its
Permits.

     

    4.5.8   MEC is
not a general partner or a limited partner in any general or limited partnership
or a joint venturer in any joint venture.

     

    4.5.9   MEC
does not have any Subsidiaries.

     

    4.5.10   No
Borrower Party has any deposit or other accounts other than as created under the
Depositary Agreement, the MEC Checking Account and the FEC Checking
Account.

     

    4.6    Adverse
Change.  Since
June 30, 2009, there has occurred no event or circumstance which could
reasonably be expected to have a Material Adverse Effect.

     

    4.7    Investment
Company Act.  None
of the Borrower Parties is an investment company or a company controlled by an
investment company, within the meaning of the Investment Company Act of 1940, as
amended.

     

    4.8    ERISA.  As
of the Restatement Date, (a) each ERISA Plan has been administered in material
compliance with all applicable provisions and requirements of ERISA and the Code
and the regulations and published interpretations thereunder; and (b) no ERISA
Event has occurred that would subject any Borrower Party to any tax, penalty or
other liabilities, which tax, penalty or other liabilities are individually or
in the aggregate in excess of $1,000,000.  The excess of the present
value of all benefit liabilities under each ERISA Plan (based on those
assumptions used to fund such ERISA Plan), as of the last annual valuation date
applicable thereto for which a valuation is available, over the value of the
assets of such Plan could not reasonably be expected to have a Material Adverse
Effect, and the excess of the present value of all benefit liabilities of all
underfunded ERISA Plans (based on those assumptions used to fund each such ERISA
Plan) as of the last annual valuation dates applicable thereto for which
valuations are available, over the value of the assets of all such underfunded
ERISA Plans could not reasonably be expected to have a Material Adverse
Effect.

     

    4.9    Permits.

    
      
         

      

      
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    4.9.1 As of the Restatement
Date, there are no material Permits under existing Legal Requirements as either
Project is currently designed that are or will become Applicable Permits other
than the Permits listed in Exhibit G-1.

     

    4.9.2 Except as disclosed in
Exhibit G-1 (as
such Exhibit may be supplemented by Borrower Parties to reflect any Change of
Law or the issuance or modification of any Permit after the Restatement Date),
each Permit listed in Part I of Exhibit G-1 and
required to be obtained by a Borrower Party is in full force and effect in all
material respects and is not subject to any current legal proceeding or to any
Unsatisfied Condition that could reasonably be expected to have a Material
Adverse Effect, and all applicable appeal periods with respect thereto have
expired.  To the knowledge of the Borrower Parties, except as
disclosed in Exhibit G-1, each Permit listed in Part I of Exhibit G-1 and
required to be obtained by Dow is in full force and effect in all material
respects and is not subject to any current legal proceeding or to any
Unsatisfied Condition that could reasonably be expected to have a Material
Adverse Effect, and all applicable appeal periods with respect thereto have
expired.

     

    4.9.3  Each Permit
listed in Part II of Exhibit G-1 is
of a type that is routinely granted upon submission of a timely application and
demonstration that the applicable Project complies with applicable standards and
Legal Requirements.  No Permit listed in Part II is required
under applicable Legal Requirements or Project Documents to be obtained before
the time contemplated to be obtained by the applicable Borrower Party or
Dow.  No fact or circumstance exists, to any Borrower Party’s
knowledge, which makes it likely that any Permit identified in Part II of
Exhibit G-1
shall not be timely obtainable by the applicable Borrower Party or Dow before it
becomes an Applicable Permit without expense in excess of amounts provided
therefor in the then-current Annual Operating Budget.

     

    4.9.4 Each Borrower Party and,
to the knowledge of the Borrower Parties, Dow is in compliance with all
Applicable Permits except to the extent such noncompliance could not reasonably
be expected to have a Material Adverse Effect.

     

    4.10    Hazardous
Substances.

     

    4.10.1   Except
as set forth in Exhibit G-5:  After
giving effect to the environmental indemnity provided by Dow under Section
17.2.2 of the FEC Ground Lease and Dow’s curative actions performed under
Section 17.3.2 of the FEC Ground Lease, (a) no Project Company has received, in
the past five years, any written notice from any Governmental Authority that,
with respect to the Sites, Improvements, other FEC Mortgaged Property or other
MEC Mortgaged Property, it is or has in the past been in violation of any
Hazardous Substance Law which violation could reasonably be expected to result
in a material liability to any Borrower Party or its properties and assets under
any Hazardous Substance Law, (b) no Project Company or, to Borrower’s
knowledge, any other Person has used, Released, generated, manufactured,
produced or stored in, on, under, or about the Sites, Improvements, other FEC
Mortgaged Property or other MEC Mortgaged Property, or transported thereto or
therefrom, any Hazardous Substances that could reasonably be expected to subject
any Secured Party or any Borrower Party to material liability
under any Hazardous Substance Law, (c) to Borrower’s

    
      
         

      

      
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    knowledge,
there are no underground tanks, whether operative or temporarily or permanently
closed, located on the Sites, Improvements, other FEC Mortgaged Property or
other MEC Mortgaged Property that could reasonably be expected to subject any
Secured Party or Borrower to material liability under any Hazardous Substances
Laws, (d) no Project Company is conducting or funding any investigation,
remediation, remedial action or cleanup of any Hazardous Substance, and
(e) there is no condition, circumstance, action, activity or event that
could reasonably be expected to be, or result in, a material violation by any
Borrower Party of any Hazardous Substance Law, which violation could reasonably
be expected to result in material liability to any Borrower Party under any
Hazardous Substance Law.

     

    4.10.2   Except
as set forth on Exhibit G-4 or
Exhibit G-5 and
after giving effect to the environmental indemnity provided by Dow under Section
17.2.2 of the FEC Ground Lease and Dow’s curative actions performed under
Section 17.3.2 of the FEC Ground Lease, (a) as of the Restatement Date,
there is no pending or, to Borrower’s knowledge, threatened in writing, action
or proceeding by any Governmental Authority (including the Minnesota Public
Utilities Commission, Blue Earth County, Minnesota, Brazoria County, Texas, U.S.
Army Corps of Engineers and U.S. Environmental
Protection Agency) or any other Person which is not a Governmental Authority
with respect to the presence or Release of Hazardous Substances in, on, from or
to the Sites, Improvements, other FEC Mortgaged Property or other MEC Mortgaged
Property, in each case that could reasonably give rise to a material liability
under any Hazardous Substance Law, and, (b) thereafter, there is no pending
or, to Borrower’s knowledge, threatened in writing, action or proceeding by any
Governmental Authority (including the Minnesota Public Utilities Commission,
Blue Earth County, Minnesota, Brazoria County, Texas, U.S. Army Corps of
Engineers and U.S.
Environmental Protection Agency) or any non-governmental third party with
respect to the presence or Release of Hazardous Substances in, on, from or to
the Sites, Improvements, other FEC Mortgaged Property or other MEC Mortgaged
Property which could reasonably be expected to have a Material Adverse
Effect.

     

    4.10.3   Except
as set forth in the Environmental Reports and after giving effect to the
environmental indemnity provided by Dow under Section 17.2.2 of the FEC Ground
Lease and Dow’s curative actions performed under Section 17.3.2 of the FEC
Ground Lease, to Borrower’s knowledge, in the past five years there have been no
violations that have not been finally resolved of any Hazardous Substances Laws
by any Person affecting the Sites, Improvements,  other FEC Mortgaged
Property or other MEC Mortgaged Property, which violations could reasonably be
expected to result in a material liability to any Borrower Party.

     

    4.11    Litigation.

     

    (a)
Except as set forth on Exhibit G-4, as
of the Restatement Date, no action, suit, proceeding or investigation has been
instituted or, to Borrower’s knowledge, threatened in writing against any
Borrower Party.

     

    (b)
Except as set forth on Exhibit G-4,
Borrower has no knowledge of any order, judgment or decree that has been issued
or proposed to be issued by any Governmental Authority that, as a result of the
leasing, ownership, operation or maintenance of a Project by any
Borrower

    
      
         

      

      
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    Party,
the sale of electricity or steam therefrom by any Borrower Party or the entering
into of any Operative Document or any transaction contemplated hereby or
thereby, could reasonably be expected to cause or deem the Lenders,
Administrative Agent, Collateral Agent, the LC Issuers, the Lead Arrangers or
any Borrower Party or any Affiliate of any of them to be subject to, or not
exempted from, regulation under PUHCA, or treated as a public utility under the
laws of the State of Texas (in the case of the Freeport Project) or Minnesota
(in the case of the Mankato Project) as presently constituted and as construed
by the courts of Texas or Minnesota, as applicable, respecting the rates or the
financial or organizational regulation of electric utilities.

     

    (c)  As
of the date of each Credit Event occurring after the Restatement Date, no
action, suit, proceeding or investigation has been instituted or, to Borrower’s
knowledge, threatened in writing against any Borrower Party, which could
reasonably be expected to have a Material Adverse Effect and which have not been
disclosed by Borrower Parties to Administrative Agent in accordance with, and to
the extent required by, Section 5.4.

     

    4.12    Labor Disputes
and Acts of God.  Neither
the business nor the properties of any Borrower Party are currently affected by
any fire, explosion, accident, strike, lockout or other labor dispute, drought,
storm, hail, earthquake, embargo, act of God or of the public enemy, or other
casualty (whether or not covered by insurance), which could reasonably be
expected to have a Material Adverse Effect.

     

    4.13    Project
Documents.  As
of the Restatement Date, copies of all of the Major Project Documents and Major
Equipment Contracts executed on or prior to such date have been delivered to
Administrative Agent.

     

    4.14    Disclosure.  Neither
this Agreement nor any certificate or other documentation (other than the Annual
Operating Budgets or the Base Case Project Projections) furnished or verified by
a Borrower Party to the Lead Arrangers, Administrative Agent, Collateral Agent,
or the Lenders, or to any consultant submitting a report to Administrative
Agent, the Lead Arrangers or the Lenders, by or, to Borrower’s knowledge, on
behalf of any Borrower Party with respect to the Projects, the Borrower Parties
or in connection with the transactions contemplated by this Agreement or the
other Credit Documents, contained (at the time of delivery or verification
thereof) any untrue statement of a material fact or omitted (at the time of
delivery or verification thereof) to state a material fact necessary in order to
make the statements contained herein or therein not misleading under the
circumstances in which they were made at the time such statements were made
(other than any information that was corrected or updated in writing to the Lead
Arrangers prior to the Restatement Date).

     

    4.15    Taxes.

     

    (a)   Each Borrower Party has
timely filed, or caused to be timely filed, all federal and other material tax
returns and reports required to have been filed by it, has paid all material
taxes, assessments, utility charges, fees and other governmental charges it is
required to pay to the extent due (other than those taxes that it is contesting
in good faith and by appropriate proceedings in accordance with the requirements
of Section 5.16).  As of the Restatement Date

    
      
         

      

      
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    and
except as set forth on Exhibit G-7, there is
no proposed tax assessment against any Borrower Party proposed to any Borrower
Party in writing or, to any Borrower Party’s knowledge, threatened, which could
reasonably be expected to have a Material Adverse Effect (other than those
proposed tax assessments that any Borrower Party is contesting in good faith and
by appropriate proceedings in accordance with the requirements of
Section 5.16).

     

    (b)   At all times since its
formation, each Borrower Party has been an entity with a single owner (with the
exception of FEC, which prior to the completion of the Reorganization, had two
owners) that is disregarded as separate from its owner for U.S. federal tax
purposes.  No Form 8832 has ever been filed with respect to any
Borrower Party as other than a disregarded entity and no such election shall
have been made.

     

    (c)   No Borrower Party has
liability for the taxes of any Person (other than such Borrower Party)
(i) under Treasury Regulations Section 1.1502-6 (or any similar
provision of state, local or foreign law), (ii) as a transferee or
successor, (iii) by contract, or (iv) otherwise.

     

    (d)   No Borrower Party intends to
treat the Loans (including the incurrence thereof) as being a “reportable
transaction” (within the meaning of Treasury Regulation
Section 1.6011-4).

     

    4.16    Governmental
Regulation.  None of Borrower Parties, Administrative Agent,
Collateral Agent, or any Lender, nor any Affiliate of any of them will, solely
as a result of the ownership, leasing or
operation of the Projects, the sale of electricity, steam, capacity or ancillary
services therefrom or the entering into any Operative Document in respect of the
Projects or any transaction contemplated hereby or thereby, be subject to, or
not exempt from, regulation under the FPA or PUHCA or under state laws and
regulations respecting the rates or the financial or organizational regulation
of electric utilities, except that (a)
Borrower is subject to the compliance requirements under PUHCA applicable to
entities that are holding companies solely with respect to Exempt Wholesale
Generators and Qualifying Facilities, (b) MEC is subject to the compliance requirements under PUHCA applicable to an Exempt Wholesale Generator
and an owner of an Eligible
Facility, (c) each of MEC and CES is a
“public utility” subject to FERC jurisdiction under the FPA with authority to
sell wholesale electric power, capacity and ancillary services at market-based
rates, and with all waivers of regulations and blanket authorizations as are
customarily granted by FERC to a “public utility” that sells wholesale electric
power, capacity and ancillary services at market-based rates, (d) FEC is
subject to the requirements under PURPA and the regulations of FERC promulgated
thereunder, as amended from time to time, necessary to be a Qualifying Facility,
(e) FEC is subject to state laws and regulations respecting the rates or
the financial or organizational regulation of electric utilities to the extent
contemplated by 18 C.F.R. § 292.602(c), and (f) the exercise of
remedies, as provided for under the Collateral Documents, with respect to MEC
and the Mankato Project may be subject to Section 203 and 205 of the FPA
and the requirements under PUHCA applicable to Exempt Wholesale
Generators.  Except to the extent provided in the first sentence of
this Section 4.16, no Borrower Party will be deemed by any Governmental
Authority having jurisdiction to be subject to, or not exempt from, financial,
organizational or rate regulation as an “electric utility”, “electric
corporation”, “electrical company”, “public utility”, “holding

    
      
         

      

      
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    company”,
or “public utility holding company” or any similar Person under any applicable
Governmental Rule then in effect.

     

    4.17    Regulation U,
Etc.  No
Borrower Party is engaged principally, or as one of its principal activities, in
the business of extending credit for the purpose of “buying”, “carrying” or
“purchasing” margin stock (each as defined in Regulations T, U or X of the
Federal Reserve Board), and no part of the proceeds of the Loans or the Project
Revenues will be used by any Borrower Party for the purpose of “buying”,
“carrying” or “purchasing” any such margin stock or for any other purpose which
violates the provisions of the regulations of the Federal Reserve
Board.

     

    4.18    Projections.  Borrower
has prepared the Annual Operating Budgets and the Base Case Project Projections
and is responsible for developing the assumptions on which such Annual Operating
Budgets and the Base Case Project Projections are based; and such Annual
Operating Budgets and the Base Case Project Projections (a) as of the date
delivered, updated or supplemented are based on reasonable assumptions
(including as to all legal and factual matters material to the estimates set
forth therein), and (b) as of the date delivered, updated or supplemented
are consistent in all material respects with the provisions of the Project
Documents executed on or prior to such date  (it being understood that
such Annual Operating Budgets and the Base Case Project Projections are subject
to significant uncertainties and contingencies, many of which are beyond the
control of the Borrower Parties, and the Borrower Parties make no representation
or warranty as to the attainability of such Annual Operating Budgets and the
Base Case Project Projections or as to whether such Annual Operating Budgets and
the Base Case Project Projections will be achieved).

     

    4.19    Financial
Statements.  In
the case of each financial statement of Borrower and accompanying information
delivered by Borrower under (a) Section 3.1.14, each such financial statement
and information has been prepared in conformity with GAAP and fairly presents,
in all material respects, the financial position of each applicable Borrower
Party described therein for each of the periods then ended, subject, if
applicable, in the case of any such unaudited financial statements, to changes
resulting from audit and normal year-end adjustments and the absence of footnote
disclosure, and (b) Section 5.5, each such financial statement and information
has been prepared in conformity with GAAP and fairly presents, in all material
respects, the financial position of (on a consolidated basis) of Borrower and
its Subsidiaries, taken as a whole, described therein for each of the periods
then ended, subject, if applicable, in the case of any such unaudited financial
statements, to changes resulting from audit and normal year-end adjustments and
the absence of footnote disclosure.  Except for (i) obligations under
the Operative Documents to which it is a party and (ii) liabilities that have
been disclosed in writing to Administrative Agent within 60 days prior to the
Restatement Date (including in Exhibits to this Agreement and in the contracts
entered into by any Borrower Party and delivered or made available to
Administrative Agent prior to the Restatement Date), each Borrower Party does
not have any contingent obligations, unmatured liabilities, contingent liability
or liability for taxes, long-term lease or forward or long-term commitment
required to be shown under GAAP or Debt for borrowed money that is not reflected
in the foregoing financial statements or the notes thereto and which in any such
case is material in relation to the business,

    
      
         

      

      
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    results
of operations, properties, financial condition or prospects of Borrower and its
Subsidiaries, taken as a whole.

     

    4.20    No
Default.  No
Event of Default or Inchoate Default which has not been disclosed to
Administrative Agent in writing has occurred and is continuing.

     

    4.21    Organizational ID
Number; Location of Collateral.

     

    4.21.1   (a) Borrower’s
organizational identification number is 3899075;  (b) FEC’s
organizational identification number is 3754988; and (c) MEC’s
organizational identification number is 3861873.

     

    4.21.2   To
Borrower’s knowledge, all of the Collateral (other than (a) inventory and
equipment (i) in transit, (ii) in the possession of the Operator or Dow or (iii)
in the possession of third parties in the ordinary course of business, (b) the
Accounts, (c) the membership interests in any Borrower Party, and (d) general
intangibles) is located on the Sites or the Easements or at the applicable
Borrower Party’s address set forth in Section 11.1; provided that
equipment owned by Borrower may be located at other sites as indicated in
writing to Collateral Agent, who shall have the right to inspect such equipment
from time to time.

     

    4.22    Title and
Liens.  Borrower
has good, legal and valid title to the Collateral in which it grants Collateral
Agent a Lien.  FEC has good and indefeasible title to all of its
material Collateral in which it grants Collateral Agent a Lien and a valid and
enforceable leasehold interest in the FEC Site and its interest in the
Easements, in each case free and clear of all Liens, encumbrances or other
exceptions to title other than Permitted Liens.  MEC has good,
marketable and insurable fee simple interest in all of its material Collateral
in which it grants Collateral Agent a Lien, in each case free and clear of all
Liens, encumbrances or other exceptions to title other than Permitted
Liens.

     

    4.23    Intellectual
Property.  Except
as disclosed in Exhibit G-8:

     

    (a)   To Borrower’s knowledge,
each Borrower Party owns, possesses or has entered into contracts with others
who possess all licenses, permits, franchises, authorizations, patents,
copyrights, service marks, trademarks and trade names, or rights thereto, that
are necessary for the operation of its business, without known conflict with the
rights of others, in each case, as to which the failure of such Borrower Party
to so own, possess or have the right to use could reasonably be expected to have
a Material Adverse Effect.

     

    (b)   To Borrower’s knowledge, no
material product of any Borrower Party infringes in any material respect any
license, permit, franchise, authorization, patent, copyright, service mark,
trademark, trade name or other right owned by any other Person.

     

    (c)   To Borrower’s knowledge,
there is no violation by any Person of any right of any Borrower Party with
respect to any patent, copyright, service mark, trademark, trade name or other
right owned or used by any Borrower Party, in each case, as to which such
violation could reasonably be expected to have a Material Adverse
Effect.

    
      
         

      

      
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    4.24    Collateral.  The respective liens and security interests granted to
Collateral Agent (for the benefit of the Secured Parties) pursuant to the
Collateral Documents (a) constitute as
to personal property included in the Collateral a valid security interest, and
(b) constitute as to the FEC Mortgaged Property and the MEC Mortgaged
Property included in the Collateral a valid
lien of record and security interest in the FEC Mortgaged Property and the MEC
Mortgaged Property, respectively.  The security interest granted to
Collateral Agent (for the benefit of the Secured Parties) pursuant to the
Collateral Documents in the Collateral consisting of personal property
will be perfected (i) with respect to any property that can
be perfected by filing, upon the filing of
financing statements in the filing offices identified in Exhibit D-2, (ii) with respect to any property that can be
perfected by control, upon execution of the
Control Agreements or the Depositary Agreement, as applicable, and
(iii) with respect to any property (if any) that can be perfected by
possession, upon Collateral Agent receiving possession thereof, and in each case
such security interest will be, as to
Collateral perfected under the UCC or
otherwise as aforesaid and to the extent
provided therein, superior and prior to the rights of all third Persons now
existing or hereafter arising whether by way of mortgage, lien, security
interests, encumbrance, assignment or otherwise, except (i) Permitted Liens
described in clauses (a), (e), (i), (j), (k) and (l)(i) of the definition
of “Permitted Liens”, and (ii) to the extent required by Governmental Rule,
those matters described in clauses (b), (c), (d), (f), (m), (n) and (p) of the
definition of “Permitted
Liens”.  Except to the extent possession of portions of the Collateral
is required for perfection, all such action
as is necessary has been taken to establish and perfect Collateral
Agent’s rights in and to the Collateral in
existence on such date to the extent
Collateral Agent’s security interest can be perfected by filing, including any
recording, filing, registration, giving of notice or other similar
action.  As of the Restatement Date, no filing, recordation, re-filing
or re-recording other than those listed on Exhibit D-2 hereto is necessary to perfect and maintain the
perfection of the interest, title or Liens of the Collateral Documents, and on
the Restatement Date all such filings or recordings will have been made to the
extent Collateral Agent’s security interest can be perfected by
filing.  Each Borrower Party has
properly delivered or caused to be delivered, or provided control, to Collateral
Agent or Depositary Agent with respect to all Collateral that permits perfection
of the Lien and security interest described above by possession or
control.

     

    4.25    Sufficiency of
Project Documents.

     

                             4.25.1 The real property and
other real property rights granted, or to be granted, pursuant to the Project
Documents in effect as of the Restatement Date:

     

              (a)   comprise
all of the real property interests necessary to secure any right material for
the leasing, ownership, operation and maintenance of each Project in accordance
in all material respects with all Legal Requirements;

              (b)   are
sufficient to enable each Project to be located and operated on the applicable
Site;

     

              (c)   provide
adequate ingress and egress to and from (i) each Site for any reasonable purpose
in connection with the leasing, or ownership (as applicable), operation and
maintenance of each Project for the purposes and on the terms set forth
in

    
      
         

      

      
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    the
applicable Major Project Documents, and (ii) the areas encumbered by the
Easements for the purposes and the terms set forth in the
Easements.

     

    4.25.2   There
are no services, materials or rights required for the leasing or ownership (as
applicable), operation and maintenance of either Project in accordance with the
Major Project Documents and the assumptions that form the basis of Base Case
Project Projections, other than those (a) to be provided under the Project
Documents, (b) that are not material to the operation of either Project or (c)
that can reasonably be expected to be commercially available at or for delivery
to the Site on commercially reasonable terms consistent with the then current
Annual Operating Budget and the Base Case Project Projections.

     

    4.25.3   Each
Borrower Party possesses, or the counterparties to the Project Documents
(including the Power Purchase Agreement and the Capacity Sales Agreement)
pursuant to which interconnection facilities are operated for the benefit of
each Project, possess, and are obligated to provide or make available to the
applicable Project Company, all necessary easements, rights of way, licenses,
agreements and other rights for the interconnection and utilization of the
interconnection facilities (including fuel, water, wastewater and
electrical).

     

    4.26    Proper
Subdivision.  The
MEC Site has been subdivided or entitled to exception therefrom.  The
MEC Site may be mortgaged, conveyed and otherwise dealt with as separate legal
lot or parcel.  FEC’s leasehold interest in the FEC Site may be
mortgaged and conveyed.

     

    4.27    Flood Zone
Disclosure.  No
material portion of the Collateral includes Improvements that are or will be
located in an area that has been identified by the Federal Emergency Management
Agency as an area having special flood or mudslide hazards and in which flood
insurance has been made available under the National Flood Insurance Act of
1968, as amended.

     

    4.28    Anti-terrorism
laws.  Neither
Borrower nor any Affiliate of Borrower is in violation of any Anti-Terrorism
Laws.  The use of the proceeds of the Loans by Borrower will not
violate any Anti-Terrorism Laws.

     

    4.29    Solvency.  Immediately
after giving effect to the transactions to occur on the Restatement Date and
immediately following the occurrence of each other Credit Event, (a) the
fair value of the assets of the Borrower Parties (taken as a whole), at a fair
valuation, will exceed the debts and liabilities, direct, subordinated,
contingent or otherwise, of the Borrower Parties, (b) the present fair
saleable value of the property of the Borrower Parties (taken as a whole) will
be greater than the amount that will be required to pay the probable liability
of the Borrower Parties on their debts and other liabilities, direct,
subordinated, contingent or otherwise, as such debts and other liabilities
become absolute and matured, (c) the Borrower Parties (taken as a whole)
will be able to pay their debts and liabilities, direct, subordinated,
contingent or otherwise, as such debts and liabilities become absolute and
matured (after giving effect to any guarantees and credit support), and
(d) the Borrower Parties (taken as a whole) will not have unreasonably
small capital with which to conduct the business in which it is engaged as
such

    
      
         

      

      
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    business
is now conducted and is proposed to be conducted following the Restatement
Date.  For purposes of this Section 4.29, (i) “able to pay its debts
and liabilities, direct, subordinated, contingent or otherwise, as such debts
and liabilities become absolute and matured (after giving effect to any
guarantees and credit support)” means that such Person will be able to generate
enough cash from operations, asset dispositions or refinancings, or a
combination thereof, to meet its obligations as they become due, and (ii) the
amount of contingent liabilities at any time shall be computed as the amount
that, in the light of all the facts and circumstances existing at such time,
represents the amount that can reasonably be expected to become an actual or
matured liability.

     

    ARTICLE
5

     

    AFFIRMATIVE
COVENANTS

     

    Borrower
covenants and agrees that until the repayment in full in cash of all of
Borrower’s Obligations (other than those contingent Obligations that are
intended to survive the termination of this Agreement or the other applicable
Credit Documents), return and cancellation of all Letters of Credit and the
expiration or termination of all Commitments and Interest Rate Agreements to
which any Secured Party is a party, Borrower shall, or as applicable shall cause
the applicable Project Company to:

     

    5.1    Use of Proceeds
and Project Revenues.

     

    5.1.1   Proceeds.  Borrower
shall apply the proceeds of any New Term Loans and Additional Term Loans, (i) as
a distribution to Sponsor or an Affiliate of Sponsor, (ii) to fund the Major
Maintenance Reserve Accounts, (iii) to fund the O&M Account, and (iv) to the
payment of costs, fees and expenses incurred in connection with the transactions
contemplated by the Credit Documents, in each case as set forth in the Funds
Flow Memorandum.

     

    5.1.2   Revenues.  Unless
otherwise applied by Administrative Agent or Collateral Agent pursuant to the
terms of this Agreement or the other Credit Documents, each Borrower Party shall
apply any Project Revenues, equity contributions, Loan proceeds, Insurance
Proceeds, Eminent Domain Proceeds and damage payments solely for the purpose,
and in the order and manner, provided for in the Depositary
Agreement.

     

    5.1.3   Borrower
shall use (a) the Security Fund LC Commitment to issue, or maintain, the
Security Fund LC as contemplated by Section 2.2.2, and (b) the DSR LC Commitment
to issue the DSR Letters of Credit as contemplated by Section
2.2.3.

     

    5.2    Payment.

     

    5.2.1   Credit
Documents.  Borrower shall pay all sums due under this
Agreement and the other Credit Documents to which it is a party according to the
terms hereof and thereof.

     

    5.2.2   Project
Documents.  Each Project Company shall pay all of its
obligations due under the Project Documents, howsoever arising, as and when due
and payable, except any one or more of the following: (a) obligations
contested in good faith or as to which a bona fide

    
      
         

      

      
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    dispute
may exist; provided that
adequate cash reserves have been established in conformity with GAAP, or
Administrative Agent is satisfied in its reasonable discretion that non-payment
of such obligation pending the resolution of such contest or dispute will not in
any way endanger its Project or result in a Material Adverse Change or that
provision is made to the satisfaction of Administrative Agent in its reasonable
discretion for the posting of security (other than the Collateral) for or the
bonding of such obligations or the prompt payment thereof in the event that such
obligation is payable, (b) obligations constituting each Project Company’s
trade payables which shall be paid in the ordinary course of business or
(c) obligations which if not paid could not reasonably be expected to have
a Material Adverse Effect.

     

    5.3    Warranty of
Title.  Except
as permitted pursuant to Sections 6.4 or 11.24, (a) MEC shall maintain
good, marketable and insurable fee simple interest in the MEC Site, (b) FEC
shall maintain good, indefeasible and insurable leasehold interest in the
FEC Site, and (c) MEC shall maintain (i) good, marketable and
insurable easement interest in the MEC Easements, and (ii) good, legal and
valid title to all of its other respective material properties and assets (other
than properties and assets disposed of in the ordinary course of business) and
(d) FEC shall maintain (i) a good, indefeasible and insurable easement
interest in the FEC Easements, and (ii) good, legal and valid title to all
of its other respective material properties and assets (other than properties
and assets disposed of in the ordinary course of business), in each case free
and clear of all Liens other than Permitted Liens.

     

    5.4    Notices.  Each
Borrower Party shall promptly, upon acquiring notice or giving notice (except as
otherwise specified below), as the case may be, or obtaining knowledge thereof,
give written notice (with copies of any underlying notices, papers, files or
related documentation) to Administrative Agent of:

     

    5.4.1   any
litigation pending or, to each Borrower Party’s knowledge, threatened in writing
against any Borrower Party as to which an adverse determination is reasonably
probable and which involves claims against any Borrower Party or either Project
in excess of $500,000 individually or
$1,000,000 in the aggregate per calendar year or which could reasonably be
expected to have a Material Adverse Effect, such notice to include, if requested
in writing by Administrative Agent, copies of all papers filed in such
litigation and to be given monthly if any such papers have been filed since the
last notice given;

     

    5.4.2   any
dispute or disputes for which written notice has been received by any Borrower
Party which may exist between such Borrower Party and any Governmental Authority
and which involve (a) claims against such Borrower Party which exceed
$500,000 individually or $1,000,000 in the aggregate per calendar year,
(b) claims which could reasonably be expected to have a Material Adverse
Effect, or (c) revocation, material modification, failure to renew or the
like of any Applicable Permit;

     

    5.4.3   any
Event of Default or Inchoate Default (together with a statement of a Responsible
Officer of Borrower setting forth the details of such Event of Default or
Inchoate Default and the action which Borrower has taken and proposes to take
with respect thereto other than litigation strategy and related documentation
subject to attorney-client-privilege);

    
      
         

      

      
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    5.4.4   any
casualty, damage or loss to a Project, whether or not insured, through fire,
theft, other hazard or casualty, or any act or omission of (a) any Borrower
Party, its employees, agents, contractors, consultants or representatives in
excess of $500,000 for any one casualty or loss or $1,500,000 in the aggregate
for any Project in any calendar year, or (b) to each Borrower Party’s
knowledge, any other Person if such casualty, damage or loss could reasonably be
expected to have a Material Adverse Effect;

     

    5.4.5   any
early cancellation, suspension or material change in the terms, coverage or
amounts of any insurance described in Exhibit K;

     

    5.4.6   any (a)
early termination (other than expiration in accordance with its terms and any
applicable Consent) or material default of which any Borrower Party has
knowledge or written notice thereof under any Major Project Document, and
(b) material Project Document Modification (with copies of all such Project
Document Modifications whether or not requiring approval of Administrative Agent
or the Super Majority Lenders pursuant to Section 6.12);

     

    5.4.7   any
written claim of material events of force majeure under any Major Project
Document and, to the extent reasonably requested in writing by Administrative
Agent, copies of related invoices or statements which are reasonably available
to such Borrower Party under any Major Project Document, together with a copy of
any supporting documentation, schedule, data or affidavit delivered under such
Major Project Document;

     

    5.4.8   to the
extent not covered by the environmental indemnity provided by Dow under
Section 17.2.2 of the FEC Ground Lease or Dow’s curative actions performed
under Section 17.3.2 of the FEC Ground Lease, any (a) material
noncompliance by any Borrower Party with any Hazardous Substance Law or any
material Release of Hazardous Substances by any Borrower Party on or from the
Sites, Improvements, other FEC Mortgaged Property or other MEC Mortgaged
Property that has resulted or could reasonably be expected to result in personal
injury or material property damage or to have a Material Adverse Effect, or
(b) pending or, to each Borrower Party’s knowledge, threatened in writing,
Environmental Claim against any Borrower Party or, to each Borrower Party’s
knowledge, any of its Affiliates, contractors, lessees or any other Persons,
arising in connection with their occupying or conducting operations on or at a
Project, a Site, the Improvements, other FEC Mortgaged Property or other MEC
Mortgaged Property which, if adversely determined, could reasonably be expected
to have a Material Adverse Effect;

     

    5.4.9   initiation
of any condemnation proceedings involving a material portion of (a) either
Project or (b) either Site;

     

    5.4.10   promptly,
but in no event later than 15 Banking Days after any Borrower Party has
knowledge of the execution and delivery thereof, a copy of each Additional
Project Document;

     

    
      
         

      

      
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    5.4.11   promptly,
but in no event later than 30 days after the receipt thereof by any
Borrower Party, copies of (a) all Applicable Permits obtained by such
Borrower Party after the Restatement Date, (b) any material amendment,
supplement or other material modification to any Applicable Permit received by
any Borrower Party after the Closing Date, and (c) all material notices
relating to either Project received by any Borrower Party from, or delivered by
such Borrower Party to, any Governmental Authority (other than routine
correspondence given or received in the ordinary course of business relating to
routine aspects of owning, financing, operating, maintaining or using any
Project);

     

    5.4.12   any
unscheduled or forced outage of any Project, which continues for more than five
consecutive days;

     

    5.4.13    the
occurrence of any ERISA Event that, individually or together with all other
ERISA Events that have occurred, would result in aggregate liability to Borrower
and its ERISA Affiliates in excess of $5,000,000; and

     

    5.4.14   event
or circumstance specific to any Borrower Party or any Project that is not a
matter of general public knowledge and that could reasonably be expected to have
a Material Adverse Effect.

     

    In
addition, Borrower shall provide, with reasonable promptness, to Administrative
Agent any other information with respect to any Borrower Party or any Project as
is reasonably requested by Administrative Agent or any Lender (which request
shall be made through Administrative Agent).

     

    5.5    Financial
Statements.

     

    5.5.1   Borrower
shall deliver or cause to be delivered to Administrative Agent, except that
where a specified financial statement is publicly available due to the issuer’s
filings with the United States Securities and Exchange Commission, Borrower may
so notify Administrative Agent and the specified financial statement will not be
required to be delivered hereunder:

     

    (a)   as soon as practicable and
in any event within 120 days after the close of each applicable fiscal year
(commencing from fiscal year 2009), the audited consolidated annual financial
statements of Borrower (including its Subsidiaries) and the related statements
of income, cash flow, and shareholders’ or members’ equity (as applicable) for
such fiscal year, setting forth in each case in comparative form corresponding
audited figures from the preceding fiscal year, all prepared in accordance with
GAAP (subject to changes resulting from audit and normal year-end adjustments
and the absence of footnote disclosure); and

     

      
(b)   as soon as practicable and in any event within 90 days
after the end of the first, second and third quarterly accounting periods of its
fiscal year (commencing from the first quarterly accounting period of fiscal
year 2010), the unaudited quarterly consolidated financial statements of
Borrower (including its Subsidiaries).  Such financial statements
shall include the related statements of income, cash flow, and shareholders’ or
members’ equity (as applicable)

    
      
         

      

      
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    for such
quarterly period and (in the case of second and third quarterly periods) for the
portion of fiscal year ending with the last day of such quarterly period,
setting forth in each case in comparative form corresponding unaudited figures
from the preceding fiscal year, all prepared in accordance with GAAP (subject to
changes resulting from audit and normal year-end adjustments and the absence of
footnote disclosure).

     

    5.5.2   Cause
to be delivered, along with such financial statements of Borrower, a certificate
signed by a Responsible Officer of Borrower certifying that (a) to such
Responsible Officer’s knowledge, no Event of Default or Inchoate Default has
occurred and is continuing or, if any Event of Default or Inchoate Default has
occurred and is continuing, the nature thereof and the corrective actions that
such Person has taken or proposes to take with respect thereto (other than
litigation strategy and related documentation subject to attorney-client
privilege), and (b) no material adverse change in the consolidated assets,
liabilities, operations, or financial condition of Borrower has occurred since
the date of the immediately preceding financial statements provided to
Administrative Agent or, if a material adverse change has occurred, the nature
of such change.

     

    5.6    Books, Records,
Access.  Borrower
and each Project Company shall maintain, or cause to be maintained, adequate
books, accounts and records with respect to itself and its Project, as
applicable. Borrower shall prepare all financial statements required hereunder
in accordance with GAAP (subject, in the case of unaudited financial statements,
to changes resulting from audit and normal year-end adjustments and the absence
of footnote disclosure) and in compliance with the regulations of any
Governmental Authority having jurisdiction thereof. Subject to requirements of
Governmental Rules, safety requirements and existing confidentiality
restrictions imposed upon any Borrower Party by any other Person, Borrower and
each Project Company shall permit employees or agents of Administrative Agent
and Independent Engineer at any reasonable times and upon reasonable prior
notice to Borrower, the applicable Project Company, Dow or Operator, as
applicable, to inspect all of Borrower Parties’ properties, including the Sites,
to examine or audit all of Borrower Parties’ books, accounts and records and
make copies and memoranda thereof and to communicate with Borrower Parties’
auditors outside the presence of such Borrower Party.

     

    5.7    Compliance with
Laws, Instruments, Applicable Permits, Etc.  Borrower
and each Project Company shall promptly comply with all Legal Requirements
(including Legal Requirements and Applicable Permits relating to pollution
control, environmental protection, equal employment opportunity and employee
safety) with respect to itself and its Project, as applicable, and make, or
cause to be made, such alterations to its Project and its Site as may be
required for such compliance. Borrower and each Project Company shall be
considered to meet the requirements of this Section 5.7 unless any
non-compliance could, in the aggregate, reasonably be expected to have a
Material Adverse Effect.

     

    5.8    Reports.

     

    5.8.1   Borrower
shall deliver to Administrative Agent within 45 days of the end of each calendar
quarter, a summary operating report with respect to each Project, which
shall

    
      
         

      

      
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    include,
with respect to the period most recently ended, the information set forth on the
Template Operating Report, as further described in the annotations
thereto.

     

    5.8.2   Borrower
shall provide to Administrative Agent promptly upon request such reports,
statements, lists of property, accounts, budgets, forecasts and other
information concerning each Project and, to the extent reasonably available, the
Major Project Participants and at such times as Administrative Agent shall
reasonably require, including such reports and information as are reasonably
required by the Independent Consultants.

     

    5.8.3   The
Borrower shall within 30 days after each annual
policy renewal date, deliver to Administrative Agent a certificate certifying
that the insurance requirements of Exhibit K have been implemented and attaching thereto a copy of
the Borrower's certificates of insurance related thereto, which certificates
shall be reasonably satisfactory to Administrative Agent (it being acknowledged
that Administrative Agent may, after consultation with the Borrower, discuss
with the Insurance Consultant any issues which may arise as part of its review
of such certificates).

     

    5.9    Existence,
Conduct of Business, Properties, Etc.  Except
as otherwise expressly permitted under this Agreement, each Borrower Party shall
(a) maintain and preserve its existence as a Delaware limited liability
company, and all material rights, privileges and franchises necessary in the
normal conduct of its business, (b)  maintain and, in the case of FEC,
cause Dow to maintain, all Applicable Permits, except to the extent that any
such failure to maintain could not reasonably be expected to have a Material
Adverse Effect, and (c) at or before the time that any Permit becomes an
Applicable Permit, obtain such Permit, except to the extent that any such
failure to obtain could not reasonably be expected to have a Material Adverse
Effect.

     

    5.10    Debt Service
Coverage Ratio.  No
later than 45 days after each Principal Repayment Date, Borrower shall calculate
and deliver to Administrative Agent the Debt Service Coverage Ratio for the
Calculation Period for such Principal Repayment Date.  The
calculations of Debt Service Coverage Ratios hereunder shall be used in
determining the application and distribution of funds pursuant to
Section 6.6.1, and Section 3.10 of the Depositary Agreement; provided that for the
fiscal quarters prior to the first anniversary of the date hereof, such Debt
Service Coverage Ratio shall be annualized for each such quarter rather than
calculated for the four consecutive fiscal quarters most recently
ended.

     

    5.11    Lender
Meetings. Borrower will, upon the
request of Administrative Agent or Required Lenders, participate in a meeting of
Administrative Agent and Lenders once during each fiscal year to be held at
Borrower’s corporate offices (or at such other location as may be agreed to by
Borrower and Administrative Agent) at such time as may be agreed to by Borrower
and Administrative Agent.

     

    
      
         

      

      
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    5.12    Operation and
Maintenance of Projects; Annual Operating Budget.

     

    5.12.1   Each
Project Company shall keep, operate and maintain its Project, or cause the same
to be kept, maintained and operated (ordinary wear and tear excepted), in a
manner consistent in all material respects with this Agreement and Prudent
Industry Practices, and make or cause to be made all repairs (structural and
non-structural, extraordinary or ordinary) necessary to keep each Project in
such condition.

     

    5.12.2    On or
before 60 days prior to the beginning of each calendar year, Borrower shall
submit a consolidated operating plan and a consolidated budget for both Project
Companies, detailed by month, of anticipated revenues and anticipated
expenditures under all applicable waterfall levels set forth in Section 3.1(b)
of the Depositary Agreement, and anticipated expenditures from the Major
Maintenance Reserve Accounts, each such budget to include Debt Service, the
projected Debt Service Coverage Ratio, proposed dividend distributions, Major
Maintenance, Capital Expenditures, reserves and all anticipated O&M Costs
(including reasonable allowance for contingencies) for the ensuing calendar year
(or, in the case of the initial Annual Operating Budget, partial calendar year)
and, in the case of Major Maintenance in accordance with Section 5.12.4, to
the conclusion of the second full calendar year thereafter (each such annual
operating plan and budget, including the initial Annual Operating Budget, an
“Annual Operating
Budget”).  Each Annual Operating Budget shall be deemed
approved so long as the aggregate amount of the anticipated aggregate O&M
Costs (other than O&M Costs which are for the supply of fuel to FEC) for
both Projects remains within 110% of the amount proposed to be expended by both
Project Companies for all such items during the applicable calendar year (as
determined by reference to the Base Case Project Projections).  In the
event that such Annual Operating Budget shall not be deemed approved as provided
in the immediately preceding sentence, such Annual Operating Budget shall be
subject to the reasonable approval of Administrative Agent acting in
consultation with the Independent Engineer, such approval not to be unreasonably
withheld or delayed.  Failure by Administrative Agent to approve or
disapprove any such draft Annual Operating Budget within 30 days after
receipt thereof shall be deemed to be an approval by Administrative Agent of
such draft as the final Annual Operating Budget.  Borrower shall
consider in good faith Administrative Agent’s suggestions in preparation of a
final Annual Operating Budget. The O&M Costs in each Annual Operating Budget
which are subject to escalation limitations in the Project Documents shall not,
absent extraordinary circumstances, be increased by more than the amounts
provided in such Project Documents.

     

    5.12.3   The
Project Companies shall operate, or cause to be operated, and maintain the
Projects, within 115% of the aggregate O&M Costs (other than O&M Costs
which are for the supply of fuel to FEC) budgeted therefor as set forth in the
then-current Annual Operating Budget as approved or deemed approved by
Administrative Agent and, if amended pursuant to the proviso below, as set forth
in such amended Annual Operating Budget; provided, however,
that (i) Borrower may propose an amendment to the Annual Operating Budget
for Administrative Agent’s approval if at any time the Project Companies cannot
comply with the provisions of this Section 5.12.3 (and Administrative Agent
shall consider each such amendment in good faith and shall not unreasonably
withhold or delay its consent to the approval of any such amendment), and
(ii) the 115% limitation shall not apply to Emergency Operating Costs to
the extent that, after deducting such Emergency Operating Costs from the
applicable calculation, the 

     

    
      
        
        

      

      
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    Project
Companies otherwise remain in compliance with such 115%
limitation.  Pending approval of any Annual Operating Budget or
amendment thereto in accordance with the terms of this Section 5.12.3, the
Project Companies shall use their commercially reasonable efforts to operate and
maintain the Projects, or cause the Projects to be operated and maintained,
within the then-current Annual Operating Budget; provided that the
amounts specified therein shall be increased or decreased to the extent
specified in the applicable Project Documents.

     

    5.12.4   Borrower
shall also include in each Annual Operating Budget a reassessment of
(a) the Major Maintenance Reserve Requirement for the Mankato Project,
determined as provided in the definition of “MEC Major Maintenance Reserve
Requirement” in the Depositary Agreement, (b) the Major Maintenance Reserve
Requirement for the Freeport Project, determined as provided in the definition
of “FEC Major Maintenance Reserve Requirement” in the Depositary Agreement,
(c) the anticipated scheduling, probable cost and a reasonably detailed
description of each anticipated item of Major Maintenance (including Capital
Expenditures), through the next major turbine overhaul cycle for each Project
(the “Major
Maintenance Plan”), and (d) the anticipated amounts which will be on
deposit in the MEC Major Maintenance Reserve Account and FEC Major Maintenance
Reserve Account during each year of the Major Maintenance
Plan.  Borrower shall cause each Project Company to cause its Project
to perform (or cause to be performed) all Major Maintenance on its respective
Project substantially in accordance with the then-current Major Maintenance Plan
and in all material respects in accordance with the provisions of the Operative
Documents.  The Major Maintenance Plan, including the assumptions made
in connection with calculating the amounts described in the foregoing clauses
(a) and (b), shall be subject to approval by Administrative Agent in
consultation with the Independent Engineer, such approval not to be unreasonably
withheld or delayed.

     

    5.13    Preservation of
Rights; Further Assurances.

     

    5.13.1   Subject
to Section 5.2.2, each Project Company shall cause its Project to maintain in
full force and effect, perform (to the extent not excused by force majeure
events or the nonperformance of the other party and not subject to a good faith
dispute) the obligations of the applicable Project Company under, preserve,
protect and defend the material rights of such Project Company under and take
all reasonable action necessary to prevent early termination (except by
expiration in accordance with its terms) of each and every Major Project
Document, including (where each such Project Company in the exercise of its
business judgment deems it proper) prosecution of suits to enforce any material
right of such Project Company thereunder and enforcement of any material claims
with respect thereto, in each case except where failure to do so could not
reasonably be expected to have a Material Adverse Effect.

     

    5.13.2   From
time to time, Borrower shall, and shall cause each Borrower Party to, execute,
acknowledge, record, register, deliver and/or file all such notices, statements,
instruments and other documents (including any memorandum of lease or other
agreement, financing statement, continuation statement, certificate of title or
estoppel certificate), relating to

    
      
         

      

      
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    the Loans
stating the interest and charges then due and any known Events of Default or
Inchoate Defaults, and take such other steps as may be necessary or advisable to
render fully valid and enforceable under all applicable laws the rights, liens
and priorities of the Secured Parties with respect to all Collateral and other
security from time to time furnished under this Agreement and the other Credit
Documents or intended to be so furnished, in each case in such form and at such
times as shall be reasonably requested by Collateral Agent, and pay all
reasonable fees and expenses (including reasonable attorneys’ fees) incident to
compliance with this Section 5.13.2.

     

    5.13.3   If any
Borrower Party shall at any time acquire any real property or leasehold or other
interest in real property that is necessary or material to the operation of any
Project or that has a value in excess of $1,000,000 (other than licenses,
easements and similar types of property that are expressly excluded from either
Mortgage by its terms) and is not covered by either Mortgage, then promptly upon
such acquisition, execute, deliver and record a supplement to such Mortgage,
reasonably satisfactory in form and substance to Collateral Agent, subjecting
the real property or leasehold or other interests to the Lien and security
interest created by such Mortgage.  If reasonably requested by
Collateral Agent, such Borrower Party shall obtain (i) in the case of the
Mankato Project, an appropriate endorsement or supplement to, the Title Policy
insuring the Lien of the Secured Parties in such additional property and (ii) in
the case of the Freeport Project, a Mortgagee Policy of Title Insurance (Form
T-2) insuring the Lien of the Secured Parties in such additional property in an
amount equal to the lesser of the amount paid for or the insurable value of such
additional property, in each case subject only to Permitted Liens and other
exceptions to title approved by Collateral Agent.

     

    5.13.4   Upon
the reasonable request of Administrative Agent or Collateral Agent, the
applicable Borrower Party shall execute and deliver all documents as shall be
necessary or that Administrative Agent or Collateral Agent (as the case may be)
shall reasonably request in connection with the rights and remedies of
Administrative Agent or Collateral Agent (as the case may be) and the Lenders
under the Credit Documents, and perform such other reasonable acts as may be
necessary to carry out the intent of this Agreement and the other Credit
Documents.

     

    5.13.5   The
applicable Borrower Party shall take such action, including the execution and
filing of all such documents and instruments, as may be necessary to effect and
continue the appointment of Corporation Service Company as its agent for service
of process in full force and effect, or if necessary by reason of any fact or
condition relating to such agent, to replace such agent (but only after having
given notice and evidence thereof to Administrative Agent).

     

    5.14    Additional
Consents.  Upon
the reasonable request of Administrative Agent, with respect to (a) any
Major Project Document (including any Additional Project Document) entered into
after the Restatement Date and (b) any Major Project Document entered into
by a Replacement Obligor, in each case, the applicable Project Company shall
cause the applicable counterparty or Replacement Obligor, as applicable, to
execute and deliver to Administrative Agent a Consent in substantially the form
of Exhibit E-1,
with such changes as are reasonably acceptable to Administrative
Agent.

     

    
      
         

      

      
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    5.15    Maintenance of
Insurance.  Borrower
shall cause each Project Company to maintain or cause to be maintained in all
material respects on its behalf in effect at all times the types of insurance
required pursuant to Exhibit K, in
the amounts and on the terms and conditions specified therein, from the quality
of insurers specified in such Exhibit or other insurance companies of recognized
responsibility reasonably satisfactory to Administrative Agent.

     

    5.16    Taxes, Other
Government Charges and Utility Charges.  Subject
to the second sentence of this Section 5.16 and except for Permitted Liens,
each Borrower Party shall timely file all material tax returns and pay, or cause
to be paid, as and when due and prior to delinquency, all material taxes,
assessments and governmental charges of any kind that may at any time be
lawfully assessed or levied against or with respect to any Borrower Party or
either Project, including material sales and use taxes and real estate taxes,
all material utility and other charges incurred in the operation, maintenance,
use, occupancy and upkeep of each Project, and all material assessments and
charges lawfully made by any Governmental Authority for public improvements that
may be secured by a Lien on each Project.  Borrower Parties may
contest in good faith any such taxes, assessments and other charges and, in such
event, may permit the taxes, assessments or other charges so contested to remain
unpaid during any period, including appeals, when Borrower Parties are in good
faith contesting the same, so long as (a) reserves to the extent required
by GAAP have been established in an amount sufficient to pay any such taxes,
assessments or other charges, accrued interest thereon and potential penalties
or other costs relating thereto, or other adequate provision for the payment
thereof shall have been made and maintained at all times during such contest,
(b) enforcement of the contested tax, assessment or other charge is
effectively stayed for the entire duration of such contest, and (c) any
tax, assessment or other charge determined to be due, together with any interest
or penalties thereon, is promptly paid after resolution of such
contest.

     

    5.17    Event of Eminent
Domain.  If
an Event of Eminent Domain shall occur with respect to any Collateral, Borrower
shall cause each Project Company (in the case of the Freeport Project, insofar
as consistent with Dow’s rights under the Dow Agreements), to
(a) diligently pursue all its rights to compensation against the relevant
Governmental Authority in respect of such Event of Eminent Domain, (b) not,
without the written consent of Administrative Agent (which consent shall not be
unreasonably withheld or delayed), compromise or settle any claim against such
Governmental Authority if such compromise or settlement results in payments in
excess of $2,500,000 or could reasonably be expected to have a Material Adverse
Effect, and (c) pay or apply all Eminent Domain Proceeds in accordance with
Section 3.7 of the
Depositary Agreement.  Each Borrower Party consents to, and agrees not
to object to or otherwise impede or impair, the participation of Administrative
Agent in any eminent domain proceedings, and each Borrower Party shall from time
to time deliver to Administrative Agent all documents and instruments reasonably
requested by it to permit such participation.

     

    5.18    Interest Rate
Protection.

     

    5.18.1   Compliance With Interest Rate
Agreements.  On the Restatement Date, Borrower shall enter into
one or more Interest Rate Agreements with one or more Lenders
(or

    
      
         

      

      
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    Affiliates
thereof) for the period commencing on the date of such Interest Rate Agreements
and ending on the Maturity Date, in a notional amount equal to at least 75% of
the anticipated amount of Loans projected to be outstanding during such period
(which anticipated amount (a) shall be determined by reference to the Base
Case Project Projections, and (b) shall take into account any scheduled or
projected repayments or prepayments of Loans contemplated thereunder); provided that, except
as otherwise provided in Section 11.24, if on any date the notional amounts
under the Interest Rate Agreements, in the aggregate, are greater than 115% of
the aggregate outstanding principal amount of the Loans, Borrower shall have a
period of up to 30 days after the date on which such condition occurs to take
such action as may be necessary to ensure that the notional amounts under such
Interest Rate Agreements, in the aggregate, are not greater than 100% of the
aggregate outstanding principal amount of the Loans (and no breach under this
Section 5.18.1 shall be deemed to have occurred during such 30-day
period).  Borrower shall at all times maintain in full force and
effect through the end of such period such Interest Rate
Agreements.

     

    5.18.2   Hedge Breaking
Fees.  To the extent required pursuant to the terms of the
Hedge Transactions, Borrower shall pay all costs, fees and expenses incurred by
Borrower in connection with any unwinding, breach or termination of such Hedge
Transactions (“Hedge
Breaking Fees”), all to the extent provided in and as calculated pursuant
to the applicable Interest Rate Agreements.

     

    5.18.3   Security.  Each
Interest Rate Agreement provided by a Lender (or an Affiliate thereof)
hereunder, including all Hedge Transactions thereunder, entered into in
accordance with the terms of this Agreement, and all Hedge Breaking Fees shall
be and are hereby secured by any Collateral Documents, pari passu with the
Loans.  The parties hereto agree that, for purposes of any sharing of
Collateral under the Collateral Documents, any Hedge Bank, in its capacity as a
counterparty or intermediary to the Interest Rate Agreements, shall be deemed to
have made a Loan to Borrower in an amount equal to the unpaid amount of any
Hedge Breaking Fees owed by Borrower to such Hedge Bank, under any such Hedge
Transaction on the date that an Early Termination Date (as defined in the
applicable Interest Rate Agreement) occurs.  For purposes of any such
Collateral sharing such Hedge Bank shall be deemed a Lender under the Collateral
Documents to the extent of such deemed Loan.  For purposes of voting
on matters under this Agreement, such Hedge Bank shall be deemed a Lender and
hold votes to the extent specified in the definition of “Proportionate Share”;
provided that
prior to the termination of the transactions under its Interest Rate Agreement,
such Hedge Bank shall have zero votes.

     

    5.19    Special Purpose
Entity.

     

    5.19.1   Borrower
shall conduct its business solely in its own name through its duly authorized
directors, officers or agents so as not to mislead others as to the identity of
the company with which those others are concerned, and particularly will avoid
the appearance of conducting business on behalf of any other entity or that its
assets or the assets of any other entity are available to pay the creditors of
such other entity.  Without limiting the generality of the foregoing,
all oral and written communications of Borrower, including, without
limitation,

    
      
         

      

      
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    letters,
invoices, purchase orders, contracts and statements, will be made solely in the
name of Borrower.

     

    5.19.2   Borrower
shall comply in all material respects with all organizational formalities to
maintain its separate existence.

     

    5.19.3   Other
than as permitted pursuant to Section 6.8, Borrower shall maintain an
arm’s-length relationship with all other entities.

     

    5.19.4   Except to the extent provided in the Depositary
Agreement, Borrower shall keep its assets and its liabilities wholly
separate from those of all other entities, provided that
notwithstanding the foregoing, any Borrower Party may exchange or borrow spare
parts related to the Projects.

     

    For the
avoidance of doubt, the parties hereto acknowledge that (i) the NERC
identification for the Mankato Project is in the name of the Sponsor and (ii)
the NERC identification and the general operating permits for the Freeport
Project are in the name of Dow.

     

    5.20    The Patriot
Act.  Borrower
shall and shall cause each Borrower Party to comply with the disclosure
requirements pursuant to Section 11.22.

     

    5.21    Certain Rights
Under Dow Agreements.  In
the event that the circumstances arise that are described in Section 5.6 of
the FEC Ground Lease, Borrower shall cause FEC to take such actions, and to
fully exercise its rights under such section, as may be reasonably necessary to
obtain adequate real estate rights, Permits, and contract rights so that if Dow
were to fail, FEC would have exercised all reasonable efforts toward being able
to operate the Freeport Project independently of Dow.

     

    5.22    Project
Representative.  Borrower
shall cause each Project Company to designate one or more individuals who will
be responsible for protecting the interests of such Project Company in all
contract discussions and negotiations, with Affiliates of the Project Company
and otherwise, and will for purposes of interactions with the Independent
Engineer, be and in all respects act, as the representative of the owner of the
applicable Project.

     

    5.23    FEC Good Standing
Certificate.  Borrower
shall, within five Banking Days after the Restatement Date, deliver to
Administrative Agent a good standing certificate for FEC in a form customarily
issued by the Secretary of the State of Texas or the Comptroller of the State of
Texas.

     

    ARTICLE
6

     

    NEGATIVE
COVENANTS

     

    Borrower
covenants and agrees that until the repayment in full in cash of all of
Borrower’s Obligations (other than those contingent Obligations that are
intended to survive the termination of this Agreement and the other applicable
Credit Documents) and the expiration or termination of all Commitments and
Interest Rate Agreements to which any Secured Party is a

    
      
         

      

      
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    party,
Borrower shall not and shall cause the applicable Borrower Party to not take the
following actions:

     

    6.1    Contingent
Liabilities.  Except
as provided in this Agreement, Borrower and each other Borrower Party shall not
become liable as a surety, guarantor, accommodation endorser or otherwise, for
or upon the obligation of any other Person; provided that this
Section 6.1 shall not be deemed to prohibit or otherwise limit the
occurrence of Permitted Debt.

     

    6.2    Limitations on
Liens.  Borrower
and each other Borrower Party shall not create, assume or suffer to exist any
Lien, securing a charge or obligation on a Project or on any of the Collateral,
real or personal, whether now owned or hereafter acquired, except Permitted
Liens.

     

    6.3    Indebtedness.  Borrower
and each Project Company shall not incur, create, assume or permit to exist any
Debt except Permitted Debt.

     

    6.4    Sale or Lease of
Assets.

     

    6.4.1   Except
as provided under Section 6.5(b) of the Security Agreement, Borrower shall
not sell, lease, assign, transfer or otherwise dispose of assets, whether now
owned or hereafter acquired, except assets used for the administration of their
respective businesses and having a value of less than $10,000.

     

    6.4.2   Each
Project Company shall not sell, lease, assign, transfer or otherwise dispose of
assets, whether now owned or hereafter acquired, except (a) in the ordinary
course of its business and as contemplated by the Operative Documents,
(b) to the extent that such asset is unnecessary, worn out or no longer
useful or usable in connection with the operation or maintenance of its Project,
(c) the sale, transfer or release, with or without consideration, of real
property or interests in real property related to its Project to the extent that
such real property or interests in real property is only incidental to, or no
longer useful in connection with, the leasing, ownership or operation of its
Project, (d) the granting of easements or other interests in real property
related to its Project to other Persons, (e) in the case of any spare part, (i)
such spare part is sold or transferred at fair market value, (ii) such sold or
transferred spare part is replaced by the respective Project Company on or
before the date when such spare part is needed by such Project Company, (iii)
such replacement part received by such Project Company is free and clear of all
Liens (other than Permitted Liens), (iv) such sale or transfer is consistent in
all material respects with Prudent Industry Practices and (v) such Project
Company can reasonably be expected to obtain any necessary replacement parts for
such spare part on commercially reasonable terms, (f) sales, transfers or other
dispositions of Permitted Investments, (g) any other asset sale or series
of related asset sales the proceeds of which (i) shall not exceed $2,000,000 in
the aggregate in any calendar year and (ii) shall be applied in accordance with
Section 3.8 of the Depositary Agreement, as applicable, or (h) pursuant to the
Put Option (if permitted pursuant to Section 6.21) or the Purchase Option, if,
with respect to clauses (c) and (d) only, such sale, transfer or release could
not reasonably be expected to have a Material Adverse
Effect.  Upon

     

    
      
         

      

      
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    any such
sale, lease, assignment, transfer or other disposition of any such assets, all
Liens in favor of any Secured Party relating to such asset shall be
released.

     

    6.5    Changes.  Borrower
and each other Borrower Party shall not change the nature of its business or
expand its business beyond the business contemplated in the Operative Documents
other than the ownership, operation, maintenance and financing of any expansion
of any Project permitted pursuant to Section 11.25.

     

    6.6    Distributions.

     

    6.6.1   Except
as provided in Section 6.6.3, Borrower shall not directly or indirectly,
make or declare any Restricted Payment unless the following conditions have been
satisfied (such conditions, “Restricted Payment
Conditions”):

     

    (a)   such Restricted Payment is
on a date occurring within 60 days after the immediately preceding
Principal Repayment Date;

     

    (b)   no Event of Default or
Inchoate Default has occurred and is continuing as of the date of such
applicable Restricted Payment, and such Restricted Payment would not cause an
Event of Default or Inchoate Default;

     

    (c)   the Debt Service Coverage
Ratio for the Calculation Period relating to the Principal Repayment Date
immediately preceding the proposed date of such Restricted Payment is greater
than or equal to 1.20 to 1;

     

    (d)   the funds necessary to make
any such Restricted Payment are on deposit in the Distribution Suspense Account
as of the Principal Repayment Date to which the applicable Restricted Payment
relates and are otherwise available to be withdrawn from the Distribution
Suspense Account on such date in accordance with the terms and conditions of the
Depositary Agreement;

     

    (e)   each of the Debt Service
Reserve Account and the Major Maintenance Reserve Accounts is funded in the
amount required by the Depositary Agreement; and

     

    (f)   no LC Loans are then
outstanding.

     

    6.6.2   No
Borrower Party (other than Borrower) shall enter into any agreement, contract or
arrangement (other than the Operative Documents) restricting its ability to pay
or make dividends or distributions in cash or kind, to make loans, advances or
other payments of any nature or to make transfers or distributions of all or any
part of its assets to Borrower.

     

    6.6.3   Notwithstanding
anything to the contrary contained in this Agreement, nothing in this
Section 6.6 shall prohibit, or otherwise limit (1) any payment made
to, or for the account of, Sponsor or any Affiliate of Sponsor in accordance
with Section 5.1.1 and 11.24, and Section 3.10(b) of the Depositary
Agreement, (2) the payment of O&M Costs in accordance with the
Depositary Agreement (including O&M Costs under any of the CES PPA (FEC),
the

    
      
         

      

      
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    Administrative
Services Agreement, the Emissions Attributes Agreement, the FEC Major
Maintenance Agreement or the MEC O&M/Major Maintenance Agreement),
(3) the payment of unsubordinated amounts due and payable to any Affiliated
Major Project Participant pursuant to any Major Project Document, (4) any
payment among the Borrower Parties expressly contemplated by the Depositary
Agreement, or (5) any subordinated payments allowed in Section 3.1(b)(x) of
the Depositary Agreement.

     

    6.7    Investments.  Borrower
shall not make any investments (whether by purchase of stocks, bonds, notes or
other securities, loan, extension of credit, advance or otherwise) other than
Permitted Investments and its ownership interests in other Borrower
Parties.  The Project Companies shall not make any investments
(whether by purchase of stocks, bonds, notes or other securities, loan,
extension of credit, advance or otherwise) other than Permitted
Investments.

     

    6.8    Transactions With
Affiliates; Subordination Agreements.  No
Borrower Party shall directly or indirectly enter into any transaction or series
of transactions relating to the any Project with or for the benefit of an
Affiliate without the prior written approval of Administrative Agent, except for
transactions which satisfy any one or more of the following conditions:
(a) the Project Documents in effect on the Restatement Date (and any
Project Document entered into after the Restatement Date in accordance with
Section 6.17), and the transactions permitted thereby, (b) transactions
that contain terms no less favorable to each Borrower Party than would be
included in an arm’s-length transaction entered into by a prudent Person with a
non-Affiliated third party, (c) any employment, noncompetition or
confidentiality agreement entered into by each Borrower Party with any of its
employees, officers or directors in the ordinary course of business, (d) the
payments expressly permitted under Section 6.6.3, or (e) as otherwise
expressly permitted or contemplated by this Agreement and the other Credit
Documents.  Except for the COSCI Subordination Agreements, which have
already been approved, no Borrower Party shall enter into any Subordination
Agreement with any Affiliate or any other Person without approval by the
Required Lenders.

     

    6.9    Regulations.  No
Borrower Party shall directly or indirectly apply any part of the proceeds of
any Loan, any cash equity contributions received by Borrower or other funds or
revenues to the “buying”, “carrying” or “purchasing” of any margin stock within
the meaning of Regulations T, U or X of the Federal Reserve Board, or any
regulations, interpretations or rulings thereunder.

     

    6.10    Partnerships,
etc.  No
Borrower Party shall become a general or limited partner in any partnership or a
joint venturer in any joint venture or create and hold stock in any subsidiary,
except as described in Section 4.1.

     

    6.11    Dissolution;
Merger.  No
Borrower Party shall liquidate or dissolve, or combine, merge or consolidate
with or into any other entity, or change its legal form, or purchase or
otherwise acquire all or substantially all of the assets of any
Person.

     

    
      
         

      

      
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    6.12    Amendments;
Change Orders; Completion.

     

    6.12.1   No
Borrower Party shall without the prior written consent of Administrative Agent
(acting in consultation with the Independent Engineer), such consent not to be
unreasonably withheld so long as no Event of Default has occurred and is
continuing, amend or otherwise modify any Major Project Document to which it is
a party or give any consent, waiver or approval (other than approvals in the
ordinary course of business consistent with past practices, where applicable)
(each such amendment or modification being referred to herein as a “Project Document
Modification”) thereunder (including any waiver of any default under or
breach of any Major Project Document to which it is a party), or agree in any
manner to any other amendment, modification or change of any term or condition
of any Major Project Document to which it is a party; provided that (i) the
extension of the term of a Major Project Document on substantially the same
terms and conditions then in effect (or on more favorable terms and conditions
to such Borrower Party), (ii) any amendments, modifications, waivers, consents
and approvals which are not adverse to such Borrower Party, any Project or the
interests of the Secured Parties in the Collateral, and (iii) ministerial or
administrative amendments, modifications, waivers, consents and approvals, in
each of the cases of clauses (i) through (iii), shall not require the consent of
Administrative Agent; provided further that any such
amendment or modification to or waiver, consent or approval under any Major
Project Document which could reasonably be expected to have a Material Adverse
Effect shall require the consent of the Super Majority Lenders (acting in
consultation with the Independent Engineer).

     

    6.12.2   No
Borrower Party shall, without the prior written consent of Administrative Agent,
such consent not to be unreasonably withheld so long as no Event of Default has
occurred and is continuing, amend, supplement, waive or otherwise modify the
organizational documents of such Borrower Party, if the result could reasonably
be expected to have an adverse effect on the Lenders or their rights or remedies
under the Credit Documents in any material respect, including, the issuance of
any equity interests in such Borrower Party other than such Borrower Party’s
issuance of additional common equity or partnership interests to its current
owner.

     

    6.12.3   No
Borrower Party shall, without the prior written consent of Administrative Agent,
such consent not to be unreasonably withheld so long as no Event of Default has
occurred and is continuing, seek to or petition to amend, modify, supplement or
take any similar actions with respect to any Permit, except for such amendments,
modifications, supplements or similar actions that (a) are required by Legal
Requirements or (b) could not reasonably be expected to have a Material Adverse
Effect.

     

    6.12.4   No
Borrower Party shall, except as expressly contemplated by the Project Documents
or pursuant to the Credit Documents, construct, install, or permit the
construction or installation of, shared or joint facilities between its Project
and any plants, facilities, generating stations or other improvements which are
not located on its Project Site or the Easements (including any such plants,
facilities, generating stations or other improvements owned by NSP or
Dow).  Notwithstanding anything to the contrary herein, nothing in
this Section 6.12 shall limit any Borrower Party’s ability to enter into any
Project Document Modification which is

    
      
         

      

      
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    expressly
permitted or is entered into to document or give effect to any transaction
expressly permitted under Section 11.24.

     

    If
applicable, the Super Majority Lenders and Administrative Agent shall use good
faith efforts to respond to each request pursuant to this Section 6.12 as soon
as possible and in all events within 30 days of its receipt of written
notification thereof.  No such amendments, modifications, changes,
waivers or approvals requiring approval by the Super Majority Lenders or
Administrative Agent hereunder shall be deemed approved by the Super Majority
Lenders or Administrative Agent until expressly approved.

     

    6.13    Name and
Location; Fiscal Year.  No
Borrower Party shall change its name, its jurisdiction of organization, the
location of its principal place of business, its organization identification
number or its fiscal year without providing 30 days prior written notice to
Collateral Agent.

     

    6.14    Assignment.  No
Borrower Party shall assign its rights hereunder, under the other Credit
Documents or under any Major Project Document to any Person, except as set forth
in this Agreement (including in respect of the release of the Project pursuant
to Section 11.24) and the other Credit Documents.

     

    6.15    Accounts.  Other
than any Accounts (as defined in and established under the Original Depositary
Agreements) that will be closed pursuant to Section 2.14(b) of the Depositary
Agreement, no Borrower Party shall maintain, establish or use any account (other
than the Accounts, the MEC Checking Account and the FEC Checking Account)
without the prior written consent of Administrative Agent.

     

    6.16    Hazardous
Substances.  No
Borrower Party shall release into the environment any Hazardous Substances in
violation of any Hazardous Substance Laws, Legal Requirements or Applicable
Permits, except for any release that results in any penalty, indemnification
claim or other liabilities to such Borrower Party of $2,000,000 per Project in
the aggregate or less, except any release that could reasonably be expected to
subject the Secured Parties to material liability or result in a Material
Adverse Effect (it being acknowledged that a Borrower Party can cure a breach of
this Section 6.16 by remedying such release in a manner that is consistent with
Legal Requirements and the Operative Documents).

     

    6.17    Additional
Project Documents.  Other
than Interest Rate Agreements, without the consent of Administrative Agent
(which consent shall not be unreasonably withheld or delayed), no Borrower Party
shall enter into, or become a party to any Project Document not in existence on
the Restatement Date, except any Project Document which (a) provides for
the payment by Project Companies of, or the provision to Project Companies of
such goods and services with a value of, $500,000 per annum individually
or less, which may be entered into without the prior consent of Administrative
Agent, (b) provides for payment of Emergency Operating Costs, (c) is a
contract by Borrower of an individual value less than $25,000 and in the
aggregate no greater than $250,000, provided that such
contract is consistent with the

     

    
      
         

      

      
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    requirements
under Section 5.20, or (d) replaces a Major Project Document as
contemplated by the definition of “Replacement Project Document”.

     

    Notwithstanding
anything to the contrary herein, nothing in this Section 6.17 shall limit any
Borrower Party’s ability to enter into any agreement which is expressly
permitted or is entered into to document or give effect to any transaction
expressly permitted or required under any provision of the Credit Documents,
including Sections 5.18, 6.2, 6.3, 6.4, 6.7, 6.8(d) and (e) and
11.24.

     

    6.18    Assignment By
Third Parties.  Without
prior written consent of the Required Lenders or unless provided in a Consent,
neither Project Company shall consent to the assignment of any obligations under
any Major Project Document by any counterparty thereto other than to a
Replacement Obligor.

     

    6.19    Acquisition of
Real Property.  No
Borrower Party shall acquire or lease any material real property or other
material interest in real property (excluding the acquisition of any easements
or licenses, the acquisition (but not the exercise) of any options to acquire
any such interests in real property or any expansions of the FEC Site in
connection with the procurement of substitute services or in connection with
Borrower and FEC’s obligations under Section 5.21) other than the Sites,
Easements and other interests in real property acquired on or prior to the
Restatement Date, unless Borrower shall have delivered to Administrative Agent a
“Phase I” environmental site assessment with respect to such real property and,
if a “Phase II” environmental site assessment is warranted (as reasonably
determined and requested by Administrative Agent upon its review of such “Phase
I” environmental site assessment), a “Phase II” environmental site assessment
with respect to such property, in each case, along with a corresponding reliance
letter from the consultant that conducted such site assessment(s), confirming,
in form and substance reasonably satisfactory to Administrative Agent, either
that (a) no Hazardous Substances were found in, on or under such real property
of a nature or concentrations that could reasonably be expected to impose on any
Borrower Party a material environmental liability or (b) the conditions and
risks associated with such Hazardous Substances were otherwise being addressed
in a manner reasonably satisfactory to Administrative Agent.

     

    6.20    Employee Benefit
Plans.  No
Borrower Party shall have any employees nor shall it maintain, sponsor or
contribute to (or be required to maintain, sponsor or contribute to) any
employee benefit plans subject to ERISA.

     

    6.21    No Merchant
Sales.  Neither
Project Company, as applicable, shall (a) sell or provide electrical
products from either Project to any Person other than (i) by MEC, to NSP
under the Power Purchase Agreement, and (ii) by FEC, to Dow under the
Capacity Sales Agreement or to CES with respect to the Reserved Capacity under
the Capacity Sales Agreement, provided that each of MEC and FEC shall be
permitted to sell or provide electrical products from either Project to any
Person to the extent permitted under the Project Documents; or (b) exercise
the Put Option (as such term is defined in the Capacity Sales Agreement)
pursuant

     

    
      
         

      

      
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    to
Section 15.1 of the Capacity Sales Agreement, in each case without the
prior written consent of the Required Lenders.

     

    6.22    Tax
Election.  No
Borrower Party shall make an election to be classified for federal income tax
purposes as an association taxable as a corporation without the prior written
consent of Administrative Agent, which consent shall not be unreasonably
withheld or delayed.

     

    6.23    Tax Sharing
Agreements.  No
Borrower Party shall enter into any tax sharing agreements with any other
Calpine Entity other than to the extent taxes to be paid pursuant to any such
agreement are paid only using funds, if any, that may from time to time be on
deposit in the Distribution Suspense Account and are otherwise available for the
making of distributions in strict accordance with the requirements of
Section 6.6 and the Depositary Agreement.

     

    6.24    Hedging
Agreements.  No
Borrower Party shall enter into or become a party to any Hedge Transaction other
than Interest Rate Agreements entered into for non-speculative
purposes.

     

    6.25    Lease
Transactions.  No
Borrower Party shall enter into any transaction for the lease of any assets,
whether operating leases, capital leases or otherwise, other than any one or
more of the following: (a) any lease constituting Permitted Debt, (b) leases of
automobiles, office equipment or other real or personal property pursuant to
which the annual lease payments by a Borrower Party do not exceed $500,000 in
the aggregate in any fiscal year, (c) any transactions contemplated in the then
applicable Annual Operating Budget, and (d) any such transactions consented to
by Administrative Agent (such consent not to be unreasonably withheld or
delayed).

     

    6.26    Capital
Expenditures.  No
Borrower Party shall make any Capital Expenditures except Permitted Capital
Expenditures and Emergency Operating Costs to the extent such costs are Capital
Expenditures.

     

    ARTICLE
7

     

    EVENTS
OF DEFAULT; REMEDIES

     

    7.1    Events of
Default.  The
occurrence of any of the following events shall constitute an event of default
(each, an “Event of
Default”) hereunder:

     

    7.1.1   Failure to Make
Payments.  Borrower shall fail to pay, in accordance with the
terms of this Agreement (i) any principal on any Loan on the date that such
sum is due, (ii) any interest on any Loan within five days after the date
such sum is due, (iii) any scheduled fee, cost, charge or sum due hereunder
or under any other Credit Documents within five days of the date that such sum
is due, or (iv) any other fee, cost, charge or other sum due under this
Agreement or the other Credit Documents
within 30 days after written notice to Borrower that such sum is
due.

     

    7.1.2   Bankruptcy;
Insolvency.  Any Borrower Party, Dow, CES, NSP, the City of
Mankato or NNG (so long as such Major Project Participant shall have outstanding
or

    
      
         

      

      
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    unperformed
obligations under the Operative Document to which it is a party) (each, a “Bankruptcy Party”)
shall become subject to a Bankruptcy Event; provided that, solely
with respect to a Bankruptcy Event with respect to a Bankruptcy Party other than
any Borrower Party, no Event of Default shall occur as a result of such
Bankruptcy Event if (a) such applicable Borrower Party obtains a
Replacement Obligor for the affected party within 90 days
thereafter and such Bankruptcy Event has not had and does not have, prior to so
obtaining such Replacement Obligor, a Material Adverse Effect or (b) the
applicable Bankruptcy Party is substantially performing its remaining
obligations with respect to the Project Documents to which it is a party and has
affirmed, within the time prescribed by applicable law, the Operative
Document(s) to which it is a party.  Notwithstanding the foregoing, no
Event of Default shall occur as a result of such bankruptcy event with the
respect to the FEC Ground Lease so long as Borrower is exercising its rights
under Section 365(h)(1)(A)(ii) of the U.S. Bankruptcy Code and continues to
retain its rights to remain in possession of the FEC Site pursuant to the terms
of the FEC Ground Lease.

     

    7.1.3   Defaults Under Other
Indebtedness.  Any Borrower Party shall default for a period
beyond any applicable grace period (a) in the payment of any principal,
interest or other amount due under any agreement involving Debt for borrowed
money (other than Debt under the Credit Documents) and the outstanding amount or
amounts payable under any such agreement equals or exceeds $2,000,000 in the
aggregate, or (b) in the performance of any obligation due under any
agreement involving such Debt if pursuant to such default, the holder of the
obligation concerned has  accelerated the maturity of any such Debt
evidenced thereby which equals or exceeds $2,000,000 in the
aggregate

     

    7.1.4   Judgments.  A final
judgment or judgments shall be entered against any Borrower Party in the amount
of $2,000,000 or more (other than, in each case, (a) a judgment which is
fully covered by insurance or discharged within 60 days after its entry, or
(b) a judgment, the execution of which is effectively stayed within
60 days after its entry).

     

    7.1.5   ERISA.  One or more
ERISA Events shall have occurred that, when taken together with all other ERISA
Events that have occurred, would reasonably be expected to have a Material
Adverse Effect.

     

    7.1.6   Breach of Terms of
Agreement.

     

    (a)   Defaults Without Cure
Periods.  Any Borrower Party shall fail to perform or observe
any of the covenants set forth in Sections 5.1, 5.3, 5.9(a), 5.15, or 5.17
(other than Section 5.17(a)) or Article 6 (other than Sections 6.2,
6.7, 6.8, or 6.16).

     

    (b)   Defaults With 30 Day
Cure Periods.  Any Borrower Party shall fail to perform or
observe any of the covenants set forth in Sections 5.19, 5.20, or 6.16, and
in each case such failure shall continue unremedied for a period of 30 days
after such Borrower Party receives written notice thereof from Administrative
Agent.

     

    
      
         

      

      
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    (c)   Other
Defaults.  Any Calpine Entity shall fail to perform or observe
any of its covenants set forth hereunder or any other Credit Document not
otherwise specifically provided for in Section 7.1.6(a),
Section 7.1.6(b) or elsewhere in this Article 7, and such failure
shall continue unremedied for a period of 30 days after such Calpine Entity
receives written notice thereof from Administrative Agent; provided that, if
(i) such failure cannot be cured within such 30 day period,
(ii) such failure is susceptible of cure within 90 days,
(iii) such Calpine Entity is proceeding with diligence and in good faith to
cure such failure, (iv) the existence of such failure has not had and could
not, after considering the nature of the cure, be reasonably expected to have a
Material Adverse Effect, and (v) Administrative Agent shall have received
an officer’s certificate signed by a Responsible Officer to the effect of
clauses (i), (ii), (iii) and (iv) above and stating what action such
Calpine Entity is taking to cure such failure, 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 such Calpine Entity diligently to cure such
failure.

     

    7.1.7   Loss of
Collateral.  Subject to Section 11.24, any substantial
portion of the Collateral is damaged, seized or appropriated without applicable
insurance proceeds (subject to the underlying deductible) or without fair value
being paid therefor so as to allow replacement of such Collateral and/or
prepayment of Loans in accordance with Section 3.7 of the Depositary Agreement
(to the extent required therein) and to allow each Borrower Party to continue
satisfying its obligations hereunder and under the other Operative Documents to
which it is a party, after giving effect to any applicable insurance coverage or
other proceeds received or reasonably expected to be received for such
event.

     

    7.1.8   Regulatory
Status.

     

    (a)   If loss of Exempt Wholesale
Generator status for MEC or loss of Eligible Facility status for the Mankato
Project could reasonably be expected to have a Material Adverse Effect,
(i) MEC shall have tendered notice to FERC that it has ceased to be an
Exempt Wholesale Generator or that the Mankato Project has ceased to be an
Eligible Facility, (ii) FERC shall have issued an order determining that
MEC no longer meets the criteria of an Exempt Wholesale Generator or takes other
action revoking such Exempt Wholesale Generator status, or (iii) MEC ceases to
satisfy the criteria for Exempt Wholesale Generator status.

     

    (b)   If loss of Qualifying
Facility status for the Freeport Project could reasonably be expected to have a
Material Adverse Effect, (i) FEC shall have tendered notice to FERC that
the Freeport Project has ceased to be a Qualifying Facility, (ii) FERC
shall have issued an order determining that the Freeport Project no longer meets
the criteria of a Qualifying Facility or takes other action revoking the
Freeport Project’s Qualifying Facility status, or (iii) the Freeport
Project ceases to satisfy the criteria for Qualifying Facility
status.

     

    (c)   If loss of MEC’s
authorization to make sales of electric energy, capacity and ancillary services
and/or waivers of regulations and blanket authorizations customarily granted by
FERC to entities with market-based rate authority could reasonably be expected
to have a Material Adverse Effect, (i) MEC shall have tendered notice to
FERC that MEC has ceased to satisfy any conditions imposed by FERC necessary to
maintain such market-based rate

    
      
         

      

      
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    authorization
and/or waivers and/or blanket authorizations, or (ii) FERC has issued an
order determining that MEC is no longer entitled to make sales of electric
energy, capacity and ancillary services at market-based rates and/or is no
longer entitled to waivers of regulations and blanket authorizations customarily
granted by FERC to entities with market-based rate authority.

     

    (d)   FEC shall become subject to
regulation as a “public utility” under the FPA and such event could reasonably
be expected to have a Material Adverse Effect.

     

    (e)   Any Borrower Party shall
suffer an Adverse PUHCA Event or, except to the extent provided in the first
sentence of Section 4.16, shall otherwise become subject to, or not exempt
from financial, organizational or rate regulation as an “electric utility
company”, “public utility company” or “public utility holding company” under
PUHCA or as a public utility under the laws of the State of Minnesota in the
case of MEC or Texas in the case of FEC as presently constituted and as
construed by the courts of Minnesota and Texas, respectively, and in each case
such event could reasonably be expected to have a Material Adverse
Effect.

     

    7.1.9   Abandonment.  Either
Project Company shall announce that (i) it is abandoning its Project, or
(ii) the applicable Project shall be abandoned for a period of more than 30
consecutive days for any reason (other than force majeure or a Dow Delay Event
(in the case of the Freeport Project)); provided that none of
(A) scheduled maintenance of such Project, (B) repairs to such
Project, whether or not scheduled or (C) a forced outage or scheduled
outage of such Project, shall constitute abandonment or suspension of such
Project, so long as such Project Company is diligently attempting to end such
suspension; and provided further, that none of
the foregoing circumstances in this Section 7.1.9 shall cause an Event of
Default with respect to the Freeport Project so long as Capacity Payments (as
defined in the Capacity Sales Agreement) continue to be paid under the Capacity
Sales Agreement.

     

    7.1.10   Security.  Any of
the Collateral Documents, shall, except as the result of the acts or omissions
of Administrative Agent, Depositary Agent, Collateral Agent or the Secured
Parties and other than with respect to an immaterial portion of the Collateral,
fail to provide to Collateral Agent, for the benefit of the Secured Parties, the
Liens, security interest having the priority required by this Agreement or the
relevant Collateral Documents, rights, titles, interest, remedies permitted by
law, powers or privileges intended to be created thereby or, except in
accordance with its terms, cease to be in full force and effect, or the validity
thereof having the priority required by this Agreement or the relevant
Collateral Documents or the applicability thereof to the Loans, the Notes (if
any) or any other obligations purported to be secured or guaranteed thereby or
any part thereof shall be disaffirmed by or on behalf of any Borrower Party
(other than following the satisfaction in full of the Obligations or any other
termination of a Collateral Document in accordance with the terms hereof and
thereof).

     

    7.1.11   Change of Control. Subject to
Section 11.24, a Change of Control shall have occurred and be
continuing.

     

    7.1.12   Unenforceability of Credit
Documents.  At any time after the execution and delivery
thereof, any material provision of any Credit Document shall cease to be in
full

    
      
         

      

      
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    force and
effect (other than by reason of the satisfaction in full of the Borrower
Parties’ Obligations or any other termination of a Credit Document in accordance
with the terms hereof or thereof) or any Credit Document shall be declared null
and void by a Governmental Authority of competent jurisdiction.

     

    7.1.13   Misstatements;
Omissions.  Any representation or warranty made or deemed made
by any Borrower Party in any Credit Document to which such Person is a party or
in any separate statement, certificate or document delivered to Administrative
Agent, Depositary Agent, Collateral Agent, or any Lender hereunder or under any
other Credit Document to which such Person is a party, shall be untrue or
misleading in any material respect as of the time made; provided that, in
respect of misrepresentations which are capable of being remedied and are made
or deemed made after the Restatement Date, and the untruth of which could not
reasonably be expected to have a Material Adverse Effect, any such
misrepresentation shall not be deemed to be an Event of Default if such
misrepresentation is corrected within 30 days of a Borrower Party acquiring
knowledge thereof.

     

    7.1.14   Project Document
Defaults.

     

    (a)   Borrower
Breach.  Any Borrower Party shall be in breach in any material
respect of, or in default in any material respect under, a Major Project
Document and such breach or default shall continue unremedied for the lesser of
(A) a period of 30 days from the time a Borrower Party obtains knowledge thereof
and (B) such period of time (without giving effect to any extension given
to Collateral Agent under any applicable Consent with respect thereto) under
such Major Project Document which such Borrower Party has available to it in
which to remedy such breach or default; provided that if (1)
such breach or default cannot be cured within such 30 day period (or such lesser
period of time, as the case may be), (2) such breach or default is susceptible
of cure within 90 days after such breach or default, (3) such Borrower
Party is proceeding
with diligence and in good faith to cure such breach or default, (4) the
existence of such breach or default has not had and could not, after considering
the nature of the cure, be reasonably expected to give rise to a Material
Adverse Effect and (5) Administrative Agent shall have received a
certificate of a Responsible Officer of Borrower to the effect of clauses (1),
(2), (3) and (4) above and stating what action such Borrower Party is taking to cure such
breach or default, then such 30 day cure period (or such lesser period of time,
as the case may be) shall be extended to such date, not to exceed a total of 90
days, as shall be necessary for such Borrower Party diligently to cure such
breach or default.

     

    (b)   Third Party
Breach.  Any Person other than a Borrower Party shall be in
breach of, or in default under, a Major Project Document (other than a
Bankruptcy Event of such Person referred to in Section 7.1.2) and such breach or
default could reasonably be expected to have a Material Adverse Effect; provided that no
Event of Default shall occur as a result of any such breach or default if (i)
such breach or default is cured within 90 days from the time a Borrower Party
obtains knowledge of such breach or default or (ii) Borrower obtains a
Replacement Obligor for the affected party within such 90 day
period.

     

    
      
         

      

      
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    (c)   Termination.  (A)
Any Major Project Document shall terminate or shall be declared null and void
(except upon fulfillment of such party’s obligations thereunder or the scheduled
expiration of the term of such Major Project Document or upon the consummation
of the Put Option or the Purchase Option in accordance with the Operative
Documents), or (B) any provision in any Major Project Document shall for
any reason cease to be valid and binding on any party thereto (other than any
Borrower Party), other than any such failure to be valid and binding which could
not reasonably be expected to have a Material Adverse Effect and except, in the
case of the foregoing clause (A) or (B), to the extent that (1) such provision
is restored or replaced by a replacement provision in form and substance
reasonably acceptable to Administrative Agent within a 90 day period thereafter,
or (2) such applicable Borrower Party enters into a Replacement Project Document
within 90 days thereafter.

     

    7.1.15   Power Purchase
Agreement.  (a) NSP shall have exercised its “step-in” rights
pursuant to Section 12.7 of the Power Purchase Agreement, (b) Sponsor
shall wrongly reject or disavow its obligations under the guaranty portion of
the Security Fund, (c) any valid draw or claim on the guaranty portion of
the Security Fund by NSP pursuant to Section 12.7 of the Power Purchase
Agreement shall fail to be timely honored in full or (d) Sponsor fails to
perform any material obligation under any guarantee extended in support of any
Project or any Borrower Party.

     

    7.1.16   Guaranties.  The
Borrower Party party thereto shall fail to perform any of its material
obligations under Section 2 of each of the MEC Guaranties or the FEC
Guaranty.

     

    7.1.17   Shortfall of Proceeds of Purchase
Option or Put Option.  The proceeds from the exercise of the Put Option
or Purchase Option are less than the amounts required to comply with Section
11.24.

     

    7.2    Remedies.  Upon
the occurrence and during the continuation of an Event of Default,
Administrative Agent, Collateral Agent, and the Lenders may, at the election of
the Required Lenders, without further notice of default, presentment or demand
for payment, protest or notice of non-payment or dishonor, or other notices or
demands of any kind, all such notices and demands (other than notices expressly
required by the Credit Documents) being waived, exercise any or all of the
following rights and remedies, in any combination or order that the Required
Lenders may elect, in addition to such other rights or remedies as the Secured
Parties may have hereunder, under the Collateral Documents or at law or in
equity:

     

    7.2.1   No Further Loans or Letter of
Credit.  Cancel all Commitments, refuse, and Administrative
Agent, the LC Issuers and the Lenders shall not be obligated, to continue any
Loans, make any additional Loans (other than Security Fund LC Loans), issue,
renew, or extend the Security Fund LC, or make any payments, or permit the
making of payments, from any Account or any Loan proceeds or other funds held by
Administrative Agent or Collateral Agent under the Credit Documents or on behalf
of Borrower; provided that in the
case of an Event of Default occurring under Section 7.1.2 with respect to
Borrower, all such Commitments shall be cancelled and terminated without further
act of Administrative Agent, Collateral Agent, or any Secured
Party.

    
      
         

      

      
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    7.2.2   Cure by
Agents.  Without any obligation to do so, make disbursements or
Loans to or on behalf of Borrower or disburse amounts from any Account to cure
(a) any Event of Default or Inchoate Default hereunder, and (b) any
default and render any performance under any Project Document as the Required
Lenders in their sole discretion may consider necessary or appropriate, whether
to preserve and protect the Collateral or the Secured Parties’ interests therein
or for any other reason.  All sums so expended, together with interest
on such total amount at the Default Rate (but in no event shall the rate exceed
the maximum lawful rate), shall be repaid by Borrower to Administrative Agent or
Collateral Agent, as the case may be, on demand and shall be secured by the
Credit Documents, notwithstanding that such expenditures may, together with
amounts advanced under this Agreement, exceed the aggregate amount of the Total
Term Loan Commitment.

     

    7.2.3   Acceleration.  Declare
and make all or a portion of the sums of accrued and outstanding principal and
accrued but unpaid interest remaining under this Agreement, together with all
unpaid fees, costs (including Liquidation Costs and Hedge Breaking Fees) and
charges due hereunder or under any other Credit Document, immediately due and
payable and require Borrower immediately, without presentment, demand, protest
or other notice of any kind, all of which Borrower hereby expressly waives, to
pay Administrative Agent or the Secured Parties an amount in immediately
available funds equal to the aggregate amount of any outstanding Obligations of
Borrower; provided that, in the
event of an Event of Default occurring under Section 7.1.2 with respect to
Borrower, all such amounts shall become immediately due and payable without
further act of Administrative Agent, the LC Issuers, Collateral Agent, or the
Secured Parties.

     

    7.2.4   Cash Collateral; Letters of
Credit.  Apply or execute upon any amounts on deposit in any
Account, or any proceeds or any other moneys of Borrower on deposit with
Administrative Agent, Collateral Agent, Depositary Agent or any Secured Party in
the manner provided in the UCC and other relevant statutes and decisions and
interpretations thereunder with respect to cash collateral; or draw upon any DSR
Letter of Credit held by Collateral Agent as security.  Without
limiting the foregoing, each of Administrative Agent, Collateral Agent and
Depositary Agent shall have all rights and powers with respect to the Loan
proceeds, draws upon any DSR Letter of Credit, the Accounts and the contents of
the Accounts as it has with respect to any other Collateral and may apply, or
cause the application of, such amounts to the payment of interest, principal,
fees, costs, charges or other amounts due or payable to Administrative Agent,
Collateral Agent, Depositary Agent or the Secured Parties with respect to the
Loans in such order as the Required Lenders may elect in their sole
discretion.  Borrower shall not have any rights or powers with respect
to such amounts.

     

    7.2.5   Possession of
Projects.  Enter into possession of either or both Projects or
operate and maintain such Project, and all sums expended by Administrative
Agent, Collateral Agent or Depositary Agent in so doing, together with interest
on such total amount at the Default Rate, shall be repaid by Borrower to
Administrative Agent, Collateral Agent or Depositary Agent, as the case may be,
upon demand and shall be secured by the Credit Documents, notwithstanding that
such expenditures may, together with amounts advanced under this Agreement,
exceed the aggregate amount of the Total Term Loan Commitment.

    
      
         

      

      
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    7.2.6   Remedies Under Credit
Documents.  Exercise, and direct Administrative Agent,
Depositary Agent, or Collateral Agent (as the case may be) to exercise, any and
all rights and remedies available to it under any of the Credit Documents,
including judicial or non-judicial foreclosure or public or private sale of any
of the Collateral pursuant to the Collateral Documents.  Furthermore,
if Administrative Agent requests that certain actions be taken and a Project
Company fails to take the requested actions within five Banking Days,
Administrative Agent or Collateral Agent (as applicable) may enforce in its own
name or in such Project Company’s name, such rights of the Project Company, all
as more particularly provided in the Security Agreement and the other Credit
Documents.

     

    ARTICLE
8

     

    SCOPE
OF LIABILITY

     

    Except as
set forth in this Article 8, notwithstanding anything in this Agreement or
the other Credit Documents to the contrary, none of the Secured Parties shall
have any claims with respect to the transactions contemplated by the Operative
Documents against Sponsor or any of its Affiliates (other than Borrower
Parties), shareholders, officers, directors or employees (collectively, the
“Nonrecourse
Persons”) and the Secured Parties’ recourse against Borrower Parties and
the Nonrecourse Persons shall be limited to the Borrower Parties, the
Collateral, the Projects, all Project Revenues, all Loan proceeds, Insurance
Proceeds, Eminent Domain Proceeds, and all income or revenues of the foregoing
as and to the extent provided herein and in the Collateral Documents; provided that the
foregoing provision of this Article 8 shall not (a) constitute a
waiver, release or discharge of any of the indebtedness, or of any of the terms,
covenants, conditions, or provisions of this Agreement or any other Credit
Document and the same shall continue (but without personal liability to the
Nonrecourse Persons) until fully paid, discharged, observed, or performed,
(b) limit or restrict the right of Administrative Agent, Collateral Agent
or any other Secured Party (or any assignee, beneficiary or successor to any of
them) to name any Borrower Party or any other Person as a defendant in any
action or suit for a judicial foreclosure or for the exercise of any other
remedy under or with respect to this Agreement or any other Collateral Document
or Credit Document, or for injunction or specific performance, so long as no
judgment in the nature of a deficiency judgment shall be enforced against any
Nonrecourse Person, except as set forth in this Article 8, (c) in any
way limit or restrict any right or remedy of Administrative Agent, Collateral
Agent or any other Secured Party (or any assignee or beneficiary thereof or
successor thereto) with respect to, and each of the Nonrecourse Persons shall
remain fully liable to the extent that it would otherwise be liable for its own
actions with respect to, any fraud, willful misrepresentation (which shall not
include innocent or negligent misrepresentation), or misappropriation of Project
Revenues, Loan proceeds, Insurance Proceeds, Eminent Domain Proceeds or any
other earnings, revenues, rents, issues, profits or proceeds from or of the
Collateral, that should or would have been paid as provided herein or paid or
delivered to Administrative Agent, Collateral Agent or any other Secured Party
(or any assignee or beneficiary thereof or successor thereto) towards any
payment required under this Agreement or any other Credit Document,
(d) affect or diminish or constitute a waiver, release or discharge of any
specific written obligation, covenant, or agreement in respect of the
transactions contemplated by the Operative Documents made by any of the
Nonrecourse Persons or any security granted by the Nonrecourse Persons in
support of the

    
      
         

      

      
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    obligations
of such Persons under any Collateral Document or Project Document (or as
security for the obligations of Borrower Parties), or the Group Pledge and
Security Agreement, or (e) limit the liability of (i) any Person who
is a party to any Project Document or has issued any certificate or other
statement in connection therewith with respect to such liability as may arise by
reason of the terms and conditions of such Project Document (but subject to any
limitation of liability in such Project Document), certificate or statement, or
(ii) any Person rendering a legal opinion pursuant to this Agreement
(including Section 3.1.8), in each case under this clause (e) relating
solely to such liability of such Person as may arise under such referenced
agreement, instrument or opinion.  The limitations on recourse set
forth in this Article 8 shall survive the termination of this Agreement,
the termination of all Commitments and the Interest Rate Agreements to which any
Secured Party is a party and the indefeasible payment in full in cash and
performance in full of the Borrower’s Obligations hereunder and under the other
Operative Documents.

     

    ARTICLE
9

     

    AGENTS;
SUBSTITUTION

     

    9.1    Appointment,
Powers and Immunities.

     

    9.1.1   In
order to expedite the transactions contemplated by this Agreement,
(a) Calyon New York Branch, CoBank ACB and WestLB AG, New York Branch are
hereby appointed to act as the Lead Arrangers and as the Co-Book Runners, (b)
Calyon New York Branch is hereby appointed to act as Administrative Agent and
Collateral Agent, (c) Calyon New York Branch is hereby appointed to act as the
Security Fund LC Issuer, and (d) CoBank, ACB is hereby appointed to act as the
DSR LC Issuer.  None of Administrative Agent, Collateral Agent, the
Lead Arrangers or any of their respective Related Parties shall have any duties
or responsibilities except those expressly set forth in this Agreement or in any
other Credit Document, or be a trustee or a fiduciary for any Secured Party, and
no implied covenants, functions, responsibilities, duties, obligations or
liabilities shall be read into the Credit Documents or otherwise exist against
Administrative Agent or Collateral Agent (other than those implied as a matter
of applicable law that are not capable of being
waived).  Notwithstanding anything to the contrary contained herein,
none of Administrative Agent, Collateral Agent, the Lead Arrangers or any of
their respective Related Parties shall be liable as such for any action taken or
omitted by any of them except for its or their own gross negligence or willful
misconduct, or required to take any action which is contrary to this Agreement
or any other Credit Documents or any Legal Requirement or exposes Administrative
Agent, Collateral Agent, the Lead Arrangers or any of their respective Related
Parties (as the case may be) to any liability.  None of the Lead
Arrangers, Collateral Agent, Administrative Agent, the Lenders nor any of their
respective Related Parties shall be required to ascertain or to make any inquiry
concerning the performance or observance by any Borrower Party of any of the
terms, conditions, covenants or agreements contained in any Credit Document, or
be responsible for (i) any recitals, statements, representations or
warranties made by any other Person contained in this Agreement or the contents
of any document delivered in connection herewith, the other Credit Documents or
in any certificate or other document referred to or provided for in, or received
by the Lead Arrangers, Administrative Agent, Collateral Agent, or any Secured
Party under this Agreement

    
      
         

      

      
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    or any
other Credit Document, (ii)  any failure by any Borrower Party or its
Affiliates to perform their respective obligations hereunder or thereunder, or
(iii) the failure, delay in performance or breach by any Lender or LC Issuer of
any of its obligations hereunder or as a result of any information provided by
any Lender or LC Issuer, or to any Lender or LC Issuer on account of the failure
of or delay in performance or breach by any other Lender or LC Issuer or any
Borrower Party of any of their respective obligations hereunder or in connection
herewith.  Each of Administrative Agent, Collateral Agent and each
Lead Arranger may execute any and all duties hereunder by or through agents,
employees or any sub-agent appointed by it, and neither shall be responsible for
the negligence or misconduct of any such agents or attorneys-in-fact selected by
it with reasonable care.

     

    9.1.2   Without
limiting the generality of the foregoing, (a) Administrative Agent may
treat the payee of any Note as the holder thereof until Administrative Agent
receives written notice of the assignment or transfer thereof signed by such
payee and in form satisfactory to Administrative Agent, (b) each of
Administrative Agent and Collateral Agent may consult with legal counsel,
independent public accountants and other experts selected by it and shall not be
liable for any action taken or omitted to be taken in good faith by them in
accordance with the advice of such counsel, accountants or experts,
(c) none of Collateral Agent, Administrative Agent and the Lead Arrangers
makes any warranty or representation to any Secured Party for any statements,
warranties or representations made in or in connection with any Operative
Document, (d) none of Collateral Agent, Administrative Agent and the Lead
Arrangers shall have any duty to ascertain or to inquire as to the performance
or observance of any of the terms, covenants or conditions of any Operative
Document on the part of any party thereto, to inspect the property (including
the books and records) of any Borrower Party or any other Person or to ascertain
or determine whether a Material Adverse Effect exists or is continuing, and
(e) none of Collateral Agent, Administrative Agent or the Lead Arrangers
shall be responsible to any Secured Party for the due execution, legality,
validity, enforceability, effectiveness, genuineness, sufficiency or value of
any Operative Document or any other instrument or document furnished pursuant
hereto.  Except as otherwise provided under this Agreement and the
other Credit Documents, each of Administrative Agent and Collateral Agent shall
take such action with respect to the Credit Documents as shall be directed by
the Required Lenders or, if expressly so provided, the Super Majority Lenders or
all Lenders.  The Lenders hereby acknowledge that no Agent shall be
under any duty to take any discretionary action permitted to be taken by it
pursuant to the provisions of this Agreement unless it shall be requested in
writing to do so by the Required Lenders.  The Lenders further
acknowledge and agree that so long as an Agent shall make any determination to
be made by it hereunder or under any other Credit Document in good faith, such
Agent shall have no liability in respect of such determination to any
Person.  Each Agent may exercise such powers, rights and remedies and
perform such duties by or through its agents or employees, and may consult with
the applicable Independent Consultants in the exercise of such powers, rights
and remedies and the performance of such duties.  To the extent of any
conflict or inconsistencies between the functions, responsibilities, duties,
obligations or liabilities of the Depositary Agent set forth in this Article 9
and those set forth in the Depositary Agreement, the terms of the Depositary
Agreement shall govern.

     

    
      
         

      

      
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    9.1.3   None of
the Syndication Agent, Co-Documentation Agents and Co-Book Runners shall have
any right, power, obligation, liability, responsibility or duty under this
Agreement, other than those applicable to all Secured Parties and those set
forth in Section 11.14 and this Article 9.  The Lead
Arrangers shall only have those rights, powers, obligations, liabilities,
responsibilities and duties set forth in Section 3.1, this Article 9
and Section 11.1 and Section 11.14.  Without limiting the
foregoing, none of the Lead Arrangers, Syndication Agent, Co-Documentation
Agents and Co-Book Runners shall have or be deemed to have a fiduciary
relationship with any Secured Party.  Each Secured Party hereby makes
the same acknowledgments with respect to the Lead Arrangers, Syndication Agent,
Co-Documentation Agents and Co-Book Runners as it makes with respect to
Administrative Agent or Collateral Agent in this
Article 9.  Notwithstanding the foregoing, the parties hereto
acknowledge that the Syndication Agent, Co-Documentation Agents and Co-Book
Runners hold such titles in name only, and that such titles confer no additional
rights or obligations relative to those conferred on any Secured Party
hereunder.

     

    9.2    Reliance.  Each
of Administrative Agent, Collateral Agent and the Lead Arrangers shall be
entitled to rely upon any certificate, notice or other document (including any
cable, telegram, facsimile, electronic mail or telex) believed by it to be
genuine and correct and to have been signed or sent by or on behalf of the
proper Person or Persons, and upon advice and statements of legal counsel,
independent accountants and other experts selected by it.  Collateral
Agent, Administrative Agent and the Lead Arrangers shall in all cases be fully
protected in acting, or refraining from acting, in accordance with written
instructions signed by the Required Lenders and, except as otherwise
specifically provided herein, such instructions and any action or inaction
pursuant thereto shall be binding on all the Lenders.  As to any other
matters not expressly provided for by this Agreement, neither Collateral Agent
nor Administrative Agent shall be required to take any action or exercise any
discretion, but shall be required to act or to refrain from acting upon
instructions of the Required Lenders or, where expressly provided, the Super
Majority Lenders or all Lenders (except that neither Collateral Agent nor
Administrative Agent shall be required to take any action which exposes
Collateral Agent or Administrative Agent (as the case may be) to personal
liability or which is contrary to this Agreement, any other Credit Document or
any Legal Requirement).  Each of Collateral Agent and Administrative
Agent shall in all cases (including when any action by Collateral Agent or
Administrative Agent (as the case may be) alone is authorized hereunder, if
Collateral Agent or Administrative Agent (as the case may be) elects in its sole
discretion to obtain instructions from the Required Lenders) be fully protected
in acting, or in refraining from acting, hereunder or under any other Credit
Document in accordance with the instructions of the Required Lenders (or, where
so expressly stated, the Super Majority Lenders or all Lenders), and such
instructions of the Required Lenders (or the Super Majority Lenders or all
Lenders, where applicable) and any action taken or failure to act pursuant
thereto shall be binding on all of the Secured Parties.

     

    9.3    Non-Reliance.  Each
Lender represents that it has, independently and without reliance on the Lead
Arrangers, Collateral Agent, Administrative Agent, or any other Lender, and
based on such documents and information as it has deemed appropriate, made its
own appraisal of the financial condition and affairs of the Calpine Entities and
its own decision to enter into this Agreement and agrees that it will,
independently and without reliance upon the

    
      
         

      

      
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    Lead
Arrangers, Collateral Agent, Administrative 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 appraisals and decisions in taking or not taking
action under this Agreement. Each of Administrative Agent, the Lead Arrangers,
Collateral Agent and any Lender shall not be required to keep informed as to the
performance or observance by any Calpine Entity or its Affiliates under this
Agreement or any other document referred to or provided for herein or to make
inquiry of, or to inspect the properties or books of any Calpine Entity or its
Affiliates.

     

    9.4    Defaults;
Material Adverse Change.  None
of the Lead Arrangers, Collateral Agent and Administrative Agent shall be deemed
to have knowledge or notice of the occurrence of any Inchoate Default, Event of
Default or Material Adverse Change, unless such Person has received a notice
from a Lender or any Borrower Party, referring to this Agreement, describing
such Inchoate Default, Event of Default or Material Adverse Change and
indicating that such notice is a notice of the occurrence of such default or
Material Adverse Change (as the case may be).  If Administrative Agent
receives such a notice of the occurrence of an Inchoate Default, Event of
Default or Material Adverse Change, Administrative Agent shall give notice
thereof to the Lenders.  Each of Collateral Agent and Administrative
Agent shall take such action with respect to such Inchoate Default, Event of
Default  or Material Adverse Change as is provided in Article 3,
Article 7 or the terms of the Credit Documents, or if not provided for in
Article 3, Article 7 or such Credit Documents, as Administrative Agent or
Collateral Agent shall be reasonably directed by the Required Lenders; provided that unless
and until Administrative Agent or Collateral Agent shall have received such
directions, each of Administrative Agent and Collateral Agent may (but shall not
be obligated to) take such action, or refrain from taking such action, with
respect to such Inchoate Default, Event of Default or Material Adverse Change as
it shall deem advisable in the best interest of the Lenders.

     

    9.5    Indemnification.  Without
limiting the Obligations of each Borrower Party hereunder, each Lender agrees to
indemnify the Lead Arrangers, Collateral Agent and Administrative Agent and
their respective officers, directors, shareholders, controlling Persons,
employees, agents and servants, ratably in accordance with their Proportionate
Shares for any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements of any kind or
nature whatsoever (other than taxes) which may at any time be imposed on,
incurred by or asserted against Administrative Agent, the Lead Arrangers,
Collateral Agent or such Person in any way relating to or arising out of this
Agreement or any documents contemplated by or referred to herein or therein or
the transactions contemplated hereby or thereby or the enforcement of any of the
terms hereof or thereof or of any such other documents, or any action taken or
omitted by it or any of them under this Agreement or any other Credit Document,
to the extent the same shall not have been reimbursed by Borrower; provided that no
Lender shall be liable to an Agent or an Lead Arranger for any portion of such
liabilities, Taxes, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements found in a final non-appealable judgment
by a court of competent jurisdiction to have resulted primarily from the gross
negligence or willful misconduct of such Agent, such Lead Arranger or any of
their Related Parties. The obligations of the Lenders under this Section 9.5
shall survive payment of all Obligations and the resignation or replacement of
any Agent.  Administrative Agent or any such Person shall be fully
justified in refusing to take or

    
      
         

      

      
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    to
continue to take any action hereunder or under any other Credit Document unless
it shall first be indemnified to its satisfaction by the Lenders against any and
all liability and expense which may be incurred by it by reason of taking or
continuing to take any such action.  Without limitation of the
foregoing, each Lender agrees to reimburse Administrative Agent, the Lead
Arrangers, Collateral Agent or any such Person promptly upon demand for its
Proportionate Share of any out-of-pocket expenses (including reasonable counsel
fees and compensation of agents and employees paid for services rendered on
behalf of the Lenders) incurred by Administrative Agent, the Lead Arrangers,
Collateral Agent or any such Person in connection with the preparation,
execution, administration or enforcement of, or legal advice in respect of
rights or responsibilities under, the Operative Documents, to the extent that
Administrative Agent, the Lead Arrangers, Collateral Agent or any such Person is
not reimbursed for such expenses by Borrower.

     

    9.6    Successor
Agent.  Subject
to the appointment and acceptance of a successor Agent as provided below, any
Agent may resign at any time by notifying the Lenders and
Borrower.  Each of Collateral Agent and Administrative Agent may be
removed involuntarily only for a material breach of its respective duties and
obligations hereunder and under the other Credit Documents or for gross
negligence or willful misconduct in connection with the performance of its
respective duties hereunder or under the other Credit Documents and then only
upon the affirmative vote of the Required Lenders (excluding Administrative
Agent and Collateral Agent (as the case may be) from such vote and
Administrative Agent’s and Collateral Agent’s (as the case may be) Proportionate
Share (if any) of the Commitments from the amounts used to determine the portion
of the Commitments necessary to constitute the required Proportionate Share of
the remaining Lenders).  Upon any such resignation or removal of
either Administrative Agent or Collateral Agent, the Required Lenders shall have
the right, with the consent of Borrower (such consent not to be unreasonably
withheld or delayed) to appoint a successor Administrative Agent or Collateral
Agent (as the case may be).  If no successor Administrative Agent or
Collateral Agent (as the case may be) shall have been so appointed by the
Required Lenders and shall have accepted such appointment, within 45 days
after the retiring Administrative Agent’s or Collateral Agent’s (as the case may
be) giving of notice of resignation or the Lenders’ removal of the retiring
Administrative Agent or Collateral Agent (as the case may be), the retiring
Administrative Agent and Collateral Agent (as the case may be) may, on behalf of
the Secured Parties, with the consent of Borrower (such consent not to be
unreasonably withheld or delayed), appoint a successor Administrative Agent or
Collateral Agent (as the case may be) hereunder, which shall be a Lender, if any
Lender shall be willing to serve, and otherwise shall be a commercial bank
having a combined capital and surplus of at least $500,000,000 or an Affiliate
of any such bank.  Upon the acceptance of any appointment as
Administrative Agent or Collateral Agent (as the case may be) under the
Operative Documents by a successor Administrative Agent or Collateral Agent (as
the case may be), such successor Administrative Agent or Collateral Agent (as
the case may be) shall thereupon succeed to and become vested with all the
rights, powers, privileges and duties of the retiring Administrative Agent or
Collateral Agent (as the case may be), and the retiring Administrative Agent or
Collateral Agent (as the case may be) shall be discharged from its duties and
obligations as Administrative Agent or Collateral Agent (as the case may be)
only under the Credit Documents.  After any retiring Administrative
Agent’s or Collateral Agent’s resignation or removal hereunder

    
      
         

      

      
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    as
Administrative Agent or Collateral Agent (as the case may be), the provisions of
this Article 9 shall inure to its benefit as to any actions taken or
omitted to be taken by it while it was Administrative Agent or Collateral Agent
(as the case may be) under the Operative Documents.  In addition to
the foregoing, if a Lender becomes, and during the period it remains, a
Defaulting Lender, a LC Issuer may, upon prior written notice to the Borrower
and Administrative Agent, resign as a LC Issuer effective at the close of
business New York time on a date specified in such notice (which date may not be
less than 20 Banking Days after the date of such notice); provided that such
resignation by the applicable LC Issuer will have no effect on the validity or
enforceability of any Letter of Credit then outstanding or on the obligations of
the Borrower or any Lender under this Agreement with respect to any such
outstanding Letter of Credit or otherwise to such LC Issuer.  Anything
herein to the contrary notwithstanding, if at any time the Required Lenders
determine that the Person serving as Administrative Agent is a Defaulting
Lender, the Required Lenders (determined after giving effect to Section 9.9) may
by notice to the Borrower and such Person remove such Person as Administrative
Agent and appoint a replacement Administrative Agent hereunder.  Such
removal will, to the fullest extent permitted by applicable law, be effective on
the earlier of (i) the date a replacement Administrative Agent is appointed and
(ii) the date which is five Banking Days after the giving of such notice by the
Required Lenders (regardless of whether a replacement Administrative Agent has
been appointed).

     

    9.7    Authorization.  Each
of the Lenders and each assignee of any such Lender hereby irrevocably
authorizes each of Administrative Agent, Collateral Agent, the Lead Arrangers,
the Co-Book Runners and LC Issuers to take such actions on behalf of such Lender
or assignee and to exercise such powers as are specifically delegated to such
Person in such capacity by the terms and provisions hereof and of the other
Credit Documents, together with such actions and powers as are reasonably
incidental thereto, and each Lender and each assignee or any such Lender hereby
agrees to be bound by any such actions.  Without limiting the
generality of the foregoing, Administrative Agent is hereby expressly authorized
by the Lenders and LC Issuers, without hereby limiting any implied authority,
(a) to receive on behalf of the Lenders and the LC Issuers  all
payments of principal of and interest on the Loans, all payments in respect of
Drawing Payments and all other amounts due to the Lenders and the LC
Issuers  hereunder, and promptly to distribute to each Lender or LC
Issuer  its proper share of each payment so received (and any such
payments not so distributed by Administrative Agent within one Banking Day of
receipt thereof shall bear interest (at Administrative Agent’s expense) at a
rate equal to the greater of (i) the Federal Funds Rate and (ii) a rate
reasonably determined by Administrative Agent in accordance with banking
industry rules on interbank compensation); (b) to give notice on behalf of
each of the Lenders of any Event of Default specified in this Agreement of which
Administrative Agent has actual knowledge acquired in connection with the
performance of its duties as Administrative Agent hereunder; and (c) to
distribute to each Lender copies of all notices, financial statements and other
materials delivered by Borrower pursuant to this Agreement as received by
Administrative Agent.  Each of Administrative Agent and Collateral
Agent is further authorized by the Secured Parties to release Liens on property
that Borrower is permitted to sell or transfer pursuant to the terms of this
Agreement or the other Credit Documents and to enter into agreements
supplemental hereto for the purpose of curing

     

    
      
         

      

      
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    any
formal defect, inconsistency, omission or ambiguity in this Agreement or any
Credit Document to which it is a party.

     

    9.8  Other Roles.  With
respect to its Commitment, the Loans made by it and any Note issued to it, each
of the Lead Arrangers, Collateral Agent, Administrative Agent and LC Issuers in
its individual capacity shall have the same rights and powers under the
Operative Documents as any other Lender and may exercise the same as though it
were not a Lead Arranger, Collateral Agent, Administrative Agent or LC
Issuer.  The term “Lender” or “Lenders” shall, unless otherwise
expressly indicated, include each of the Lead Arrangers, Collateral Agent,
Administrative Agent and LC Issuers in its individual capacity.  Each
of the Lead Arrangers, Collateral Agent, Administrative Agent, LC Issuers and
their respective Affiliates may accept deposits from, lend money to, act as
trustee under indentures of, and generally engage in any kind of business with
any Borrower Party or any other Person, without any duty to account therefor to
the Lenders.  For the avoidance of doubt Collateral Agent may act as
Depositary Agent notwithstanding any potential or actual conflict of interest
presented by the foregoing and any Borrower Party.  Each of the
Lenders hereby waives any claim against each of the Lead Arrangers, Collateral
Agent, Administrative Agent, LC Issuers, the Borrower Parties and any of their
respective Affiliates based upon any conflict of interest that such Lead
Arranger, Collateral Agent, Administrative Agent, LC Issuer or any of their
respective Affiliates may have with regard to acting as an agent, arranger or LC
Issuer hereunder and acting in such other roles.

     

    9.9    Amendments;
Waivers.

     

    9.9.1   Unanimous Consent. Subject to
the provisions of this Section 9.9, unless otherwise specified in this
Agreement or another Credit Document, the Required Lenders (or Administrative
Agent or Collateral Agent upon written direction or consent of the Required
Lenders) and any Borrower Party may enter into agreements, waivers or
supplements hereto for the purpose of adding, modifying or waiving any
provisions to the Credit Documents or changing in any manner the rights of the
Lenders or any Borrower Party hereunder or thereunder or waiving any Inchoate
Default or Event of Default; provided that no such
supplemental agreement shall, without the consent of all of the Lenders or, with
respect to clauses (b) and (d), all of the Lenders and all of the Hedge
Banks:

     

    (a)   increase the amount of the
Commitment of any Lender hereunder;

     

    (b)   amend Section 9.9.1(b) or
(d) or Section 9.9.2(f) or (g);

     

    (c)   amend any other provision of
this Section 9.9;

     

    (d)   release any Collateral with
a fair market value in excess of $10,000,000 (other than (i) pursuant to Section
6.4.2, (ii) pursuant to the Put Option, (iii) pursuant to the Purchase Option,
(iv) as contemplated by the definition of Change of Control, (v) in respect of
any Loss Event or Event of Eminent Domain or (vi) as otherwise expressly
permitted hereby or under any other Operative Document) from the Lien of any of
the Collateral Documents;

     

    
      
         

      

      
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    (e)   extend the Maturity Date or
reduce the principal amount of any outstanding Loans or Notes or reduce the rate
or change the time of payment of interest due on any Loan; provided that only
the consent of the Required Lenders shall be necessary to amend the definition
of “Default Rate” contained in Section 2.5.3 or to waive any obligation of
Borrower to pay interest at the Default Rate;

     

    (f)   reduce the amount or extend
the payment date for any amount due, whether principal or interest;
or

     

    (g)   add, modify or waive any
provisions to the Credit Documents so as to subordinate the Loans to any other
Debt.

     

    9.9.2   Affected Party
Consent.  Notwithstanding anything to the contrary herein, no
agreement, waiver or supplement hereto shall add, modify or waive any provisions
to the Credit Documents, or change in any manner the rights of the Lenders,
Hedge Banks or any Borrower Party hereunder or thereunder, so as
to:

     

    (a)    amend or modify any
provision set forth in Sections 2.1.6(b)(ii), 2.1.6(c)(ii), 2.5.5, 2.6.1 or
2.6.2 in a manner that would alter the pro rata sharing of payments
with respect to the applicable Loan facility without the prior written consent
of each Lender adversely affected thereby;

     

    (b)   extend the stated expiration
date of a DSR Letter of Credit beyond the Maturity Date, without the prior
written consent of each Lender directly affected thereby and the applicable DSR
LC Issuer;

     

    (c)   change the order of priority
of payments set forth in Sections 3.1(b), 3.3(b), 3.3(c), 3.4(b) or 3.4(c) of
the Depositary Agreement, without the prior written consent of each Lender
adversely affected thereby;

     

    (d)   amend, modify or otherwise
affect the rights or duties of Administrative Agent, Collateral Agent, a Lead
Arranger or a LC Issuer without the prior written consent of Administrative
Agent, Collateral Agent, such Lead Arranger or such LC Issuer, as applicable,
acting as such at the effective date of such agreement;

     

    (e)   amend the definition of
“Lenders” or reduce the percentage specified in the definition “Required
Lenders” or “Super Majority Lenders” or any other provision hereof specifying
the number or percentage of Lenders required to waive, amend or modify any
rights hereunder or make any determination or grant any consent hereunder,
without the prior written consent of each Lender adversely affected
thereby;

     

    (f)   change
the relative priority or the extent of the security interest granted in favor of
any Lender or Hedge Bank as compared to the priority or the extent of the
security interest granted in favor of any other Lender or Hedge Bank, without
the prior written consent of each Lender or Hedge Bank adversely affected
thereby; or

     

    
      
         

      

      
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    (g)   otherwise
subordinate the Obligations of the Borrower Parties in respect of the Interest
Rate Agreements to any other Obligations of the Borrower Parties hereunder,
without the prior written consent of each Hedge Bank adversely affected
thereby.

     

    9.9.3   Super Majority
Consent.  Notwithstanding anything to the contrary herein,
after the occurrence of an Event of Default or an Inchoate Event of Default
which is continuing, no such Event of Default or Inchoate Event of Default may
be waived, consented to, amended or modified except pursuant to an agreement
entered into in writing by the Super Majority Lenders.  For the avoidance
of doubt, it is understood that if any waiver, consent, amendment or
modification does not cure or waive an Event of Default or an Inchoate Event of
Default which is then in existence, this Section 9.9.3 shall not apply to
such waiver, consent, amendment or modification.

     

    9.9.4   Defaulting
Lenders.  Anything herein to the contrary notwithstanding,
during such period as a Lender is a Defaulting Lender, to the fullest extent
permitted by applicable law, such Lender will not be entitled to vote in respect
of amendments and waivers hereunder and the Commitment and the outstanding Loans
or other extensions of credit of such Lender hereunder will not be taken into
account in determining whether the Required Lenders, the Super Majority Lenders
or all of the Lenders, as required, have approved any such amendment or waiver
(and the definition of “Required Lenders” or “Super Majority Lenders” will
automatically be deemed modified accordingly for the duration of such
period).

     

    9.9.5   Minor
Defects.  Notwithstanding the other provisions of this Section
9.9, the applicable Borrower Parties, Administrative Agent or Collateral Agent
may (but shall have no obligation to) amend or supplement the Credit Documents
without the consent of any other Secured Party for the purpose of (a) curing any
ambiguity, defect or inconsistency, (b) making any change that would provide any
additional rights or benefits to the Secured Parties or that does not adversely
affect the legal rights hereunder of any Secured Party and (c) making,
completing or confirming any grant of Collateral permitted or required by this
Agreement or any of the Credit Documents or any release of any Collateral that
is otherwise permitted under the terms of this Agreement and the Credit
Documents.

     

    9.9.6   Sale of
Project.  Notwithstanding the other provisions of this Section
9.9, upon the sale of a Project (whether in connection with the Put Option or
Purchase Option or otherwise) in accordance with Section 11.24, Administrative
Agent and Borrower will amend the Credit Documents as necessary to reflect the
release of the applicable Project.

     

    9.10    Withholding
Tax.  If
the forms or other documentation required by Section 2.5.6 are not
delivered to Administrative Agent, then Administrative Agent may withhold from
any interest payment to any Secured Party not providing such forms or other
documentation, an amount equivalent to the applicable withholding
tax.

     

    9.10.1   If the
Internal Revenue Service or any authority of the United States or other
jurisdiction asserts a claim that Administrative Agent did not properly withhold
tax from amounts paid to or for the account of any Secured Party (because the
appropriate form was not

    
      
         

      

      
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    delivered,
was not properly executed, or because such Secured Party failed to notify
Administrative Agent of a change in circumstances which rendered the exemption
from, or reduction of, withholding tax ineffective, or for any other reason),
then such Secured Party shall indemnify Administrative Agent fully for all
amounts paid, directly or indirectly, by Administrative Agent as tax or
otherwise, including penalties and interest, together with all expenses
incurred, including legal expenses, allocated staff costs, and any out of pocket
expenses.  The obligations of the Secured Parties under this Section
9.10.1 shall survive the payment of all Obligations and the resignation or
replacement of Administrative Agent.  Borrower shall not be
responsible for any amounts paid or required to be paid by a Secured Party under
this Section 9.10.1.

     

    9.10.2   If any
Lender or LC Issuer sells, assigns, grants participation in, or otherwise
transfers its rights under this Agreement, the purchaser, assignee, participant
or transferee, as applicable, shall comply and be bound by the terms of
Section 2.5.6 and this Section 9.10 as though it were such Lender or LC
Issuer.

     

    9.11    General
Provisions as to Payments.  Administrative
Agent shall promptly distribute to each Lender, subject to the terms of any
separate agreement between Administrative Agent and such Lender, its pro rata share of each
payment of principal and interest payable to the Lenders on the Loans and of
fees hereunder received by Administrative Agent for the account of the Lenders
and of any other amounts owing under the Loans. The payments made for the
account of each Lender shall be made, and distributed to it, for the account of
(a) its domestic lending office in the case of payments of principal of,
and interest on, its Base Rate Loans, (b) its domestic or foreign lending
office, as each Lender may designate in writing to Administrative Agent, in the
case of LIBOR Loans, and (c) its domestic lending office, or such other
lending office as it may designate for the purpose from time to time, in the
case of payments of fees and other amounts payable hereunder.

     

    9.12    Substitution of
Lender.  Should
any Lender fail to make a Loan in violation of its obligations under this
Agreement (a “Non-Advancing Bank”),
Administrative Agent shall (a) in its sole discretion fund the Loan on
behalf of the Non-Advancing Bank, or (b) cooperate and consult with
Borrower or any other Lender to find another Person that shall be acceptable to
Administrative Agent and that shall be willing to assume the Non-Advancing
Bank’s obligations under this Agreement (including the obligation to make the
Loan which the Non-Advancing Bank failed to make but without assuming any
liability for damages for failing to have made such Loan or any previously
required Loan).  Subject to the provisions of the next following
sentence, such Person shall be substituted for the Non-Advancing Bank hereunder
upon execution and delivery to Administrative Agent of an agreement acceptable
to Administrative Agent by such Person assuming the Non-Advancing Bank’s
obligations (including its Commitments) under this Agreement, and all interest
and fees which would otherwise have been payable to the Non-Advancing Bank shall
thereafter be payable to such Person.  Nothing in (and no action taken
pursuant to) this Section 9.12 shall relieve the Non-Advancing Bank from
any liability it might have to Borrower or to the other Lenders as a result of
its failure to make any Loan.

     

    
      
         

      

      
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    9.13    Participation.

     

    9.13.1   Sales of
Participation.  Any Lender may, without the consent of
Borrower, Administrative Agent or any LC Issuer, sell participations to one or
more banks or other entities (a “Participant”) in all
or a portion of such Lender’s rights and obligations under this Agreement
(including all or a portion of its Commitments and the Loans and Drawing
Payments owing to it); provided that
(a) no such sale of a participation shall alter such Lender’s or Borrower’s
obligations hereunder, (b) such Lender shall remain solely responsible to
the other parties hereto for the performance of such obligations and
(c) Borrower and the Lender Parties shall continue to deal solely and
directly with such Lender in connection with such Lender’s rights and
obligations under this Agreement, and (c) any agreement or instrument (oral or
written) pursuant to which any Secured Party may grant a participation in its
rights with respect to its Commitment (or Loans made hereunder) shall provide
that, with respect to such Commitment (or Loans made hereunder), subject to the
following proviso, such Lender shall retain the sole right and responsibility to
exercise the rights of such Lender, and enforce the obligations of Borrower
relating to such Commitment (or Loans made hereunder), including the right to
approve any amendment, modification or waiver of any provision of this Agreement
or any other Credit Document and the right to take action to have the
Obligations hereunder (or any portion thereof) declared due and payable pursuant
to Article 7; provided that (A)
such agreement may provide that the participant may have rights to approve or
disapprove decreases in Commitments, interest rates or fees, lengthening of
maturity of any Loans, extend the payment date for any amount due under
Article 2 or release any Collateral with a fair market value in excess of
$10,000,000 (other than (i) pursuant to Section 6.4.2, (ii) pursuant to the Put
Option, (iii) pursuant to the Purchase Option, (iv) as contemplated by the
definition of Change of Control, (v) in respect of any Loss Event or Event of
Eminent Domain or (vi) as otherwise expressly permitted hereby or under any
other Operative Document) and (B) no other agreement (oral or written) with
respect to such Participant may exist between such Lender and such
Participant.  No recipient of a participation in any Commitment or
Loans of any Lender shall have any rights under this Agreement or shall be
entitled to any reimbursement for Taxes, Other Taxes, increased costs or reserve
requirements under Section 2.7 or 2.8 or any other indemnity or
payment rights against Borrower (but shall be permitted to receive from the
Lender granting such participation a proportionate amount which would have been
payable to the Lender from whom such Person acquired its
participation).  Each Lender that sells a participation shall maintain
a register on which it enters the name and address of each Participant and the
principal amounts of each Participant’s interest in the Loans or Drawing
Payments (or other rights or obligations) held by it.  The entries in
such register shall be conclusive, and such Lender shall treat each Person whose
name is recorded in such register as the owner of such Loan, Drawing Payments
(or other right or obligation) hereunder as the owner thereof for all purposes
of this Agreement notwithstanding any notice to the contrary.  Any
such register shall be available for inspection by an Agent at any reasonable
time and from time to time upon reasonable prior notice.

     

    9.13.2   Special Purpose Funding
Vehicles.  Notwithstanding anything to the contrary contained
herein, any Lender (a “Granting Bank”) may
grant to a special purpose funding vehicle (a “SPC”), identified as
such in writing from time to time by the Granting Bank to Administrative Agent
and Borrower, the option to provide to Borrower all or any part of
any

    
      
         

      

      
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    Loan that
such Granting Bank would otherwise be obligated to make to Borrower pursuant to
this Agreement; provided that
(a) nothing herein shall constitute a commitment by any SPC to make any
Loan, and (b) if a SPC elects not to exercise such option or otherwise
fails to provide all or any part of such Loan, the Granting Bank shall be
obligated to make such Loan pursuant to the terms hereof.  The making
of a Loan by a SPC hereunder shall utilize the Commitment of the Granting Bank
to the same extent, and as if, such Loan were made by such Granting
Bank.  Each party hereto hereby agrees that no SPC shall be liable for
any indemnity or similar payment obligation under this Agreement (all liability
for which shall remain with the Granting Bank).  In furtherance of the
foregoing, each party hereto hereby agrees (which agreement shall survive the
termination of this Agreement) that, prior to the date that is one year and one
day after the payment in full of all outstanding commercial paper or other
senior indebtedness of any SPC, it will not institute against, or join any other
Person in instituting against, such SPC any bankruptcy, reorganization,
arrangement, insolvency or liquidation proceedings under the laws of the United
States or any state thereof.  In addition, notwithstanding anything to
the contrary contained in this Section 9.13, any SPC may (i) with
notice to, but without the prior written consent of, Borrower, Administrative
Agent or  and without paying any processing fee therefor, assign all
or a portion of its interests in any Loans to the Granting Bank or to any
financial institutions (consented to by Borrower and Administrative Agent)
providing liquidity or credit support to or for the account of such SPC to
support the funding or maintenance of Loans, and (ii) disclose on a
confidential basis any non-public information relating to its Loans to any
rating agency, commercial paper dealer or provider of any surety, guarantee or
credit or liquidity enhancement to such SPC.  This Section 9.13.2
may not be amended without the written consent of all SPCs having outstanding
Loans or Commitments hereunder.

     

    9.14    Transfer of
Commitment.  Notwithstanding
anything else herein to the contrary (but subject to Section 9.13.2), any
Lender, after receiving Administrative Agent’s prior written consent (such
consent not to be unreasonably withheld) and (so long as no Event of Default has
occurred and is continuing) after receiving Borrower’s prior written consent
(such consent not to be unreasonably withheld), may from time to time, at its
option, sell, assign, transfer, negotiate or otherwise dispose of a portion of
one or more of its Commitments (including, for purposes of this
Section 9.14, Loans made hereunder) (including the Lender’s interest in
this Agreement and the other Credit Documents) to any Lender; provided that no
Lender (including any assignee of any Lender) may assign any portion of its
Commitment (including Loans) (a) in an amount less than $5,000,000 (unless
to another Lender), or (b) in an amount which leaves the assigning Lender
with a Commitment (including Loans) of less than $5,000,000 (in each case based
on the original principal amount of the Commitment assigned) after giving effect
to such assignment and all previous assignments (except that a Lender may be
left with no Commitment or Loans if it assigns its entire Commitment); provided, further, that any
Lender may assign all or any portion of its Commitments to an Affiliate of such
Lender without the consent of any Person.  An assignee shall not be
entitled to receive any greater payment under Section 2.5.4, 2.7 and 2.8 than
the applicable Lender would have been entitled to receive with respect to the
interest assigned to such assignee.  In addition, notwithstanding
anything else herein to the contrary, any Lender may assign all or any portion
of the Term Loans or Notes held by it to any Federal Reserve Bank or the United
States Treasury as collateral security pursuant to Regulation A of the
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    issued by
such Federal Reserve Bank; provided that any
payment in respect of such assigned Term Loans or Notes made by Borrower to or
for the account of the assigning or pledging Lender in accordance with the terms
of this Agreement shall satisfy Borrower’s obligations hereunder in respect to
such assigned Term Loans or Notes to the extent of such payment; provided, further, that no such
assignment shall release the assigning Lender from its obligations hereunder and
in no event shall the Federal Reserve Bank be considered a “Lender”
hereunder.   An assignee shall not be entitled to the benefits of
Section 2.5.4 to the extent such assignee fails to comply with Section
2.5.6.  In the event of any such assignment, (i) the assigning
Lender’s Proportionate Share shall be reduced and its obligations hereunder
released by the amount of the Proportionate Share assigned to the new Lender,
(ii) the parties to such assignment shall execute and deliver an
appropriate agreement evidencing such sale, assignment, transfer or other
disposition, in form and substance reasonably satisfactory to Administrative
Agent and Borrower, (iii) the parties to the sale, assignment, transfer or
other disposition, excluding Borrower, shall collectively pay to Administrative
Agent an administrative fee of $3,500, (iv) at the assigning Lender’s
option, Borrower shall execute and deliver to such new Notes in the forms
attached hereto as Exhibit B-1, as
requested, in a principal amount equal to such assignee new Lender’s Commitment,
but only if it shall also be executing and exchanging with the assigning Lender
a replacement note for any Note in an amount equal to the Commitment retained by
the assigning Lender, if any; provided that
Borrower shall have received for cancellation the existing Note held by such
assigning Lender, and (v) Administrative Agent shall amend Exhibit H to
reflect the Proportionate Shares of the Lenders following such
assignment.  Thereafter, such new Lender shall be deemed to be a
Lender and shall have all of the rights and duties of a Lender (except as
otherwise provided in this Article 9), in accordance with its Proportionate
Share, under each of the Credit Documents.  No assignment shall be
effective for purposes of this Agreement unless it has been recorded in the
Register as provided in Section 2.1.7.

     

    9.15    Laws.  Notwithstanding
the foregoing provisions of this Article 9, no sale, assignment, transfer,
negotiation or other disposition of the interests of any Lender hereunder or
under the other Credit Documents shall be allowed if it would require
registration under the federal Securities Act of 1933, as then amended, any
other federal securities laws or regulations or the securities laws or
regulations of any applicable jurisdiction.  Borrower shall, from time
to time at the request and expense of Administrative Agent, execute and deliver
to Administrative Agent, or to such party or parties as Administrative Agent may
designate, any and all further instruments as may in the opinion of
Administrative Agent be reasonably necessary or advisable to give full force and
effect to such sale, assignment, transfer, negotiation or disposition which
would not require any such registration.

     

    9.16    Assignability as
Collateral.  Notwithstanding
any other provision contained in this Agreement or any other Credit Document to
the contrary, any Lender may assign all or any portion of the Loans or Notes
held by it to the Federal Reserve Bank and the United States Treasury as
collateral security; provided that any
payment in respect of such assigned Loans or Notes made by Borrower to or for
the account of the assigning or pledging Lender in accordance with the terms of
this Agreement shall satisfy Borrower’s obligations

     

    
      
         

      

      
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    hereunder
in respect of such assigned Loans or Notes to the extent of such
payment.  No such assignment shall release the assigning Lender from
its obligations hereunder.

     

    9.17    Notices to
Lenders.  Administrative
Agent promptly shall deliver all material documents, instruments and notices
that it receives hereunder and under the other Operative Documents to each
Lender.  Except as expressly provided in this Agreement or the other
Credit Documents, the Borrower shall not be required to deliver any documents,
instruments or notices directly to the Lenders.

     

    9.18    Collateral
Agent.  Collateral
Agent shall:

     

    9.18.1   forward
promptly to Administrative Agent any notice delivered to Collateral Agent
pursuant to any Consent;

     

    9.18.2   have
the right, but not the obligation, to (a) refuse any item for credit to any
Account except as required by the terms of the Credit Documents, (b) refuse
to honor any request for transfer in relation to any Account that is not
consistent with the Credit Documents, (c) charge to any Account all
applicable charges related to maintaining such Accounts, and (d) pay fees,
interest and other charges owing by Borrower as provided herein and in the other
Operative Documents;

     

    9.18.3   except
as otherwise provided herein and in the Depositary Agreement (including by the
provision of standing instructions therein), take all actions and make all
determinations with respect to the Collateral, the Security Documents (including
as to the advisability of taking additional steps to perfect, or cause the
perfection of, any security interest) and the other Credit Documents to which it
is a party as directed in writing by Administrative Agent (acting in accordance
with Section 9.7); and

     

    9.18.4   have
the right at any time to seek clarification and instructions concerning the
administration of the Credit Documents from Administrative Agent, legal counsel
selected by it in good faith with reasonable care or any court of competent
jurisdiction and shall be fully protected in relying upon such
instructions.

     

    ARTICLE
10

     

    INDEPENDENT
CONSULTANTS

     

    10.1    Removal and
Fees.  Administrative
Agent, in its reasonable discretion, may remove from time to time, any one or
more of the Independent Consultants and Administrative Agent may appoint
replacements, which, so long as no Default or Event of Default shall have
occurred and be continuing, shall be reasonably acceptable to
Borrower.  Notice of any replacement Independent Consultant shall be
given by Administrative Agent to Borrower, the Lenders and to the Independent
Consultant being replaced.  All reasonable fees and expenses of the
Independent Consultants (whether the original ones or replacements) shall be
paid by Borrower pursuant to agreements reasonably acceptable to Borrower; provided that no such
acceptance shall be required at any time an Event of Default shall have occurred
and be continuing.

    
      
         

      

      
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    10.2    Certification of
Dates.  Administrative
Agent will request that the Independent Consultants act diligently in the
issuance of all certificates required to be delivered by the Independent
Consultants hereunder, if their issuance is appropriate.  Borrower
shall provide the Independent Consultants with reasonable notice of the expected
occurrence of any dates or events requiring the issuance of such
certificates.

     

    ARTICLE
11

     

    MISCELLANEOUS

     

    11.1    Addresses.  Any
communications between the parties hereto or notices provided herein to be given
may be given to the following addresses:

     

    

      
        	
                If
      to Administrative Agent or

                Collateral
      Agent:

              	
                Calyon
      New York Branch

                1301
      Avenue of the Americas

                New
      York, NY  10019-6022

                Attn:  Structured
      Finance International Agency Group – Portfolio Management

                Telephone:  (212)
      261-7882

                Fax:  (917)
      849-5054

                E-mails:
      Robert.Colvin@us.calyon.com;
      Justine.Ventrelli@us.calyon.com

              
	 
      	 
      
	
                If
      to Borrower:

              	
                Calpine
      Steamboat Holdings, LLC

                717
      Texas Avenue, Suite 1000

                Houston,
      Texas 77002

                Telephone:  (713)
      830-8845

                Fax:  (713)
      830-8751

                Attn:  Contract
      Administration

              
	 
      	 
      
	 
      	
                With
      a copy to:

                Calpine
      Steamboat Holdings, LLC

                717
      Texas Avenue, Suite 1000

                Houston,
      Texas 77002

                Telephone:  (713)
      570-4719

                Fax:  (713)
      353-9131

                Attn:  Chief
      Legal Officer

              

      

    

     

    All such
notices or other communications required or permitted to be given hereunder
shall be in writing and shall be considered as properly given (a) if
delivered in person, (b) if sent by overnight delivery service (including
Federal Express, UPS, ETA, Emery, DHL, AirBorne and other similar overnight
delivery services), (c) if mailed by first class United States Mail,
postage prepaid, registered or certified with return receipt requested,
(d) if sent by facsimile with receipt confirmed by telephone, or
(e) by Electronic Transmission (as defined

     

    
      
         

      

      
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    below).  Notice
so given shall be effective upon receipt by the addressee, except that
communication or notice so transmitted by facsimile or other direct written
electronic means shall be deemed to have been validly and effectively given on
the day (if a Banking Day and, if not, on the next following Banking Day) on
which it is transmitted if transmitted before 4:00 p.m., recipient’s time,
and if transmitted after that time, on the next following Banking Day; provided that if any
notice is tendered to an addressee and the delivery thereof is refused by such
addressee, such notice shall be effective upon such tender.  Any party
shall have the right to change its address for notice hereunder to any other
location within the continental United States by giving of 30 days’ notice
to the other parties in the manner set forth above.

     

    Any Borrower Party may deliver to
Administrative Agent, Collateral Agent or Depositary Agent, as the case may be,
any borrowing certificate, collateral report or other material that such
Borrower Party is required to deliver to Administrative Agent, Collateral Agent
or Depositary Agent (as the case may be) hereunder or under the other Credit
Documents, by e-mail or other electronic transmission (an “Electronic
Transmission”), subject to the following terms:

     

    (1)           Each
Electronic Transmission must be sent by the treasurer or chief financial officer
of the applicable Borrower Party (or any other authorized representative), and
must be addressed to the e-mail address specified above in this Section 11.1 or
such other e-mail address, as designated by Administrative Agent or Collateral
Agent (as the case may be) from time to time in accordance with this Section
11.1.  If any Electronic Transmission is returned to the sender as
undeliverable, the material included in such Electronic Transmission must be
delivered to the intended recipient in the manner required by
Section 11.1.

     

    (2)           Each
certificate, collateral report or other material contained in an Electronic
Transmission must be in a “pdf” or other imaging format.  Any
signature on a certificate, collateral report or other material contained in an
Electronic Transmission shall constitute a valid signature for purposes
hereof.  Administrative Agent and Collateral Agent may rely upon, and
assume the authenticity of, any such signature, and any material containing such
signature shall constitute an “authenticated” record for purposes of the Uniform
Commercial Code and shall satisfy the requirements of any applicable statute of
frauds.

     

    (3)           The
Borrower Parties shall maintain the original versions of all certificates,
collateral reports and other materials delivered to Administrative Agent or
Collateral Agent by means of an Electronic Transmission and shall furnish to
Administrative Agent or Collateral Agent such original versions within five
Banking Days of Administrative Agent or Collateral Agent’s request for such
materials, signed and certified (to the extent required hereunder) by the
officer submitting the Electronic Transmission.

     

    11.2    Right to
Set-Off.  If
an Event of Default shall have occurred and be continuing, each Secured Party is
hereby authorized at any time and from time to time, to the

    
      
         

      

      
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    fullest
extent permitted by law, to set off and apply any and all deposits (general or
special, time or demand, provisional or final) at any time held and other
indebtedness at any time owing by such Secured Party to or for the credit or the
account of Borrower, against any and all obligations of Borrower, now or
hereafter existing under this Agreement or any other Credit Document held by
such Secured Party, irrespective of whether or not such Secured Party shall have
made any demand under this Agreement or such other Credit Document and although
the obligations may be unmatured.  The rights of each Secured Party
under this Section are in addition to other rights and remedies (including
other rights of set-off) that such Secured Party may have.

     

    11.3    Delay and
Waiver.  No
delay or omission to exercise any right, power or remedy accruing to the Secured
Parties upon the occurrence of any Event of Default, Inchoate Default, Material
Adverse Change or any breach or default of any Borrower Party or any other
Calpine Entity or unsatisfied condition precedent under this Agreement or any
other Credit Document shall impair any such right, power or remedy of the
Secured Parties, nor shall it be construed to be a waiver of any such breach or
default or unsatisfied condition precedent, or an acquiescence therein, or of or
in any similar breach or default or unsatisfied condition precedent thereafter
occurring, nor shall any waiver of any single Event of Default, Inchoate
Default, Material Adverse Change or other breach or default or unsatisfied
condition precedent be deemed a waiver of any other Event of Default, Inchoate
Default, Material Adverse Change or other breach or default or unsatisfied
condition precedent theretofore or thereafter occurring.  Any waiver,
permit, consent or approval of any kind or character on the part of
Administrative Agent, Collateral Agent or the Secured Parties of any Event of
Default, Inchoate Default, Material Adverse Effect or other breach or default or
unsatisfied condition precedent under this Agreement or any other Credit
Document, or any waiver on the part of Administrative Agent, Collateral Agent or
the Secured Parties of any provision or condition of this Agreement or any other
Credit Document, must be in writing and shall be effective only to the extent in
such writing specifically set forth.  All remedies, either under this
Agreement or any other Credit Document or by law or otherwise afforded to
Administrative Agent, Collateral Agent, LC Issuers and the Secured Parties,
shall be cumulative and not alternative.

     

    11.4    Costs, Expenses
and Attorneys’ Fees; Syndication.

     

    11.4.1   Borrower
will pay to each of Administrative Agent, Collateral Agent, and the Lead
Arrangers all of their respective reasonable and documented out-of-pocket costs
and expenses (net of any costs and expenses paid prior to the Reinstatement
Date) in connection with the preparation, negotiation, closing and administering
of this Agreement and the documents contemplated hereby and any participation or
syndication of the Loans or this Agreement (with respect to any participation or
syndication of the Loans, prior to the Restatement Date), including the
reasonable fees, expenses and disbursements of Latham & Watkins LLP,
together with one legal counsel retained by Administrative Agent or Collateral
Agent in the States of Minnesota and Texas in connection with the preparation of
such documents and any amendments hereof; provided that
Borrower shall not be required to pay the fees of the other Lenders’
attorneys.  Borrower will reimburse (a) Administrative Agent and
Collateral Agent for all costs and expenses, including reasonable attorneys’
fees, expended or incurred by Administrative Agent, Collateral Agent, and the
Lenders for their reasonable internal out-of-pocket expenses (but
not,

    
      
         

      

      
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    in the
case of the Lenders, for counsel fees), in enforcing this Agreement or the other
Credit Documents in connection with an Event of Default or Inchoate Default, in
actions for declaratory relief in any way related to this Agreement or in
collecting any sum which becomes due on the Notes or under the Credit Documents
and (b) Administrative Agent, Collateral Agent, and the Lenders for their
reasonable out-of-pocket expenses, including reasonable attorney fees and
reasonable expert, consultant and advisor fees and expenses, in the case of a
restructuring of the Loans or otherwise relating to the occurrence of any
Inchoate Default or Event of Default.  Borrower shall not be
responsible for any counsel fees of the Lead Arrangers, Administrative Agent,
Collateral Agent or the Lenders other than as set forth above, in Section 11.14
or as otherwise set forth in a separate agreement.

     

    11.4.2   In
connection with syndication of the Loans and Commitments prior to the
Restatement Date, an information package containing certain relevant information
concerning each Borrower Party, the Projects and the other Project participants
(including a computer model prepared by Borrower containing the Base Case
Project Projections) will be prepared on behalf of Borrower and provided to
potential Lenders and participants.  Borrower agrees to cooperate and
to cause each other Borrower Party and Sponsor to cooperate in the syndication
of the Loans and Commitments in all respects reasonably requested by the Lead
Arrangers, including participation of each Borrower Party and Sponsor in bank
meetings held in connection with such syndication, in each case prior to the
Restatement Date.

     

    11.5    Entire
Agreement.  This
Agreement and any agreement, document or instrument attached hereto or referred
to herein integrate all the terms and conditions mentioned herein or incidental
hereto and supersede all oral negotiations and prior writings in respect to the
subject matter hereof.  Except as otherwise expressly provided, in the
event of any conflict between the terms, conditions and provisions of this
Agreement and any such agreement, document or instrument, the terms, conditions
and provisions of this Agreement shall prevail.

     

    11.6    Governing
Law.  THIS
AGREEMENT AND ANY OTHER CREDIT DOCUMENT (UNLESS OTHERWISE EXPRESSLY PROVIDED FOR
THEREIN), SHALL BE GOVERNED BY, AND CONSTRUED UNDER, THE LAWS OF THE STATE OF
NEW YORK, WITHOUT REFERENCE TO CONFLICTS OF LAWS (OTHER THAN SECTION 5-1401
AND SECTION 5-1402 OF THE NEW YORK GENERAL OBLIGATIONS LAW).

     

    11.7    Severability.  In
case any one or more of the provisions contained in this Agreement should be
invalid, illegal or unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions shall not in any way be affected or
impaired thereby.

     

    11.8    Headings.  Article,
Section and Paragraph headings have been inserted in this Agreement as a matter
of convenience for reference only and it is agreed that such headings are not a
part of this Agreement and shall not be used in the interpretation of any
provision of this Agreement.

     

    
      
         

      

      
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    11.9    Accounting
Terms.  All
accounting terms not specifically defined herein shall be construed in
accordance with GAAP and practices consistent with those applied in the
preparation of the financial statements submitted by Borrower to Administrative
Agent, and all financial data submitted pursuant to this Agreement shall be
prepared in accordance with such principles and practices.

     

    11.10    Additional
Financing.  The
parties hereto acknowledge that as of the date hereof the Lenders have made no
agreement or commitment to provide any financing except as set forth
herein.

     

    11.11    No Partnership,
Etc.  The
Lenders and Borrower intend that the relationship between them shall be solely
that of creditor and debtor.  Nothing contained in this Agreement, the
Notes or in any of the other Credit Documents shall be deemed or construed to
create a partnership, tenancy-in-common, joint tenancy, joint venture or
co-ownership by or between the Lenders and Borrower or any other
Person.  None of the Lead Arrangers, Administrative Agent, Collateral
Agent or the Lenders shall be in any way responsible or liable for the debts,
losses, obligations or duties of Borrower or any other Person with respect to
the Projects or otherwise.  All obligations to pay real property or
other taxes, assessments, insurance premiums, and all other fees and charges
arising from the ownership, operation or occupancy of the Projects (if any) and
to perform all obligations and other agreements and contracts relating to the
Projects shall be the sole responsibility of Borrower Parties.

     

    11.12    Deed of
Trust/Collateral Documents.  Certain
guaranties of the Loans are secured in part by the FEC Deed of Trust and the MEC
Mortgage encumbering certain properties in the States of Texas and Minnesota, in
each case, solely to the extent provided therein. Reference is hereby made to
the FEC Deed of Trust and the MEC Mortgage and the other Collateral Documents
for the provisions, among others, relating to the nature and extent of the
security provided thereunder, the rights, duties and obligations of Borrower and
the rights of Administrative Agent, Collateral Agent and the other Secured
Parties with respect to such security.

     

    11.13    Limitation on
Liability.  No
claim shall be made by any Borrower Party against the Lead Arrangers,
Administrative Agent, Collateral Agent, the Lenders, LC Issuers or any of their
respective Affiliates, directors, employees, attorneys or agents for any loss of
profits, business or anticipated savings, special or punitive damages or any
indirect or consequential loss whatsoever in respect of any breach or wrongful
conduct (whether or not the claim therefor is based on contract, tort or duty
imposed by law), in connection with, arising out of or in any way related to the
transactions contemplated by this Agreement or the other Operative Documents or
any act or omission or event occurring in connection therewith, and each
Borrower Party hereby waives, releases and agrees not to sue upon any such claim
for any such damages, whether or not accrued and whether or not known or
suspected to exist in its favor, in each case, except to the extent such claim
is based on gross negligence or willful misconduct of such Person.  No
claim shall be made by any Lead Arranger, Administrative Agent, Collateral
Agent, Lender or LC Issuer against any Borrower Party or any of their respective
Affiliates, directors, employees, attorneys or agents for any loss of profits,
business or anticipated savings, special or punitive

    
      
         

      

      
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    damages
or any indirect or consequential loss whatsoever in respect of any breach or
wrongful conduct (whether or not the claim therefor is based on contract, tort
or duty imposed by law), in connection with, arising out of or in any way
related to the transactions contemplated by this Agreement or the other
Operative Documents or any act or omission or event occurring in connection
therewith, and each of the Lead Arrangers, Administrative Agent, Collateral
Agent, the Lenders and LC Issuers hereby waives, releases and agrees not to sue
upon any such claim for any such damages, whether or not accrued and whether or
not known or suspected to exist in its favor, in each case, except to the extent
such claim is based on gross negligence or willful misconduct of such
Person.

     

    11.14    Indemnity.  Each
Borrower Party agrees to indemnify Lead Arrangers, Administrative Agent,
Collateral Agent, the Lenders, LC Issuers and each of their respective
directors, trustees, officers, employees, affiliates, investment advisors and
agents (each such Person being called an “Indemnitee”) against,
and to hold each Indemnitee harmless from, any and all losses, claims, damages,
liabilities and related expenses (other than taxes), including reasonable and
documented counsel fees, charges and disbursements, incurred by or asserted
against any Indemnitee (collectively, “Subject Claims”)
arising out of, in any way connected with, or as a result of (i) the execution
or delivery of this Agreement or any other Credit Document or any agreement or
instrument contemplated hereby or thereby, the performance by the parties hereto
and thereto of their respective obligations hereunder or thereunder or the
consummation of the other transactions contemplated hereby, (ii) the use of the
proceeds of the Loans or the use of any Letter of Credit or (iii) any claim,
litigation, investigation or proceeding relating to any of the foregoing,
whether or not any Indemnitee is a party thereto (other than claims solely as
between the Lenders and/or the Lead Arrangers); provided that such
indemnity shall not, as to any Indemnitee, be available to the extent that the
applicable Subject Claim results primarily from the bad faith, gross negligence
or willful misconduct of such Indemnitee, as determined by the final judgment of
a court of competent jurisdiction.  Subject to and without limiting
the generality of the foregoing sentence, each Borrower Party agrees to
indemnify each Indemnitee against, and hold each Indemnitee harmless from, any
and all Subject Claims arising out of, in any way connected with, or as a result
of (A) any Environmental Claim to the extent related in any way to any Borrower
Party or either Project, or (B) any actual or alleged presence, Release or
threatened Release of Hazardous Substances at, under, on or from any real
property, any property owned, leased or operated by any predecessor of any
Borrower Party, or, to the extent related in any way to any Borrower Party, any
property at which any Borrower Party has sent Hazardous Substances for
treatment, storage or disposal; provided that such
indemnity shall not, as to any Indemnitee, be available to the extent that the
applicable Subject Claim results from the bad faith, gross negligence or willful
misconduct of such Indemnitee or any of its Affiliates, as determined by the
final judgment of a court of competent jurisdiction.  The provisions
of this Section shall remain operative and in full force and effect
regardless of the expiration of the term of this Agreement, the consummation of
the transactions contemplated hereby, the repayment of any of the Obligations,
the invalidity or unenforceability of any term or provision of this Agreement or
any other Credit Document, or any investigation made by or on behalf of any
Lender.  All amounts due under this Section shall be payable
within 30 days at the written demand therefor accompanied by reasonable
documentation with respect to any reimbursement, indemnification or other amount
requested.  This Section 11.14 shall not apply to

    
      
         

      

      
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    Taxes.  Each
Indemnitee agrees to provide the applicable Borrower Party with written notice
of a proposed compromise or settlement of any Subject Claim specifying in detail
the nature and amount of such proposed settlement or compromise. Such Indemnitee
shall consult with the applicable Borrower Party before compromising or settling
such Subject Claim for at least 30 days after such Borrower Party receives such
notice of intended compromise or settlement and shall take into consideration
any views or issues communicated by the applicable Borrower Party in connection
with such compromise or settlement.  Such Indemnitee shall act in good
faith and reasonably, taking into account the interests of the Borrower Parties,
in agreeing to any compromise or settlement.

     

    11.15    Waiver of Jury
Trial.  ADMINISTRATIVE
AGENT, COLLATERAL AGENT, THE LENDERS, THE HEDGE BANKS, THE LC ISSUERS AND
BORROWER HEREBY KNOWINGLY, VOLUNTARILY, AND INTENTIONALLY WAIVE ANY RIGHTS THEY
MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON, OR
ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS AGREEMENT OR ANY OTHER CREDIT
DOCUMENT, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER
VERBAL OR WRITTEN), OR ACTIONS OF ADMINISTRATIVE AGENT, COLLATERAL AGENT, THE
LENDERS, THE HEDGE BANKS, THE LC ISSUERS, OR BORROWER.  THIS PROVISION
IS A MATERIAL INDUCEMENT FOR BORROWER, ADMINISTRATIVE AGENT, COLLATERAL AGENT,
THE LENDERS, THE HEDGE BANKS AND THE LC ISSUERS TO ENTER INTO THIS
AGREEMENT.

     

    11.16    Consent to
Jurisdiction.  Administrative
Agent, Collateral Agent, the Lenders, the Hedge Banks, the LC Issuers and
Borrower agree that any legal action or proceeding by or against Borrower or
with respect to or arising out of this Agreement, the Notes, or any other Credit
Document may be brought in or removed to the courts of the State of New York, in
and for the County of New York, or of the United States of America for the
Southern District of New York, as Administrative Agent may elect.  By
execution and delivery of this Agreement, the Lenders, the Hedge Banks, the LC
Issuers, Administrative Agent, Collateral Agent and Borrower accept, for
themselves and in respect of their property, generally and unconditionally, the
jurisdiction of the aforesaid courts.  Administrative Agent,
Collateral Agent, the Lenders, the Hedge Banks, the LC Issuers and Borrower
irrevocably consent to the service of process out of any of the aforementioned
courts in any manner permitted by law.  Nothing herein shall affect
the right of Administrative Agent to bring legal action or proceedings in any
other competent jurisdiction, including judicial or non-judicial foreclosure of
the FEC Deed of Trust or the MEC Mortgage.  Administrative Agent,
Collateral Agent, the Lenders, the Hedge Banks, the LC Issuers and Borrower
further agree that the aforesaid courts of the State of New York and of the
United States of America shall have exclusive jurisdiction with respect to any
claim or counterclaim of Borrower based upon the assertion that the rate of
interest charged by the Lenders on or under this Agreement, the Loans or the
other Credit Documents is usurious.  Administrative Agent, Collateral
Agent, the Lenders, the Hedge Banks, the LC Issuers and Borrower hereby waive
any right to stay or dismiss any action or proceeding under or in connection
with any or all of the Projects, this Agreement or any other Credit Document
brought before the foregoing courts on the basis of forum
non-conveniens.

    
      
         

      

      
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    11.17    Knowledge and
Attribution.  References
in this Agreement and the other Credit Documents to the “knowledge,” “best
knowledge” or facts and circumstances “known to” Borrower, and all like
references, mean facts or circumstances of which a Responsible Officer of the
applicable Calpine Entity has actual knowledge.

     

    11.18    Successors and
Assigns.  The
provisions of this Agreement shall be binding upon and inure to the benefit of
the parties hereto and their respective successors and
assigns.  Borrower may not assign or otherwise transfer any of its
rights under this Agreement except as provided in Section 6.14, and the
Lenders may not assign or otherwise transfer any of their rights under this
Agreement except as provided in Article 9.

     

    11.19    Counterparts.  This
Agreement and any amendments, waivers, consents or supplements hereto or in
connection herewith may be executed in one or more duplicate counterparts and by
different parties hereto in separate counterparts, each of which when so
executed and delivered shall be deemed an original, but all such counterparts
together shall constitute but one and the same instrument; signature pages may
be detached from multiple separate counterparts and attached to a single
counterpart so that all signature pages are physically attached to the same
document.  Delivery of an executed counterpart to this Agreement by
facsimile transmission or electric transmission in “.pdf” format shall be as
effective as delivery of a manually signed original.

     

    11.20    Usury.  Nothing
contained in this Agreement or the Notes shall be deemed to require the payment
of interest or other charges by Borrower or any other Person in excess of the
amount which the holders of the Notes may lawfully charge under applicable usury
laws.  In the event that the Lenders shall collect moneys which are
deemed to constitute interest which would increase the effective interest rate
to a rate in excess of that permitted to be charged by applicable Legal
Requirements, all such sums deemed to constitute interest in excess of the legal
rate shall, upon such determination, at the option of the Lenders, be returned
to Borrower or credited against the principal balance then
outstanding.

     

    11.21    Survival.  All
representations, warranties, covenants and agreements made herein and in the
certificates or other instruments delivered in connection with or pursuant to
this Agreement and the other Credit Documents shall be considered to have been
relied upon by the parties hereto and shall survive the execution and delivery
of this Agreement, the other Credit Documents and the making of the
Loans.  Notwithstanding anything in this Agreement or implied by law
to the contrary, the agreements of Borrower set forth in Sections 2.1.3,
2.5.4, 2.7.3, 2.7.4, 11.4, 11.14, 11.23 and the agreements of the Lenders set
forth in Sections 9.1, 9.5, 9.8, 9.10.1 and 11.23 shall survive the payment
and performance of the Loans and the other Obligations and the reimbursement of
any amounts drawn hereunder, and the termination of this Agreement.

     

    11.22    Patriot Act
Notice.  Each
Lender, Collateral Agent (for itself and not on behalf of any other Person,
including any Lender), Administrative Agent (for itself and not on behalf of any
other Person, including any Lender) and LC Issuer (for itself and not on behalf
of any other Person, including any Lender) hereby notifies Borrower, Sponsor and
each other

    
      
         

      

      
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    Borrower
Party that, pursuant to the requirements of the USA Patriot Act (2001 H.R. 3162
(signed into law October 26, 2001)) (the “Act”), it is required
to obtain, verify and record information that identifies Borrower, Sponsor and
each other Borrower Party which information includes the name, address, the tax
identification number and other identifying information that will allow such
Lender, Collateral Agent, Administrative Agent or LC Issuer, as applicable, to
identify Borrower, Sponsor and each other Borrower Party in accordance with the
Act.

     

    11.23    Treatment of
Certain Information; Confidentiality.  Each
Lender and each Agent agrees (on behalf of itself and each of its Affiliates,
directors, officers, employees and representatives) to keep confidential any
nonpublic information supplied to it by Borrower or any other Calpine Entity;
provided that
nothing herein shall limit the disclosure of any such information: (a) to
the extent such information is required to be disclosed by any Governmental Rule
or judicial or administrative process, or to any Governmental Authority in
connection with a tax audit or dispute or otherwise, (b) to counsel for any
of the Lenders or any Agent, (c) to banking, securities exchange or other
regulatory or supervisory authorities, auditors or accountants having proper
jurisdiction and authority to require such disclosure, (d) to any Agent or
any other Lender, (e) to any entity in connection with a securitization or
proposed securitization of, among other things, all or a part of any amounts
payable to or for the benefit of any Lender or its Affiliates under the Credit
Documents so long as such entity first executes and delivers to Administrative
Agent a confidentiality agreement substantially in the form of Exhibit L,
(f) in connection with the exercise of any remedies hereunder or under any
of the other Credit Documents, including without limitation upon the occurrence
of any Event of Default and any enforcement or collection proceedings resulting
therefrom or in connection with the negotiation of any restructuring or
“work-out”, whether or not consummated, of the obligations of Borrower under
this Agreement or the obligations of any Borrower Party or Major Project
Participant under any other Operative Document or any suit, action or proceeding
relating to this Agreement or any other Credit Document or the enforcement of
rights hereunder or thereunder, so long as such Major Project Participant first
executes and delivers to the respective Lender and Borrower a confidentiality
agreement substantially in the form of Exhibit L,
(g) to the Independent Engineer, the Power Marketing Consultant, the
Insurance Consultant or to other experts engaged by Administrative Agent or any
Lender in accordance with the provisions of this Agreement and in connection
with the transactions contemplated hereby so long as such expert first executes
and delivers to Administrative Agent and Borrower a confidentiality agreement
substantially in the form of Exhibit L, or
(h) to any assignee or participant (or prospective assignee or participant)
so long as such assignee or participant (or prospective assignee or participant)
first executes and delivers to the respective Lender and Borrower a
confidentiality agreement substantially in the form of Exhibit L.  In no
event shall any Lender, Administrative Agent or Collateral Agent be obligated or
required to return any materials furnished by any Borrower
Entity.  Notwithstanding the foregoing provisions of this
Section 11.23, the foregoing obligation of confidentiality shall not apply
to any such information that (i) was known to any Lender or Agent prior to
the time it received such confidential information from any Borrower Party or
its respective Affiliates, or (ii) becomes part of the public domain
independently of any act of any Lender or Agent not permitted hereunder (through
publication or otherwise), or (iii) is received by any Lender or any Agent,
as applicable, without restriction as to its disclosure or use, from a Person
other than a Calpine Entity.

    
      
         

      

      
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    Notwithstanding
anything to the contrary set forth herein or in any other agreement to which the
parties hereto are parties or by which they are bound, any obligations of
confidentiality contained herein and therein, as they relate to the transactions
contemplated by this Agreement (the “Loan
Transactions”), shall not apply to the
federal tax structure or federal tax treatment of the Loan Transactions, and
each party hereto (and any employee, representative, or agent of any party
hereto) may disclose to any and all Persons, without limitation of any kind, the
federal tax structure and federal tax treatment of the Loan
Transactions.  The preceding sentence is intended to cause the Loan
Transactions not to be treated as having been offered under conditions of
confidentiality for purposes of Section 1.6011-4(b)(3) (or any successor
provision) of the Treasury Regulations promulgated under Section 6011 of
the Code and shall be construed in a manner consistent with such
purpose.  In addition, each party hereto acknowledges that it has no
proprietary or exclusive rights to any tax concept, tax matter or tax idea
related to the Loan Transactions.  In addition, each Lender and each
Agent acknowledges that the Dow Documents contain various provisions on
confidentiality and each Lender and each Agent agree to be bound by the terms
thereof, including Article XIX (Confidential and Proprietary Information)
of the Capacity Sales Agreement to the extent applicable to the performance of
its obligations under this Agreement; provided that in
connection with exercise of remedies under the Credit Documents, each Lender and
each Agent’s obligations under this sentence as to potential transferees of the
Collateral shall be limited to requiring the transferee to execute a
confidentiality agreement.

     

    11.24    Release of
Project.  At
Borrower’s option upon notice to Administrative Agent, without the consent or
approval of Administrative Agent, the Lenders or any other Person, the
Collateral corresponding to either Project will be released, the Guaranties
corresponding to such Project shall terminate, and the financing continue in
reliance on the single remaining Project, provided that
(a) the projected Debt Service Coverage Ratio after giving effect to such
Project release shall be a minimum of 1.60x and an average of 1.70x through
December 31, 2027 (as demonstrated in the updated Base Case Project Projections
delivered to the Administrative Agent at least 15 Banking Days prior to the
proposed release date, which Base Case Project Projections shall be in form and
substance reasonably satisfactory to Administrative Agent (acting in
consultation with the Independent Engineer)); (b) concurrent with such
release, there shall be no LC Loans outstanding and no Event of Default shall
have occurred and be continuing, and (c) concurrent with such release, the Term
Loan, together with any related Hedge Breaking Fees (provided that
Borrower may allow to remain outstanding only Hedge Transactions whose notional
amount as of the date of such release do not exceed the Loans outstanding after
giving effect to the prepayments contemplated by this clause (c)), will be
prepaid such that the Term Loan balance on the Maturity Date will be no more
than 45% of the projected Term Loan balance at the Maturity Date in the Base
Case Project Projections delivered pursuant to Section 3.1.16.  If the
Purchase Option or Put Option is exercised, the proceeds, in an amount equal to
the lesser of (i) all of such proceeds, and (ii) such amount as shall
result in satisfaction of the criteria set forth in clauses (a), (b) and
(c) above, shall be applied to prepay, first, the LC Loans and, second, the Term
Loans together with any related Hedge Breaking Fees (provided that
Borrower may allow to remain outstanding only Hedge Transactions whose notional
amount as of the date of such release do not exceed the Loans outstanding after
giving effect to the prepayments contemplated by clause (c)
above).  Upon exercise of either such

    
      
         

      

      
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    option,
and only if Borrower shall have complied with clauses (a), (b) and (c) above,
the Collateral will be released.  Any proceeds from an exercise of the
Put Option or Purchase Option, in excess of the amounts required to be applied
to a prepayment of the Loans and Hedge Breaking Fees to the levels as set forth
in clauses (a), (b) and (c) above will be released immediately to Sponsor
without condition.

     

    11.25    Project
Expansion.  Notwithstanding
any provision to the contrary contained herein or in any other Credit Document
(including Section 9.9 hereof), upon approval (in their sole discretion) by
Lenders holding at least 80% of Proportionate Shares, Borrower or any Borrower
Party at its option may obtain secured financing for an expansion of either or
both Projects to accommodate an additional combustion turbine and related
equipment.  No Lender commits hereby or shall be construed by any
other term of any Credit Document to have committed to finance any such
expansion.

     

    11.26    Communications.

     

    11.26.1   Delivery.

     

    (a)   Borrower hereby agrees that
it will use all reasonable efforts to provide to Administrative Agent all
information, documents and other materials that it is obligated to furnish to
Administrative Agent pursuant to this Agreement and any other Credit Document,
including all notices, requests, financial statements, financial and other
reports, certificates and other information materials, but excluding any such
communication that (i) relates to a request for a new, or a conversion of
an existing, borrowing or other extension of credit (including any election of
an interest rate or Interest Period relating thereto), (ii) relates to the
payment of any principal or other amount due under this Agreement prior to the
scheduled date therefor, (iii) provides notice of any Default or Event of
Default under this Agreement or (iv) is required to be delivered to satisfy
any condition precedent to the effectiveness of this Agreement and/or any
borrowing or other extension of credit hereunder (all such non-excluded
communications collectively, the “Communications”), by
transmitting the Communications in an electronic/soft medium in a format
reasonably acceptable to Administrative Agent at the address referenced on
Section 11.1.  Nothing in this Section shall prejudice the right
of the Lead Arrangers, any Lender Party or Borrower to give any notice or other
communication pursuant to this Agreement or any other Credit Document in any
other manner specified in this Agreement or any other Credit
Document.

     

    (b)   Administrative Agent agrees
that receipt of the Communications by Administrative Agent at the email address
referenced in Section 11.1 shall constitute effective delivery of the
Communications to Administrative Agent for purposes of the Credit
Documents.  Each Lender agrees that notice to it (as provided in the
next sentence) specifying that the Communications have been posted to the
Platform (as defined below) shall constitute effective delivery of the
Communications to such Lender for purposes of the Credit
Documents.  Each Lender agrees (A) to notify Administrative Agent
in writing

    
      
         

      

      
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    (including
by electronic communication) from time to time of such Lender’s email address to
which the foregoing notice may be sent by electronic transmission and
(B) that the foregoing notice may be sent to such email
address.

     

    11.26.2   Posting.  Borrower
further agrees that Administrative Agent may make the Communications available
to the Lenders by posting the Communications on IntraLinks, SyndTrak or a
substantially similar electronic transmission system (the “Platform”).

     

    11.26.3   The
Platform is provided “as is” and “as available.”  The Agent Parties
(as defined below) do not warrant the accuracy or completeness of the
Communications or the adequacy of the Platform and expressly disclaim liability
for errors or omissions in the communications.  No warranty of any
kind, express, implied or statutory, including any warranty of merchantability,
fitness for a particular purpose, non-infringement of third party rights or
freedom from viruses or other code defects, is made by any Agent Party in
connection with the Communications or the Platform.  In no event shall
Administrative Agent, any other Agent or Lead Arranger or any of their
Affiliates or any of their respective officers, directors, employees, agents
advisors or representatives (collectively, “Agent Parties”) have
any liability to Borrower, any Lender or any other Person or entity for damages
of any kind, including direct or indirect, special, incidental or consequential
damages, losses or expenses (whether in tort, contract or otherwise) arising out
of Borrower’s or such Person’s transmission of communications through the
internet, except to the extent the liability of any Agent Party is found in a
final non-appealable judgment by a court of competent jurisdiction to have
resulted primarily from such Agent Party’s gross negligence or willful
misconduct.

     

    

     

    [Signature
pages follow]

     

    
      
         

      

      
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    IN
WITNESS WHEREOF, the parties hereto, by their officers duly authorized,
intending to be legally bound, have caused this Amended and Restated Credit
Agreement to be duly executed and delivered as of the day and year first above
written.

     

    

     

    
      	 
      	
              CALPINE
      STEAMBOAT HOLDINGS, LLC.

            
	 
      	
              a
      Delaware limited liability company

            
	 
      	 
      	 
      
	 
      	
              By:

            	
                /s/
      WALTER O’CONNELL

            
	 
      	 
      	
              Name:

              Title:

            

    

    

    

    
      
        
          

          [Signature
Page to Amended and Restated Credit Agreeement]

          

        

         

      

      
         

        
          

        

      

      
         

      

    

    

     

    
      	 
      	
              CALYON
      NEW YORK BRANCH,

            
	 
      	
              as
      Lead Arranger, Co-Book Runner, Administrative Agent, Collateral Agent,
      Security Fund LC Issuer and as a Lender

            
	 
      	 
      	 
      
	 
      	
              By:

            	
                /s/
      EVAN S. LEVY

            
	 
      	 
      	
              Name:  Evan
      S. Levy

              Title:  Director

            
	 
      	 
      	 
      
	 
      	
              For
      any Lender requiring a second signature line:

            
	 
      	 
      	 
      
	 
      	
              By:

            	
                /s/
      FRANCOIS COUSSOT

            
	 
      	 
      	
              Name:  Francois
      Coussot

              Title:  Managing
      Director

            

    

    

     

    

     

    
      
        
          

          [Signature
Page to Amended and Restated Credit Agreeement]

        

         

      

      
         

        
          

        

      

      
         

      

    

    

     

    

     

    
      	 
      	
              WESTLB
      AG, NEW YORK BRANCH,

            
	 
      	
              as
      Lead Arranger, Co-Book Runner, Syndication Agent and as a
      Lender

            
	 
      	 
      	 
      
	 
      	
              By:

            	
                /s/
      MARTIN C. LIVINGSTON

            
	 
      	 
      	
              Name:  Martin
      C. Livingston

              Title:  Managing
      Director

            
	 
      	 
      	 
      
	 
      	
               

            
	 
      	 
      	 
      
	 
      	
              By:

            	
                /s/
      ANTHONY ALESSANDRO

            
	 
      	 
      	
              Name:  Anthony
      Alessandro

              Title:  Executive
      Director

            

    

    

     

    
      
        
          

          [Signature
Page to Amended and Restated Credit Agreeement]

        

         

      

      
         

        
          

        

      

      
         

      

    

    

     

    
      	 
      	
              COBANK
      ACB,

            
	 
      	
              as
      Lead Arranger, Co-Book Runner, and Co-Documentation Agent, DSR LC Issuer
      and as a Lender

            
	 
      	 
      	 
      
	 
      	
              By:

            	
                /s/
      BRENT R. KNIGHT

            
	 
      	 
      	
              Name:  Brent
      R. Knight

              Title:  Vice
      President

            
	 
      	 
      	 
      
	 
      	
              For
      any Lender requiring a second signature line:

            
	 
      	 
      	 
      
	 
      	
              By:

            	 
      
	 
      	 
      	
              Name:

              Title:

            

    

    

     

    
      
        
          

          [Signature
Page to Amended and Restated Credit Agreeement]

        

         

      

      
         

        
          

        

      

      
         

      

    

    

     

    
      	 
      	
              THE
      BANK OF TOKYO-MITSUBISHI UFJ, LTD., NEW YORK BRANCH,

            
	 
      	
              as
      Lead Arranger, Co-Book Runner, Co-Documentation Agent and as a
      Lender

            
	 
      	 
      	 
      
	 
      	
              By:

            	
                /s/
      ROTCHIRO OSHIZU

            
	 
      	 
      	
              Name:  Rotchiro
      Oshizu

              Title:  Senior
      Vice President and Group Head

            
	 
      	 
      	 
      

    

    

     

    
      
        
          

          [Signature
Page to Amended and Restated Credit Agreeement]

        

         

      

      
         

        
          

        

      

      
         

      

    

    

     

    
      	 
      	
              BAYERISCHE
      HYPO-UND VEREINSBANK AG, NEW YORK BRANCH,

            
	 
      	
              as
      Lead Arranger and as a Lender

            
	 
      	 
      	 
      
	 
      	
              By:

            	
                /s/
      RUDI STUETZLE

            
	 
      	 
      	
              Name:  Rudi
      Stuetzle

              Title:  Director

            
	 
      	 
      	 
      
	 
      	
              For
      any Lender requiring a second signature line:

            
	 
      	 
      	 
      
	 
      	
              By:

            	
                /s/
      HERMANI SAIGAL

            
	 
      	 
      	
              Name:  Hermani
      Saigal

              Title:  Vice
      President

            

    

    

     

    
      
        
          

          [Signature
Page to Amended and Restated Credit Agreeement]

        

         

      

      
         

        
          

        

      

      
         

      

    

    

     

    
      	 
      	
              LANDESBANK
      HESSEN-THURINGEN,

            
	 
      	
              as
      Lead Arranger and as a Lender

            
	 
      	 
      	 
      
	 
      	
              By:

            	
                /s/
      DAVID A. LEECH

            
	 
      	 
      	
              Name:  David
      A. Leech

              Title:           Senior
      Vice President

              Corporate Finance
      Division

            
	 
      	 
      	 
      
	 
      	
              For
      any Lender requiring a second signature line:

            
	 
      	 
      	 
      
	 
      	
              By:

            	
                /s/
      GAELLE WADDINGTON

            
	 
      	 
      	
              Name:  Gaelle
      Waddington

              Title:           Assistant
      Vice President

              Corporate Finance
      Department

            

    

    

     

    
      
        
          

          [Signature
Page to Amended and Restated Credit Agreeement]

        

         

      

      
         

        
          

        

      

      
         

      

    

    

     

    
      	 
      	
              NATIXIS,
      NEW YORK BRANCH,

            
	 
      	
              as
      Lead Arranger and as a Lender

            
	 
      	 
      	 
      
	 
      	
              By:

            	
                /s/
      PIERRE AUDRAIN

            
	 
      	 
      	
              Name:  Pierre
      Audrain

              Title:  Director

            
	 
      	 
      	 
      
	 
      	
               

            
	 
      	 
      	 
      
	 
      	
              By:

            	
                /s/
      AMIT ROY

            
	 
      	 
      	
              Name:  Amit
      Roy

              Title:  Director

            

    

    

     

    
      
        
          

          [Signature
Page to Amended and Restated Credit Agreeement]

        

         

      

      
         

        
          

        

      

      
         

      

    

    

     

    
      	 
      	
              THE
      GOVERNOR & COMPANY OF THE BANK OF IRELAND,

            
	 
      	
              as
      Lead Arranger and as a Lender

            
	 
      	 
      	 
      
	 
      	
              By:

            	
                /s/
      PETER O’NEILL

            
	 
      	 
      	
              Name:  Peter
      O’Neill

              Title:  Senior
      Vice President

            
	 
      	 
      	 
      
	 
      	
               

            
	 
      	 
      	 
      
	 
      	
              By:

            	
                /s/
      ERIC MUTH

            
	 
      	 
      	
              Name:  Eric
      Muth

              Title:  Vice
      President

            

    

    

     

    
      
        
          

          [Signature
Page to Amended and Restated Credit Agreeement]

        

         

      

      
         

        
          

        

      

      
         

      

    

    

     

    
      	 
      	
              SIEMENS
      FINANCIAL SERVICES, INC.,

            
	 
      	
              as
      a Lender

            
	 
      	 
      	 
      
	 
      	
              By:

            	
                /s/
      CRAIG L. JOHNSON

            
	 
      	 
      	
              Name:  Craig
      L. Johnson

              Title:    Vice
      President and Head of Rating - COFUS

            
	 
      	 
      	 
      
	 
      	
              For
      any Lender requiring a second signature line:

            
	 
      	 
      	 
      
	 
      	
              By:

            	
                /s/
      THILO HAHN

            
	 
      	 
      	
              Name:  Thilo
      Hahn

              Title:  Vice
      President & Controller

            

    

    

     

    
      
        
          

          [Signature
Page to Amended and Restated Credit Agreeement]

        

         

      

      
         

        
          

        

      

      
         

      

    

    

     

    
      	 
      	
              SEB
      AB,

            
	 
      	
              as
      a Lender

            
	 
      	 
      	 
      
	 
      	
              By:

            	
                /s/
      DR. CHRISTOPH TOMAS

            
	 
      	 
      	
              Name:  Dr.
      Christoph Tomas

              Title:  Director,
      Head

            
	 
      	 
      	 
      
	 
      	
              For
      any Lender requiring a second signature line:

            
	 
      	 
      	 
      
	 
      	
              By:

            	
                /s/
      BENGT SVENSSON

            
	 
      	 
      	
              Name:  Bengt
      Svensson

              Title:  V.P.

            

    

    

     

    
      
        
          

          [Signature
Page to Amended and Restated Credit Agreeement]

        

         

      

      
         

        
          

        

      

      
         

      

    

    

     

    
      	 
      	
              CREDIT
      INDUSTRIEL ET COMMERCIAL,

            
	 
      	
              as
      a Lender

            
	 
      	 
      	 
      
	 
      	
              By:

            	
                /s/
      MARK D. PALIN

            
	 
      	 
      	
              Name:  Mark
      D. Palin

              Title:  Vice
      President

            
	 
      	 
      	 
      
	 
      	
              For
      any Lender requiring a second signature line:

            
	 
      	 
      	 
      
	 
      	
              By:

            	
                /s/
      BORDES PATRICK

            
	 
      	 
      	
              Name:  BORDES
      Patrick

              Title:

            

    

    

     

    
      
        
          

          [Signature
Page to Amended and Restated Credit Agreeement]

        

         

      

      
         

        
          

        

      

      
         

      

    

    

     

    
      	 
      	
              EXPORT
      DEVELOPMENT CANADA,

            
	 
      	
              as
      a Lender

            
	 
      	 
      	 
      
	 
      	
              By:

            	
                /s/
      ANTON PFISZTNER

            
	 
      	 
      	
              Name:  Anton
      Pfisztner

              Title:  Project
      Finance Manager

            
	 
      	 
      	 
      
	 
      	
              For
      any Lender requiring a second signature line:

            
	 
      	 
      	 
      
	 
      	
              By:

            	
                /s/
      JULIAN DESCHATELETS

            
	 
      	 
      	
              Name:  Julian
      Deschatelets

              Title:  Project
      Finance Manager

            

    

    
      
        
          

          [Signature
Page to Amended and Restated Credit Agreeement]

        

         

      

      
         

        
          

        

      

      
         

      

    

    

    

    

    EXHIBIT
A

     

    to
Amended and Restated Credit Agreement

     

    DEFINITIONS

     

    “Accounts” means
Revenue Account, the FEC O&M Account, the MEC O&M Account, the Interest
Payment Account, the Principal Payment Account, the Debt Service Reserve
Account, the FEC Major Maintenance Reserve Account, the MEC Major Maintenance
Reserve Account, the Loss Proceeds Account, the Restoration Sub-Account, the
Title Event Sub-Account, the Asset Sales Proceeds Account, the Prepayment
Account and the Distribution Suspense Account and each cash collateral account
referred to in the Credit Documents, including any sub-accounts within such
accounts.

     

    “Act” has the meaning
given in Section 11.22 of the Credit Agreement.

     

    “Additional Project
Documents” means MEC Additional Project Documents and FEC Additional
Project Documents.

     

    “Additional Term Loan
Commitment” means a Term Loan Commitment provided by an Increasing
Lender.

     

    “Additional Term
Loans” has the meaning given in Section 2.1.1(a)(iv) of the Credit
Agreement.

     

    “Administrative Agent”
means Calyon New York Branch, acting in its capacity as administrative agent for
the Secured Parties under the Credit Documents.

     

    “Administrative Services
Agreement” means the Administrative Services Agreement, dated as of the
Restatement Date, among Sponsor, CES, Borrower, FEC and MEC.

     

    “Adverse PUHCA Event”
means that Borrower or any of its “affiliates” (within the meaning of
Section 1262(1) of PUHCA) becomes  subject to, or not exempt
from, regulation under PUHCA at a time at which applicable provisions of PUHCA,
or any successor statute thereof, and the rules and regulations thereunder are
in effect and such event or occurrence has, or with the passage of time will
have, a Material Adverse Effect or a material and adverse effect on
Administrative Agent or any of the Secured Parties.

     

    “Affected Lender” has
the meaning given in Section 2.7.1 of the Credit Agreement.

     

    “Affiliate” of a
specified Person means any other Person that (a) directly, or indirectly
through one or more intermediaries, controls, is controlled by or is under
common control with the Person specified, or (b) only with respect to
matters relating to PUHCA, holds or beneficially owns 10% or more of the equity
interest in the Person specified or 10% or more of any class of voting
securities of the Person specified.  When used with respect to
Borrower, “Affiliate” shall include Sponsor, FEC, MEC, Operator, CES, and any
Affiliate thereof (other than Borrower).

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    “Affiliated Major Project
Participant” means each Affiliate of the Borrower that is party to an
Operative Document as of the Restatement Date.

     

    “Agency Fee Letter”
means that certain letter agreement regarding fees, amended and restated as of
the Restatement Date, by and among Administrative Agent, Collateral Agent and
Borrower.

     

    “Agent” means
Depositary Agent, Collateral Agent or Administrative Agent.

     

    “Agent Parties” has
the meaning given in Section 11.26.3 of the Credit Agreement.

     

    “Agreement” has the
meaning given in the preamble hereto.

     

    “Amendment Agreement”
means that certain Amendment Agreement, dated as of November 23, 2009, among
Calpine Development Holdings, Inc., Borrower, Calpine Freeport GP, LLC, Calpine
Freeport LP, LLC, Freeport Energy Center, LP, MEC, Calpine Construction
Management Company, Inc., Administrative Agent, Collateral Agent and the
Existing Lenders.

     

    “Amortization
Schedule” means the schedule for repayment of the principal of the Term
Loans as set forth on Exhibit I to the
Credit Agreement.

     

    “Annual Operating
Budget” has the meaning given in Section 5.12.2 of the Credit
Agreement.

     

    “Anti-Terrorism Laws”
shall mean (a) the anti-money laundering provisions of the Act; (b) any of the
foreign assets control regulations of the United States Treasury Department (31
C.F.R., Subtitle B, Chapter V, as amended) or any enabling legislation or
executive order relating thereto; and (c) Executive Order No. 13,224 Fed
Reg 49,079 (2001) issued by the President of the United States (Executive Order
Blocking Property and Prohibiting Transactions with Persons Who Commit, Threaten
to Commit or Support Terrorism).

     

    “Applicable Permit”
means, at any time, any Permit, including any zoning, land use, environmental
protection, pollution (including air, water or noise), sanitation, FERC,
Minnesota Public Utilities Commission, Minnesota Pollution Control Agency, City
of Mankato, U.S. Environmental Protection Agency, Federal Aviation
Administration, Department of Energy, Minnesota Environmental Quality Board,
State Fire Marshall, import, export, safety, siting or building Permit
(a) that is necessary under applicable Legal Requirements or any of the
Operative Documents to be obtained by or on behalf of any Borrower Party and/or
those permits required to be obtained by Dow under the Dow Agreements at such
time in light of the stage of development, construction or operation of the
Projects to construct, test, operate, maintain, repair, lease, own or use the
Projects as contemplated by the Operative Documents, to sell electricity from
the Projects or deliver fuel to the Projects, or for any Borrower Party to enter
into any Operative Document or to consummate any transaction contemplated
thereby, in each case in accordance with all applicable Legal Requirements, or
(b) that is necessary so that none of Borrower Parties, Administrative
Agent, Collateral Agent, the Lead Arrangers or the Secured Parties nor any
Affiliate of any of them may be deemed by any Governmental Authority to
be

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    subject
to, or not exempt from, regulation under the FPA or PUHCA or treated as a public
utility under the Constitution and the laws of the State of Minnesota or Texas
as presently constituted and as construed by the courts of Minnesota or Texas,
respectively, with respect to the regulation of the rates of, or the financial
or organizational regulation of, electric utilities solely as a result of the
development and construction or operation of the Projects or the sale of
electricity therefrom, except that (i) Borrower is subject to the compliance
requirements under PUHCA applicable to entities that are holding companies
solely with respect to Exempt Wholesale Generators and Qualifying Facilities,
(ii) MEC is subject to the compliance requirements under PUHCA applicable to an
Exempt Wholesale Generator and an owner of an Eligible Facility, (iii) FEC
is subject to the compliance requirements under PURPA applicable to a Qualifying
Facility and will be subject to state law and regulation with respect to rates
or the financial or organizational regulation of electric utilities to the
extent contemplated by 18 C.F.R § 292.602(c), and (iv) each of MEC and CES is a “public utility” under the FPA
with authority to sell wholesale electric power, capacity and ancillary services
at market based rates and with all waivers of regulations and blanket
authorizations as are customarily granted by FERC to a “public utility” that
sells wholesale electric power, capacity and ancillary services at market based
rates.  For the purposes of clarity, any Permits related to
Phase II of the Mankato Project shall not be included in the definition of
Applicable Permits.

     

    “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
Texas, the State of Minnesota or the State of New York and, where such term is
used in any respect relating to a LIBOR Loan, which is also a day on which
dealings in Dollar deposits are carried out in the London interbank
market.

     

    “Bankruptcy Event”
shall be deemed to occur, with respect to any Person, if that Person shall
institute a voluntary case seeking liquidation or reorganization under the
Bankruptcy Law, or shall consent to the institution of an involuntary case
thereunder against it; or such Person shall file a petition or consent or shall
otherwise institute any similar proceeding under any other applicable Federal or
state law, or shall consent thereto; or such Person shall apply for, or consent
or acquiesce to, the appointment of, a receiver, administrator, administrative
receiver, liquidator, sequestrator, trustee or other officer with similar powers
for itself or any substantial part of its assets; or such Person shall make a
general assignment for the benefit of its creditors; or such Person shall admit
in writing its inability to pay its debts generally as they become due; or if an
involuntary case shall be commenced seeking liquidation or reorganization of
such Person under the Bankruptcy Law or any similar proceedings shall be
commenced against such Person under any other applicable Federal or state law
and (a) the petition commencing the involuntary case is not timely
controverted, (b) the petition commencing the involuntary case is not
dismissed within 60 days of its filing, (c) an interim trustee is
appointed to take possession of all or a portion of the property, and/or to
operate all or any part of the business of such Person and such appointment is
not vacated within 60 days, or (d) an order for relief shall have been
issued or entered therein; or a decree or order of a court having jurisdiction
in the premises for the appointment of a receiver, administrator, administrative
receiver, liquidator, sequestrator, trustee or other officer having similar
powers, over such Person or all or a part of its property shall have been
entered; or any other similar relief shall be granted against such Person under
any applicable Bankruptcy Law.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    “Bankruptcy Law” means
Title 11, United States Code, and any other state or federal insolvency,
reorganization, moratorium or similar law for the relief of debtors, or any
successor statute.

     

    “Bankruptcy Party” has
the meaning given in Section 7.1.2 of the Credit Agreement.

     

    “Base Case Project
Projections” means a projection of operating results for each Project,
showing at a minimum Borrower’s reasonable good faith estimates, as of the
Restatement Date, of revenues, O&M Costs, Major Maintenance, Capital
Expenditures, the Debt Service Coverage Ratio, and sources and uses of revenues
over the forecast period, which projection is attached as Exhibit G-3 to
the Credit Agreement.

     

    “Base Rate” means, for
any day, the greater of (a) the floating rate per annum publicly announced from
time to time by Administrative Agent as its prime rate in effect at its
principal office in New York City (the prime rate not being intended to be the
lowest rate of interest charged by Administrative Agent in connection with
extensions of credit to debtors) or (b) the Federal Funds Rate for such day plus
0.50%.  Any change in the Base Rate due to a change in the prime rate, bank
prime rate, the Federal Funds Rate shall be effective from and including the
effective date of such change in the prime rate, bank prime rate, the Federal
Funds Rate, as the case may be.

     

    “Base Rate Loans”
means, collectively, the Base Rate Term Loans and the Base Rate LC
Loans.

     

    “Base Rate LC Loan”
means a DSR LC Loan or a Security Fund LC Loan that shall bear interest at the
rate set forth in Section 2.2.9(a) of the Credit
Agreement. 

     

    “Base Rate Term Loan”
means a Term Loan which bears interest as provided in Section
2.1.1(b)(i).

     

    “Benefiting Project
Company” means (a) with respect to issuance, renewal or extension of
the Security Fund LC, MEC, and (b) with respect to all other Credit Events,
both Project Companies.

     

    “Borrower” means
Calpine Steamboat Holdings, LLC, a Delaware limited liability
company.

     

    “Borrower Parties”
means Borrower, FEC and MEC.

     

    “Borrowing” means a
borrowing by Borrower of any Loan.

     

    “Calculation Period”
means, as to a particular date, the four consecutive fiscal quarters most
recently ended immediately preceding such date; provided that for the
fiscal quarters prior to the first anniversary of the date hereof, the Debt
Service Coverage Ratio shall be annualized for each such quarter rather than
calculated for the four consecutive fiscal quarters most recently
ended.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    “Calpine” means
Calpine Corporation, a Delaware corporation.

     

    “Calpine Entity(ies)”
means each Borrower Party and each Affiliated Major Project
Participant.

     

    “Capacity Sales
Agreement” means the Amended and Restated Capacity Sales Agreement, dated
May 27, 2004, between Dow and FEC, as amended pursuant to an Amendment dated
March 12, 2008.

     

    “Capital Expenditures”
shall mean expenditures made by any Borrower Party to acquire or construct fixed
assets, plant and equipment (including renewals, improvements and replacements,
but excluding expenditures related to Major Maintenance or repairs, or
replacements in lieu of repairs where economically advantageous), computed in
accordance with GAAP (excluding any such expenditures that are paid out of the
proceeds of Loss Proceeds or Asset Sale Proceeds).

     

     “Cash Collateralize”
means, in respect of an obligation, provide and pledge (as a first priority
perfected security interest) cash collateral in Dollars, at a location and
pursuant to documentation in form and substance reasonably satisfactory to
Administrative Agent (and “Cash
Collateralization” has a corresponding meaning).

     

    “CES” means Calpine
Energy Services, L.P., a Delaware limited
partnership.

     

    “CES PPA (FEC)” means
the Edison Electric Institute Master Power Purchase and Sale Agreement &
related Cover Sheet and Confirmation Letter, each dated and delivered as of the
Restatement Date, between FEC and CES.

     

    “Change of Control”
shall mean the consummation of any transaction or series of
transactions as a result of which (a) Sponsor shall cease to
directly or indirectly own and control more than 50% of
(i) the economic interests in any
Borrower Party and (ii) the voting interests (whether by
committee, contract or otherwise) of any Borrower Party (provided that such
events shall not constitute a Change of Control to the extent arising from a
merger, consolidation or acquisition involving Sponsor and another Person whose
primary business is the ownership and operation of electric generating
facilities similar to the Projects following which the long term unsecured debt
of the resulting entity has a rating from S&P and Moody’s of at least BBB-
and Baa3, respectively, and Sponsor (or such successor entity) indirectly
controls the management and operation of Borrower), (b) Holdings shall cease to
directly or indirectly own and control 100% of (i) the economic interests
in the Borrower and (ii) the voting interests (whether by committee,
contract or otherwise) of the Borrower; provided that such
cessation shall not constitute a “Change of Control” hereunder if simultaneously
with such transfer of Holdings’ interest in the Borrower to a Subsidiary of
Sponsor, the transferee thereof (A) enters into a pledge agreement substantially
on the same terms as the Group Pledge and Security Agreement in respect of 100%
of (1) the economic interests in the Borrower and (2) the voting
interests (whether by committee, contract or otherwise) of the Borrower, (B)
Borrower provides, or causes to be provided, to Administrative Agent
deliverables with respect to such transferee and such pledge agreement as are
comparable to those described in Sections 3.1.1 to 3.1.4, 3.1.7, 3.1.8 and
3.1.15 of the Credit Agreement (and each of which is reasonably satisfactory to
Administrative

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    Agent)
and (C) no Default or Event of Default shall have occurred and be continuing, or
would result therefrom, or (iii) Borrower shall cease to directly or indirectly
own and control 100% of (a) the economic interests in MEC and FEC and
(b) the voting interests (whether by committee, contract or otherwise) of
MEC and FEC.

     

    “Change of Law” has
the meaning given in Section 2.7.2 of the Credit Agreement.

     

    “City of Mankato”
means the City of Mankato, Minnesota.

     

    “Closing Date” means
February 25, 2005.

     

    “Co-Book Runners”
means Calyon New York Branch, WestLB AG, New York Branch, CoBank, ACB and The
Bank of Tokyo-Mitsubishi UFJ, Ltd., New York Branch, each acting in its capacity
as Co-Book Runner under the Credit Agreement.

     

    “Code” means the
Internal Revenue Code of 1986, as amended.

     

    “Co-Documentation
Agents” means CoBank, ACB and The Bank of Tokyo-Mitsubishi UFJ, Ltd., New
York Branch, each acting in its capacity as Co-Documentation Agent for the
Lenders under the Credit Agreement.

     

    “Collateral” means all
property which is subject or is intended to become subject to the security
interests or liens granted by any of the Collateral Documents but shall exclude
any properties and assets released from Collateral pursuant to Section
11.24.

     

    “Collateral Agent”
means Calyon New York Branch, acting in its capacity as collateral agent for the
Secured Parties under the Credit Documents.

     

    “Collateral Documents”
means the Group Pledge and Security Agreement, the MEC Mortgage, the Security
Agreement, the MEC Security Agreement, the FEC Deed of Trust, the FEC Security
Agreement, the Depositary Agreement, the Control Agreements, each Consent, the
NSP Acknowledgment of Subordination, the Master Ratification of Security
Interests and Credit Documents and any fixture filings, financing statements, or
other similar documents filed, recorded or delivered in connection with the
foregoing.

     

    “Commitment Fee” has
the meaning given in Section 2.3.2 of the Credit Agreement.

     

    “Commitments” means,
with respect to each Lender, such Lender’s Term Loan Commitment, DSR LC
Commitment and Security Fund LC Commitment and with respect to all Lenders, the
Total Term Loan Commitment, the Total DSR LC Commitment and the Total Security
Fund LC Commitment.

     

    “Communications” has
the meaning given in Section 11.26.1(a) of the Credit Agreement.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    “Confirmation of Interest
Period Selection” has the meaning given in Section 2.1.2(c)(ii) of
the Credit Agreement.

     

    “Consents” means the
Consents as defined in, and as entered into pursuant to, the Existing Credit
Agreement and any other third party consents to the assignments contemplated by
the Credit Documents.

     

    “Continuing Lenders”
means an Existing Lender who will also be a Lender under the Credit
Agreement.

     

    “Continuing Term
Loans” has the meaning given in Section 2.1.1(a)(ii) of the Credit
Agreement.

     

    “Control Agreements”
means the FEC Control Agreement, the MEC Control Agreement or any other account control agreement entered into to
establish “control” (within the meaning of the UCC) over any account established
by either Project Company as permitted hereunder or by the Depositary Agreement
(other than the Depositary Accounts) and required to be subject to the Lien of
Collateral Agent under the Collateral Documents, in form and substance
reasonably satisfactory to Administrative Agent.

     

    “COSCI Subordination
Agreements” means (a) the Subordination Agreement (Major Maintenance
Agreement), dated as of February 25, 2005, among Operator, FEC, Borrower
and Administrative Agent and (b) the Subordination Agreement (O&M
Agreement), dated as of February 25, 2005, among Operator, MEC, Borrower
and Administrative Agent.

     

    “Credit Agreement”
means the Credit Agreement, dated as of February 25, 2005, by and among
Borrower, Administrative Agent, Collateral Agent, the other agents and arrangers
listed on the signature pages thereto and the Existing
Lenders, as amended and restated pursuant to the Amended and Restated Credit
Agreement, dated as of November 24, 2009, among Borrower, Administrative Agent,
Collateral Agent, the Lead Arrangers, LC Issuers, the other agents and arrangers
listed on the signature pages thereto and the
Lenders.

     

    “Credit Documents”
means the Amendment Agreement, the Credit Agreement, the Notes, the Collateral
Documents, the Interest Rate Agreements (including all Hedge Transactions
thereunder), any Subordination Agreements, the Dow Payment Substitution
Agreement, the FEC Guaranty and the MEC Guaranties and any other loan or
security agreements or letter agreement or similar document, entered into by
Administrative Agent, Collateral Agent, Depositary Agent, the Lead Arrangers or
any Secured Party, on the one hand, and the Borrower or one or more Borrower
Parties, on the other hand, in connection with the transactions expressly
contemplated by the Credit Agreement.

     

    “Credit Event” means
the making or continuation of Term Loans in accordance with Section 2.1.1 or the
issuance, amendment, renewal or extension of a Letter of Credit.

     

    “Debt” of any Person
at any date means, without duplication, (a) all obligations of such Person
for borrowed money, (b) all obligations of such Person evidenced by bonds,
debentures, notes or other similar instruments (other than, for the avoidance of
doubt, surety,

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    performance
and similar bonds), (c) all obligations of such Person to pay the deferred
purchase price of property or services, and other accrued expenses arising in
the ordinary course of business which in accordance with GAAP would be shown on
the liability side of the balance sheet of such Person, but excluding trade
accounts payable and other accrued expenses arising in the ordinary course of
business, (d) all obligations of such Person under leases which are or
should be, in accordance with GAAP, recorded as capital leases in respect of
which such Person is liable, (e) all obligations of such Person to purchase
securities (or other property) which arise out of or in connection with the sale
of the same or substantially similar securities (or property), (f) all
deferred obligations of such Person to reimburse any bank or other Person in
respect of amounts paid or advanced under a letter of credit or other
instrument, (g) all Debt of others secured by a Lien on any asset of such
Person, whether or not such Debt is assumed by such Person, (h) all
guarantees by such Person of any of the foregoing and (i) obligations in
respect of Hedge Transactions.

     

    “Debt Service” means,
for any period, the sum of (a) all fees (other than fees paid on the
Restatement Date) payable by Borrower hereunder during such period to
Administrative Agent, Collateral Agent, Depositary Agent, the LC Issuers and the
Lenders, (b) interest payable by Borrower on Loans less (for purposes of
calculating the Debt Service Coverage Ratio) net payments, if any, received by
Borrower during such period pursuant to Hedge Transactions, (c) scheduled
Term Loan principal payments payable by Borrower (as reduced to reflect actual
prepayments through the date of such calculation) payable during such period,
and (d) (for purposes of calculating the Debt Service Coverage Ratio) net
payments, if any, paid by Borrower during such period pursuant to Hedge
Transactions.

     

    “Debt Service Coverage
Ratio” means, for any period, the ratio of (a) Operating Cash
Available for Debt Service for such period to (b) Debt Service for such
period.

     

    “Debt Service Reserve
Account” has the meaning given in Section 2.2(f) of the Depositary
Agreement.

     

    “DEC” means Dow
Engineering Company, a Delaware corporation.

     

    “Default Rate” has the
meaning given in Section 2.5.3 of the Credit Agreement.

     

    “Defaulting Lender”
means, at any time, a Lender with respect to which a Lender Default is in
effect.

     

    “Depositary Accounts”
has the meaning given in Section 2.2 of the Depositary Agreement.

     

    “Depositary Agent”
means Wilmington Trust Company, not in its individual capacity but solely as
depositary agent, bank and securities intermediary under the Depositary
Agreement.

     

    “Depositary Agreement”
means the Amended and Restated Depositary Agreement, dated as of Restatement
Date, in substantially the form of Exhibit D-1 to
the Credit

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    Agreement,
among Borrower, FEC, MEC, Administrative Agent, Collateral Agent and Depositary
Agent.

     

    “Distribution Suspense
Account” has the meaning given in Section 2.2(l) of the Depositary
Agreement.

     

    “Dollars” and “$”
means United States dollars or such coin or currency of the United States of
America as at the time of payment shall be legal tender for the payment of
public and private debts in the United States of America.

     

    “Dow” means The Dow
Chemical Company, a Delaware corporation.

     

    “Dow Agreements” means
the Capacity Sales Agreement, the FEC Ground Lease, the FEC O&M Agreement
and the Site Services Agreement.

     

    “Dow Consent” means
the Consent and Agreement, dated as of February 25, 2005, executed by Dow,
FEC, and Administrative Agent.

     

    “Dow Delay Event” has
the meaning given in the Capacity Sales Agreement.

     

    “Dow Payment Substitution
Agreement” means the Dow Payment Substitution Agreement, dated as of
February 25, 2005, by and between Sponsor and Agent, as confirmed by the
Master Ratification of Security Interests and Credit Documents.

     

    “Drawing Payment”
means any payment by a LC Issuer honoring a drawing under a Letter of
Credit.

     

    “DSR LC Commitment”
means, at any time with respect to each Lender, such Lender’s commitment to make
DSR LC Loans and otherwise reimburse the DSR LC Issuers for any draws under a
DSR Letter of Credit issued hereunder, as such commitment may be (a) reduced
from time to time pursuant to Section 2.1.6(d) and (b) reduced or increased from
time to time pursuant to assignments by or to such Lender under Section
9.14.

     

    “DSR LC Exposure”
means, at any time the sum of (a) the aggregate principal amount of all DSR LC
Loans outstanding at such time and (b) the Stated Amount of all DSR Letters of
Credit outstanding at such time.

     

    “DSR LC Issuer” means
CoBank, ACB and each other Lender designated as DSR LC Issuer pursuant to
Section 2.2.12, in each case in its capacity as an issuer of any DSR Letter of
Credit hereunder, and its successors in such capacity pursuant to Section
2.2.14.  A DSR LC Issuer may, in its discretion, arrange for any DSR
Letter of Credit to be issued by an Affiliate of such DSR LC Issuer, in which
case the term “DSR LC Issuer” shall include any such Affiliate with respect to
DSR Letters of Credit issued by such Affiliate.

     

    “DSR LC Loan” has the
meaning given in Section 2.2.5 of the Credit Agreement.

     

    “DSR LC Note” has the
meaning given in Section 2.1.3 of the Credit Agreement.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    “DSR Letter of Credit”
has the meaning given to such term in the Depositary Agreement.

     

    “DSR Required Balance”
means, as of any date, an amount equal to all principal (other than the final
principal payment of the Loans on the Maturity Date and excluding, for the
avoidance of doubt, any principal required to be repaid pursuant to Section
2.1.6(c)), the LC Fee, the Commitment Fee, the Fronting Fee and interest in
respect of the Term Loans (other than the LC Fee, the Commitment Fee, the
Fronting Fee and interest in respect of the Term Loans payable on the Maturity
Date) due or to become due within six months after such date.  For the
purposes of the foregoing, interest shall be determined after giving effect to
any net payments expected to be made or received by Borrower with respect to any
Interest Rate Agreements.

     

    “Easements” means the
FEC Easements and the MEC Easements.

     

    “Eligible Facility”
means an “eligible facility” within the meaning of PUHCA and FERC’s implementing
regulations pertaining thereto.

     

    “Emergency Operating
Costs” means those amounts required to be expended for the purchase of
goods and services in order to prevent or mitigate an unforeseeable event or
circumstances that, in the good faith judgment of MEC (or Operator as its
operator) or FEC (or Dow as its operator) as the case may be, necessitates the
taking of immediate measures to prevent or mitigate injury to Persons or injury
to or loss of property.

     

    “Eminent Domain
Proceeds” has the meaning given in the Depositary Agreement.

     

    “Emissions Attributes
Agreement” means the Emissions Attributes Intercompany Transfer &
Services Agreement, dated as of November 25, 2008, among CES, FEC, MEC and
certain other parties thereto, as amended by the Second Amendment thereto dated
October 1, 2009, and as amended by the Third Amendment thereto dated November
24, 2009.

     

    “Environmental Claim”
means any and all administrative, regulatory or judicial actions, suits,
demands, decrees, claims, liens, judgments, warning notices, notices of
noncompliance or violation, investigations, proceedings, removal or remedial
actions or orders, relating in any way to (a) a violation or alleged
violation of any Hazardous Substance Law or Permit issued under any Hazardous
Substance Law, (b) a Release or threatened Release of Hazardous Substances,
or (c) any legal or administrative proceedings relating to any of the
above.

     

    “Environmental
Consultant” means Wenck Associates, Inc..

     

    “Environmental
Reports” means, collectively, with respect to the Mankato Project
(a) the Phase I Environmental Site Assessment, Wenck Associates, dated
September 2003, together with the update dated October 19, 2004,
(b) the Limited Phase II Environmental Site Assessment, Wenck
Associates, dated December 2003, (c) the Phase I Environmental
Site Assessment (Baker Property), Wenck Associates, dated July 2004,
(d) Critical Environmental Issues Assessment, Wenck Associates, dated
October 2003, (e) Preliminary Subsurface Exploration, Laboratory Testing
and Geotechnical Engineering Analysis for Proposed Mankato

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    Power
Plant Site, STS Consultants, Ltd., dated October 2003, (f) Site Permit
Application for Mankato Energy Center submitted by MEC to Minnesota
Environmental Quality Board, dated March 2004, (g) Environmental
Assessment, Minnesota Environmental Quality Board, dated July 2004, (h) the
Phase I Environmental Site Assessment, Wenck Associates, 1 Fazio Lane,
Mankato, Minnesota, dated August 31, 2009, (i) the Phase I Environmental
Site Assessment, Wenck Associates, Natural Gas Pipeline Corridor Mankato,
Minnesota, dated August 31, 2009 and (j) the Phase I Environmental Site
Assessment, Wenck Associates, Water Pipeline Within Section 31, T109N, R26W and
Section 7, T108N, R26W Mankato, Minnesota, dated August 31, 2009.

     

    “Equity Interests” of
any Person shall mean any and all shares, interests, rights to purchase,
warrants, options, participations or other equivalents of or interests in
(however designated) equity of such Person, including any preferred stock, any
limited or general partnership interest and any limited liability company
membership interest.

     

    “ERCOT” has the
meaning given in the Capacity Sales Agreement.

     

    “ERISA” means the
Employee Retirement Income Security Act of 1974, as amended.

     

    “ERISA Affiliate”
shall mean any trade or business (whether or not incorporated) that, together
with any Borrower Party, is treated as a single employer under
Section 414(b) or (c) of the Code, or, solely for purposes of
Section 302 of ERISA and Section 412 of the Code, is treated as a
single employer under Section 414(b), (c), (m) or (o) of the
Code.

     

    “ERISA Event” shall
mean (a) the occurrence of any “reportable event” as defined in
Section 4043(c) of ERISA or the regulations issued thereunder, other than
those events as to which the 30-day notice period has been waived, with respect
to an ERISA Plan; (b) the existence with respect to any ERISA Plan of an
“accumulated funding deficiency” (as defined in Section 412 of the Code or
Section 302 of ERISA) and any failure by any ERISA Plan to satisfy the
minimum funding standard (within the meaning of Section 412 of the Code or
Section 302 of ERISA) applicable to such ERISA Plan, in each case, whether
or not waived (or, for years in which funding requirements are governed by the
Pension Act, any failure to satisfy the applicable minimum funding standards
under Section 412(a)(2) of the Code or Section 302(a)(2) of ERISA,
whether or not waived); (c) the filing pursuant to Section 412(c) of
the Code or Section 302(c) of ERISA of an application for a waiver of the
minimum funding standard with respect to any ERISA Plan, the failure to make by
its due date a required installment under Section 412(m) of the Code with
respect to any ERISA Plan or the failure to make any required contribution to a
Multiemployer Plan; (d) a determination that any ERISA Plan is, or is
expected to be, in “at risk” status (as defined in Section 303(i)(4) of
ERISA or Section 430(i)(4) of the Code); (e) the incurrence by Borrower or
any ERISA Affiliate of any liability under Title IV of ERISA with respect to the
termination of any ERISA Plan; (f) the receipt by Borrower or any ERISA
Affiliate from the PBGC or a plan administrator of any notice relating to an
intention to terminate any ERISA Plan or to appoint a trustee to administer any
ERISA Plan under Section 4042 of ERISA, or the occurrence of any event or
condition which could reasonably be expected to constitute grounds under ERISA
for the termination of, or the appointment of a trustee to administer, any ERISA
Plan; (g) the incurrence by Borrower or any

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    ERISA
Affiliates of any liability with respect to the withdrawal or partial withdrawal
from any ERISA Plan or Multiemployer Plan; (h) the receipt by Borrower or any
ERISA Affiliate of any notice, or the receipt by any Multiemployer Plan from
Borrower or any ERISA Affiliate of any notice, concerning the imposition of
Withdrawal Liability or a determination that a Multiemployer Plan is, or is
expected to be, insolvent or in reorganization, within the meaning of
Section 305 of ERISA; or (i) the occurrence of a nonexempt prohibited
transaction (within the meaning of Section 4975 of the Code or
Section 406 of ERISA) which could reasonably be expected to result in
liability to Borrower.

     

    “ERISA Plan” shall
mean any employee pension benefit plan subject to the provisions of Title IV of
ERISA or Section 412 of the Code or Section 302 of ERISA and in
respect of which any Borrower Party or any ERISA Affiliate is (or if such plan
were terminated any Borrower Party would under Section 4069 of ERISA be
deemed to be) an “employer” as defined in Section 3(5) of
ERISA.

     

    “Event of Default” has
the meaning given in Article 7 of the Credit Agreement.

     

    “Event of Eminent
Domain” means any compulsory transfer or taking by condemnation, eminent
domain or exercise of a similar power, or transfer under threat of such
compulsory transfer or taking, of any part of the Collateral or any of the
Mortgaged Property, by any agency, department, authority, commission, board,
instrumentality or political subdivision of the State of Minnesota, the State of
Texas, the United States or another Governmental Authority having jurisdiction,
in each case, that is reasonably anticipated to last for more than 120
consecutive days.

     

    “Exempt Wholesale
Generator” means an “exempt wholesale generator” within the meaning of
PUHCA and FERC’s implementing regulations pertaining thereto.

     

    “Existing Credit
Agreement” means that certain Credit Agreement, dated as of February 25,
2005, among Borrower, Administrative Agent, Collateral Agent, the Existing
Lenders and the other agents and financial institutions from time to time party
thereto, as amended from time to time prior to the Restatement
Date.

     

    “Existing FEC Title
Policy” means that certain Mortgagee Policy of Title Insurance, Number
M-5894-360330, issued by Stewart Title Guaranty Company on March 3,
2005.

     

    “Existing Lenders”
means “Lenders” as defined in the Existing Credit Agreement immediately prior to
the Restatement Date.

     

    “FEC” has the meaning
given in the Recitals in the Credit Agreement.

     

    “FEC Additional Project
Documents” means any material contracts or agreements related to the
maintenance, repair, operation or use of the Freeport Project entered into by
FEC and any other Person, or assigned to FEC, subsequent to the Closing Date;
provided that
all such contracts and agreements which provide for payment by FEC of, or the
provision to FEC of such

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    goods and
services with a value of, $500,000 per annum individually or less shall be
deemed not to constitute a FEC Additional Project Document.

     

    “FEC Amendment to Deed of
Trust” means the First Amendment to Leasehold and Easment Deed of Trust,
Assignment of Rents and Lease, Security Agreement and Fixture Filing and
Financing Statement (Guaranty), dated on or about the Restatement Date, in
substantially the form of Exhibit D-4 to the
Credit Agreement, by and between FEC and Collateral Agent.

     

    “FEC Checking Account”
means the “FEC O&M Checking Account” as defined in the Depositary
Agreement.

     

    “FEC Checking Account
Bank” means Union Bank, N.A.

     

    “FEC Control
Agreement” means that certain Special Deposit Account Control Agreement
dated as of the Closing Date among FEC, Collateral Agent and FEC Checking
Account Bank regarding the perfection of Collateral Agent’s Lien on the FEC
Checking Account.

     

    “FEC Deed of Trust”
means the FEC Original Deed of Trust as amended by the FEC Amendment to Deed of
Trust.

     

    “FEC Easements” shall
have the meaning given in the FEC Deed of Trust and shall include the Access
Easement (as such term is defined in the FEC Ground Lease).

     

    “FEC Ground Lease”
means the Ground Lease, dated May 27, 2004, between Dow and FEC as amended by
Amendment 1 to the Ground Lease dated April 29, 2005.

     

    “FEC Guaranty” means
the FEC Guaranty, dated as of the Closing Date, entered into pursuant to the
Existing Credit Agreement, by and between FEC and Collateral Agent, as confirmed
by the Master Ratification of Security Interests and Credit
Documents.

     

    “FEC Interconnection
Agreement” has the meaning given in the Capacity Sales
Agreement.

     

    “FEC Major Maintenance
Agreement” means the Major Maintenance Agreement, dated as of
February 25, 2005, between FEC and Operator.

     

    “FEC Major Maintenance
Reserve Account” means the “FEC Major Maintenance Reserve Account”
created pursuant to the Depositary Agreement.

     

    “FEC Major Project
Documents” means the Dow Agreements, the CES PPA (FEC), the FEC Major
Maintenance Agreement, any guaranty agreements related to the foregoing executed
by Persons in favor of FEC and, unless otherwise agreed by Administrative Agent
prior to its execution and delivery, any FEC Additional Project Documents
following the execution and delivery thereof.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    “FEC Major Project
Participants” means, without duplication, Borrower, FEC, Dow, CES,
Operator and any Person other than those so listed which provides any guaranty
agreement with respect to a FEC Major Project Document, and any counterparty to
any FEC Additional Project Document which is a FEC Major Project
Document.

     

    “FEC Mortgaged
Property” means the “Trust Property” as defined in the FEC Deed of
Trust.

     

    “FEC Original Deed of
Trust” means the Leasehold and Easement Deed of Trust, Assignment of
Rents and Leases, Security Agreement, Fixture Filing, and Financing Statement
(Guaranty) dated February 25, 2005, and recorded under Clerk’s file number
2005011786 in the Real Property Records of Brazoria County, Texas, by FEC in
favor of Collateral Agent.

     

    “FEC O&M Account”
means the “FEC O&M Account” created pursuant to the Depositary
Agreement.

     

    “FEC O&M
Agreement” means the Operation and Maintenance Agreement, dated as of
May 27, 2004, between FEC and Dow.

     

    “FEC Partnership
Agreement” means the Amended and Restated Agreement of Partnership of
Freeport Energy Center, LP, dated as of January 25, 2005.

     

    “FEC Project
Documents” means, without duplication, the FEC Major Project Documents,
the Major Equipment Contracts to which FEC is a party, the Emissions Attributes
Agreement, the Administrative Services Agreement, the FEC Easements, and any
other agreement relating to the development, construction or operation of the
Freeport Project to which FEC is a party.

     

    “FEC Security
Agreement” means the Security Agreement, dated as of the Closing Date,
entered into pursuant to the Existing Credit Agreement, between FEC and
Collateral Agent, as amended pursuant to the First Amendment to Security
Agreement, dated as of the Restatement Date, between FEC and Collateral
Agent.

     

    “FEC Site” has the
meaning given to the term “Facility Site” in the FEC Ground Lease.

     

    “FEC Technical
Requirements” has the meaning given in the Capacity Sales
Agreement.

     

    “Federal Funds Rate”
means, for any day, the weighted average of the per annum rates on overnight
Federal funds transactions with member banks of the Federal Reserve System
arranged by Federal funds brokers as published by the Federal Reserve Bank of
New York for such day (or, if such rate is not so published for any day,
the average of the quotations for the day of such transactions received by
Administrative Agent from three Federal funds brokers of recognized standing
selected by it).

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    “Federal Reserve
Board” means the Board of Governors of the Federal Reserve
System.

     

    “FERC” means the
Federal Energy Regulatory Commission and its successors.

     

    “FPA” means the
Federal Power Act, as amended.

     

    “Freeport Project” has
the meaning given in the Recitals of the Credit Agreement.

     

    “Fronting Fee” has the
meaning given in Section 2.4.2 of the Credit Agreement.

     

    “Funds Flow
Memorandum” shall mean the memorandum, dated as of November 24, 2009,
delivered by Borrower to the Lead Arrangers and the Depositary Agent with
respect to the disbursement of funds on the Restatement Date.

     

    “GAAP” means generally
accepted accounting principles in effect from time to time in the United States
of America.

     

    “Governing Documents”
means, with respect to any Person, the certificate or articles of incorporation,
bylaws, operating agreement or other organizational or governing documents of
such Person.

     

    “Governmental
Authority” means any national, state or local government (whether
domestic or foreign), any political subdivision thereof or any other
governmental, quasi-governmental, judicial, public or statutory instrumentality,
authority, body, agency, bureau or entity (including, but not limited to, any
zoning authority, FERC, the Securities Exchange Commission, the Minnesota Public
Utilities Commission, the Public Utilities Commission of Texas, the Comptroller
of the Currency or the Federal Reserve Board, any central bank or any comparable
authority) or any arbitrator with authority to bind a party at law.

     

    “Governmental Rule”
means any law, rule, regulation, ordinance, order, code interpretation, treaty,
judgment, decree, directive, guidelines, policy or similar form of decision of
any Governmental Authority.

     

    “Granting Bank” has
the meaning given in Section 9.13.2 of the Credit Agreement.

     

    “Group Pledge and Security
Agreement” means the Pledge and Security Agreement, dated as of the
Closing Date, entered into pursuant to the Existing Credit Agreement, by and
among Borrower, Calpine Development Holdings, Inc., and Collateral Agent, as
amended and restated pursuant to the Amended and Restated Pledge and Security
Agreement, dated as of the Restatement Date, by and among Borrower, Calpine
Development Holdings, Inc., Holdings, and Collateral Agent.

     

    “Guaranties” mean the
FEC Guaranty and the MEC Guaranties.

     

    “Hazardous Substances”
means (statutory acronyms and abbreviations having the meaning given them in the
definition of “Hazardous Substances Laws”) substances defined as

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    “hazardous
substances,” “pollutants” or “contaminants” in Section 101 of the CERCLA;
those substances defined as “hazardous waste,” “hazardous materials” or
“regulated substances” by the RCRA; those substances designated as a “hazardous
substance” pursuant to Section 311 of the CWA; those substances defined as
“hazardous materials” in Section 103 of the HMTA; those substances
regulated as a hazardous chemical substance or mixture or as an imminently
hazardous chemical substance or mixture pursuant to Section 6 or 7 of the
TSCA; those substances defined as “contaminants” by Section 1401 of the
SDWA, if present in excess of permissible levels; those substances regulated by
the Oil Pollution Act; those substances defined as a pesticide pursuant to
Section 2(u) of the FIFRA; those substances defined as a source, special
nuclear or by-product material by Section 11 of the AEA; those substances
defined as “residual radioactive material” by Section 101 of the UMTRCA;
those substances defined as “toxic materials” or “harmful physical agents”
pursuant to Section 6 of the OSHA; those substances defined as hazardous
wastes in 40 C.F.R. Part 261.3; those substances defined as hazardous waste
constituents in 40 C.F.R.  Part 260.10, specifically including
Appendix VII and VIII of Subpart D of 40 C.F.R. Part 261; those substances
designated as hazardous substances in 40 C.F.R. Parts 116.4 and 302.4; those
substances defined as hazardous substances or hazardous materials in 49 C.F.R.
Part 171.8; those substances regulated as hazardous materials, hazardous
substances, or toxic substances in 40 C.F.R. Part 1910; those substances
regulated as hazardous materials, hazardous substances, or toxic substances in
any other Hazardous Substances Laws; and those substances regulated as hazardous
materials, hazardous substances, or toxic substances in the regulations adopted
and publications promulgated pursuant to said laws, whether or not such
regulations or publications are specifically referenced herein.

     

    “Hazardous Substances
Law” means any of:

     

    (i)      
the Comprehensive Environmental Response, Compensation, and Liability Act of
1980, as amended (42 U.S.C. Section 9601 et seq.) (“CERCLA”);

     

    (ii)     
the Federal Water Pollution Control Act (33 U.S.C. Section 1251 et seq.) (“Clean Water Act” or
“CWA”);

     

    (iii)    
the Resource Conservation and Recovery Act (42 U.S.C. Section 6901
et seq.) (“RCRA”);

     

    (iv) 
   the Atomic Energy Act of 1954 (42 U.S.C. Section 2011
et seq.) (“AEA”);

     

    (v) 
    the Clean Air Act (42 U.S.C. Section 7401 et seq.) (“CAA”);

     

    (vi) 
   the Emergency Planning and Community Right to Know
Act (42 U.S.C. Section 11001 et seq.) (“EPCRA”);

     

    (vii)
   the Federal Insecticide, Fungicide, and Rodenticide
Act (7 U.S.C. Section 136 et seq.) (“FIFRA”);

     

    (viii)  
the Oil Pollution Act of 1990 (P.L. 101-380, 104 Stat. 486);

     

    (ix)     
the Safe Drinking Water Act (42 U.S.C. Section 300f et seq.) (“SDWA”);

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    (x)      
the Surface Mining Control and Reclamation Act of 1974 (30 U.S.C.
Section 1201 et
seq.) (“SMCRA”);

     

    (xi)     
the Toxic Substances Control Act (15 U.S.C. Section 2601 et seq.) (“TSCA”);

     

    (xii)    
the Hazardous Materials Transportation Act (49 U.S.C. Section 5101
et seq.) (“HMTA”);

     

    (xiii)   
the Uranium Mill Tailings Radiation Control Act of 1978 (42 U.S.C.
Section 7901 et
seq.) (“UMTRCA”);

     

    (xiv)   the
Occupational Safety and Health Act (29 U.S.C. Section 651 et seq.) (“OSHA”);

     

    (xv)    the
Texas Solid Waste Disposal Act (Tex. Health & Safety Code, § 361.001 et seq.);

     

    (xvi)  
the Texas Clean Air Act (Tex. Health & Safety Code, § 382.001 et seq.);

     

    (xvii) 
Subtitle D of the Texas Water Code (Tex. Water Code, § 26.001 et seq.);

     

    (xviii)
the Texas Oil Spill Prevention and Response Act (Tex. Nat. Res. Code, § 40.001
et seq.);

     

    (xix)   
the Minnesota Environmental Response and Liability Act (Minn. Stat. Chap. 115B)
(“MERLA”);

     

    (xx)    
the Minnesota Petroleum Tank Release Cleanup Act (Minn. Stat. Chap.
115C);

     

    (xxi)   
Minnesota Statutes Chapter 18D (Agricultural Chemical Liability);

     

    (xxii)  
Minnesota Statutes Chapter 115E (Oil and Hazardous Substance Discharge
Preparedness);

     

    (xxiii) 
Minnesota Statutes Chapter 116 (Pollution Control Agency);

     

    (xxiv) 
the Minnesota Water Pollution Control Act (Minn. Stat. Chap. 115);
and

     

    (xxv)  all
other Federal, state and local Governmental Rules relating to the protection of
human health or the environment or which otherwise govern Hazardous Substances,
and the regulations adopted and publications promulgated pursuant to all such
foregoing laws.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    “Hedge Bank” means a
Lender or any Affiliate thereof which, in any case, is party to an Interest Rate
Agreement with Borrower, in its capacity as counterparty to such Interest Rate
Agreement.

     

    “Hedge Breaking Fees”
has the meaning given in Section 5.18.2 of the Credit
Agreement.

     

    “Hedge Transaction”
means any “Transaction” (such as swaps, caps, collars or floors) entered into
under an Interest Rate Agreement.

     

    “Holdings” means New Steamboat Holdings, LLC, a Delaware limited
liability company.

     

    “Improvements” has the
meaning given in the FEC Deed of Trust or MEC Mortgage.

     

    “Inchoate Default” or
“Default” means
any occurrence, circumstance or event, or any combination thereof, which, with
the lapse of time or the giving of notice or both, would constitute an Event of
Default.

     

    “Increasing Lender”
means a Continuing Lender who will provide a Term Loan Commitment under this
Agreement which is greater than such Continuing Lenders’ Term Loan under the
Existing Credit Agreement immediately prior to the Restatement
Date.

     

    “Indemnitees” has the
meaning given in Section 11.14 of the Credit Agreement.

     

    “Independent
Consultants” means, collectively, the Environmental Consultant, the
Insurance Consultant, the Power Market Consultant and the Independent
Engineer.

     

    “Independent Engineer”
means Harris Group Inc. or another engineering consultant selected in accordance
with Section 10.1 of the Credit Agreement.

     

    “Insurance Consultant”
means Moore-McNeil, LLC or another insurance consultant selected in accordance
with Section 10.1 of the Credit Agreement.

     

    “Insurance Proceeds”
has the meaning given in the Depositary Agreement.

     

    “Interest Period”
means, with respect to any LIBOR Loan, the time period selected by Borrower or
provided for pursuant to the Credit Agreement which commences on the first day
of such Loan, or the effective date of any conversion (as the case may be) and
ends on the last day of such time period.

     

    “Interest Rate” means
the Base Rate or the LIBO Rate, as the case may be.

     

    “Interest Rate
Agreements” means one or more interest rate swap agreements, caps,
collars, or other master interest rate hedging mechanisms entered into by any
Borrower Party, each
documented pursuant to customary ISDA agreements and otherwise in form and
substance reasonably satisfactory to Administrative Agent.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    “Interest Rate Determination
Date” means, with respect to any Interest Period, the second Banking Day
prior to the first day of such Interest Period.

     

    “LC Commitment” means
the DSR LC Commitment or Security Fund LC Commitment, as
applicable.

     

    “LC Exposure” means
the DSR LC Exposure and the Security Fund LC Exposure.

     

    “LC Fee” has the
meaning given in Section 2.4.1 of the Credit Agreement.

     

    “LC Issuer” means,
collectively or as applicable, a DSR LC Issuer or a Security Fund LC
Issuer.

     

    “LC Loan” means a DSR
LC Loan or a Security Fund LC Loan, as applicable.

     

    “LC Reimbursement
Obligation” means the obligation of Borrower to repay any Drawing
Payments relating to a Letter of Credit.

     

    “Lead Arrangers” means
Calyon New York Branch, WestLB AG, New York Branch, CoBank, ACB, The Bank of
Tokyo-Mitsubishi UFJ, Ltd., New York Branch, The Governor & Company of the
Bank of Ireland, Landesbank Hessen-Thüringen, Natixis, New York Branch and
Bayerische Hypo- und Vereinsbank AG, New York Branch, each acting in its
capacity as a Lead Arranger under the Credit Agreement.

     

    “Lead Arrangers Fee
Letter” means that certain letter agreement regarding fees, dated as of
the Restatement Date, by and among Borrower, Calyon New York Branch, WestLB AG,
New York Branch and CoBank, ACB.

     

    “Legal Requirements”
means, as to any Person, any requirement under a Permit, and any Governmental
Rule in each case applicable to or binding upon such Person or any of its
properties or to which such Person or any of its property is
subject.

     

    “Lender” or “Lenders” means each
financial institution listed on Exhibit H, as well as any Person that becomes a
“Lender” hereunder pursuant to Section 9.14.  For purposes of
determining Obligations secured by the Collateral, each Hedge Bank shall be
deemed a “Lender” party to the Credit Agreement and Credit Documents to the
extent so specified in Section 5.18.3 of the Credit Agreement.

     

    “Lender Default” means
(a) the refusal (which has not been retracted and fully cured) of a Lender
to make available its portion of any Borrowing or to fund its portion of any
unreimbursed Drawing Payment, or (b) a Lender having notified in writing
Borrower and/or Administrative Agent that it does not intend to comply with its
obligations under Section 2.1.4.

     

    “Lending Office”
means, with respect to any Lender, the office designated in writing as such to
Administrative Agent and Borrower from time to time.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    “Letter of Credit”
means a DSR Letter of Credit or the Security Fund LC, as
applicable.

     

    “LIBO Rate” means,
with respect to any LIBOR Loan for any Interest Period, the rate per annum
determined by Administrative Agent at approximately 11:00 a.m. (London time) on
the Interest Rate Determination Date by reference to the British Bankers’
Association Interest Settlement Rates for deposits in Dollars (as set forth on
the appropriate page of the Telerate screen, or, if the agreed page is replaced
or service ceased to be available, Administrative Agent may specify another page
or service displaying the appropriate rate after consultation with Borrower and
the Lenders) for a period equal to such Interest Period; provided that, to the
extent that an interest rate is not ascertainable pursuant to the foregoing
provisions of this definition, the “LIBO Rate” shall be the interest rate per
annum determined by Administrative Agent to be the average of the rates per
annum at which deposits in Dollars are offered for such Interest Period to major
banks in the London interbank market in London, England by Administrative Agent
at approximately 11:00 a.m. (London time) on the Interest Rate Determination
Date.  Each determination by Administrative Agent pursuant to this
definition shall be conclusive in the absence of manifest error.

     

    “LIBOR LC Loan” means
a DSR LC Loan or a Security Fund LC Loan that shall bear interest at the rate
set forth in Section 2.2.9(b) of the Credit Agreement. 

     

    “LIBOR Loans” means
the Loans, the interest in respect of which is determined by reference to the
LIBO Rate.

     

    “LIBOR Term Loan”
means a Term Loan that bears interest as provided in Section 2.1.1(b)(ii)
of the Credit Agreement.

     

    “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.

     

    “Liquidation Costs”
has the meaning given in Section 2.8 of the Credit Agreement.

     

    “LLC Agreements” mean,
collectively, (a) the Limited Liability Company Operating Agreement of Freeport
Energy Center, LLC, dated as of the Restatement Date, and (b) the Amended and
Restated Limited Liability Company Operating Agreement of Mankato Energy
Center, LLC, dated as of December 17, 2004.

     

    “Loan Transactions”
has the meaning given the Section 11.23 of the Credit
Agreement.

     

    “Loans” means,
collectively, the Term Loans and the LC Loans.

     

    “Loss Proceeds” has
the meaning given in of the Depositary Agreement.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    “Loss Proceeds
Account” means the “Loss Proceeds Account” as defined in the Depositary
Agreement.

     

    “Major Equipment
Contracts” means, collectively, (a) the Purchase Contract for One
Heat Recovery Steam Generator & Accessories, dated as of May 17, 2004,
between HRSG Vendor and MEC, (b) the Purchase Contract for Steam Turbine
Generator and Accessories, dated as of July 28, 2004, between Toshiba
International Corporation and MEC, (c) the Purchase Contract for One Gas
Turbine Generator & Accessories, dated as of August 30, 2004, between
Siemens Westinghouse Power Corporation and MEC, (d) the Purchase Contract
for Four Auxiliary Boilers and Accessories, dated as of December 8, 2003,
between Rentech and FEC, and (e) the Purchase Contract for Steam Turbine
Generator and Accessories, dated as of August 27, 2004, between Toshiba
International Corporation and Construction Contractor.

     

    “Major Maintenance”
means labor, materials and other direct expenses for any overhaul of, or major
maintenance procedure for, a Project which require significant disassembly or
shutdown of such Project, (a) in accordance with Prudent Industry
Practices, (b) pursuant to manufacturers’ requirements to avoid voiding any
such manufacturer’s warranty, or (c) pursuant to any applicable Legal
Requirement, not including any subordinated major maintenance fee.

     

    “Major Maintenance
Expenses” has the meaning given such term in the Depositary
Agreement.

     

    “Major Maintenance
Plan” has the meaning given in Section 5.12.4 of the Credit
Agreement.

     

    “Major Maintenance Reserve
Accounts” means the “Major Maintenance Reserve Accounts” as defined in
the Depositary Agreement.

     

    “Major Maintenance Reserve
Requirement” means, for each Project, the applicable “Major Maintenance
Reserve Requirement” as defined in the Depositary Agreement.

     

    “Major Maintenance Service
Arrangement” means Appendix E to the Capacity Sales
Agreement.

     

    “Major Project
Documents” means FEC Major Project Documents and MEC Major Project
Documents.

     

    “Major Project
Participants” means FEC Major Project Participants and MEC Major Project
Participants.

     

    “Mandate Letter” means
that certain letter agreement regarding fees, costs and expenses, dated as of
September 17, 2009, by and between Lead Arrangers and Borrower.

     

    “Mandatory Prepayment”
has the meaning given in Section 2.1.6(c) of the Credit
Agreement.

     

    “Mankato Project” has
the meaning given in the Recitals of the Credit Agreement.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    “Master Ratification of
Security Interests and Credit Documents” means that certain Master
Ratification of Security Interests and Credit Documents entered into on the
Restatement Date by and among Holdings, the Borrower Parties and Collateral
Agent and in form and substance reasonably satisfactory to the Lead
Arrangers.

     

    “Material Adverse
Effect” or “Material Adverse
Change” means (a) a material adverse change in the business,
property, results of operation or financial condition of Borrower and its
Subsidiaries (taken as a whole), (b) any event or occurrence of whatever
nature which could reasonably be expected to materially and adversely affect
Borrower’s and its Subsidiaries’ (taken as a whole) ability to perform its
material obligations under the Credit Documents, and (c) any event or
occurrence of whatever nature which could reasonably be expected to materially
and adversely affect the value, validity or priority of the Secured Parties’
security interests in the Collateral.

     

    “Maturity” or “maturity” means, with
respect to any Loan, Borrowing, interest, fee or other amount payable by
Borrower under the Credit Agreement or the other Credit Documents, the date such
Loan, Borrowing, interest, fee or other amount becomes due, whether upon the
stated maturity or due date, upon acceleration or otherwise.

     

    “Maturity Date” means
(a) with respect to the Term Loans, the Security Fund LC Commitments or the
Security Fund LC Loans, November 24, 2017, and (b) with respect to the DSR LC
Commitments or DSR LC Loans, September 29, 2017.

     

    “MEC” has the meaning
given in the Recitals of the Credit Agreement.

     

    “MEC Additional Project
Documents” means any material contracts or agreements related to the
maintenance, repair, operation or use of the Mankato Project entered into by MEC
and any other Person, or assigned to MEC, subsequent to the Closing Date; provided that all
such contracts and agreements which provide for payment by MEC of, or the
provision to MEC of such goods and services with a value of, $500,000 per annum
individually or less shall be deemed not to constitute a MEC Additional Project
Document.

     

    “MEC Amendment to
Mortgage” means the Amendment to Mortgage, Security Agreement and Fixture
Filing, dated on or about the Restatement Date, in substantially the form of
Exhibit D-5 to
the Credit Agreement, by and between MEC and Collateral Agent.

     

    “MEC Checking Account”
means the “MEC O&M Checking Account” as defined in the Depositary
Agreement.

     

     “MEC Checking Account
Bank” means Union Bank, N.A.

     

    “MEC Control
Agreement” means that certain Special Deposit Account Control Agreement
dated as of the Closing Date among MEC, Collateral Agent and MEC Checking
Account Bank regarding the perfection of Collateral Agent’s Lien on the MEC
Checking Account.

     

    “MEC Easements” means
shall have the meaning given in the MEC Mortgage.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    “MEC Gas Interconnection
Agreement” means the Facility Interconnect, Construction and
Reimbursement Agreement, dated effective December 8, 2004, between MEC and
NNG.

     

    “MEC Guaranties” means
the MEC Secured Guaranty and the MEC Unsecured Guaranty, as confirmed by that
the Master Ratification of Security Interests and Credit Documents.

     

    “MEC Interconnection
Agreement” means the Interconnection and Operating Agreement, dated
November 17, 2004, among MEC, Midwest Independent Transmission System
Operator, Inc. and NSP, doing business as Xcel Energy.

     

    “MEC Major Maintenance
Reserve Account” means the “MEC Major Maintenance Reserve Account”
created pursuant to the Depositary Agreement.

     

    “MEC Major Project
Documents” means the Power Purchase Agreement, the MEC Interconnection
Agreement, the MEC O&M/Major Maintenance Agreement, the Water Services
Agreement, the MEC Gas Interconnection Agreement, any guaranty agreements
related to the foregoing executed by Persons in favor of MEC and, unless
otherwise agreed by Administrative Agent prior to its execution and delivery,
any MEC Additional Project Documents following the execution and delivery
thereof.

     

    “MEC Major Project
Participants” means, without duplication, Borrower, MEC, Operator, NSP,
the City of Mankato, NNG, and any Person other than those so listed which
provides any guaranty agreement with respect to a MEC Major Project Document,
and any counterparty to any MEC Additional Project Document which is a MEC Major
Project Document.

     

    “MEC Mortgage” means
the MEC Original Mortgage as amended by the MEC Amendment to
Mortgage.

     

    “MEC Mortgaged
Property” means the “Premises” as defined in the MEC
Mortgage.

     

    “MEC Original
Mortgage” means the Mortgage and Security Agreement and Fixture Financing
Statement and Assignment of Leases and Rents, by MEC in favor of Collateral
Agent, dated February 25, 2005, and filed March 3, 2005, in the office of the
County Recorder in and for Blue Earth County, Minnesota, as Document No.
453CR034.

     

    “MEC O&M Account”
means the “MEC O&M Account” created pursuant to the Depositary
Agreement.

     

    “MEC O&M/Major
Maintenance Agreement” means the Operations and Maintenance Services and
Major Maintenance Work Agreement, dated as of October 1, 2004, between MEC
and Operator.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    “MEC Project
Documents” means, without duplication, the MEC Major Project
Documents, the Major Equipment Contracts to which MEC is a party, the Emissions
Attributes Agreement, the Administrative Services Agreement, the MEC Easements,
the NSP Subordinated Mortgage and any other agreement relating to the operation
or maintenance of the Mankato Project to which MEC is a party.

     

    “MEC Secured Guaranty”
means the Guaranty, dated as of the Closing Date, between MEC and Collateral
Agent, entered into pursuant to the Existing Credit Agreement, as confirmed by
the Master Ratification of Security Interests and Credit Documents, as amended
pursuant to the First Amendment to MEC Secured Guaranty, dated as of the
Restatement Date, between MEC and Collateral Agent.

     

    “MEC Security
Agreement” means the Security Agreement, dated as of the Closing Date,
between MEC and Collateral Agent, entered into pursuant to the Existing Credit
Agreement, as amended pursuant to the First Amendment to Security Agreement,
dated as of the Restatement Date, between MEC and Collateral Agent.

     

    “MEC Site” means the
Land, as defined in the MEC Mortgage.

     

    “MEC Unsecured
Guaranty” means the Guaranty, dated as of the Closing Date, between MEC
and Collateral Agent, entered into pursuant to the Existing Credit Agreement, as
confirmed by the Master Ratification of Security Interests and Credit Documents,
as amended pursuant to the First Amendment to MEC Unsecured Guaranty, dated as
of the Restatement Date, between MEC and Collateral Agent.

     

    “Minimum Notice
Period” means (a) at least three Banking Days before the date of any
Borrowing, continuation or conversion of a Type of Loan resulting in whole or in
part in one or more LIBOR Term Loans, and (b) at least one Banking Day
before any Borrowing or conversion of a Type of Loan resulting in whole or in
part in one or more Base Rate Term Loans.

     

    “Moody’s” means
Moody’s Investors Service, Inc.

     

    “Monthly Payment Date”
has the meaning given in the Depositary Agreement.

     

    “Mortgage” means
either the FEC Deed of Trust or MEC Mortgage.

     

    “Multiemployer Plan”
shall mean a multiemployer plan as defined in Section 4001(a)(3) of ERISA
subject to the provisions of Title IV of ERISA and in respect of which any
Borrower Party or any ERISA Affiliate is an “employer” as defined in
Section 3(5) of ERISA.

     

    “NERC” means North
American Electric Reliability Corporation.

     

    “New Lender” means a
Lender under this Agreement who is not an Existing Lender.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    “New Term Loans” has
the meaning given in Section 2.1.1(a)(iii) of the Credit
Agreement.

     

    “NNG” means Northern
Natural Gas Company, a Delaware corporation.

     

    “Non-Advancing Bank”
has the meaning given in Section 9.12 of the Credit Agreement.

     

    “Nonrecourse Persons”
has the meaning given in Article 8 of the Credit Agreement.

     

    “Non-Defaulting
Lender” means, at any time, a Lender that is not a Defaulting
Lender.

     

    “Notes” means,
collectively, any Term Notes, any DSR LC Notes, and any Security Fund LC Loan
Notes.

     

    “Notice of Conversion of Loan
Type” has the meaning given in Section 2.1.5 of the Credit Agreement
and substantially in the form of Exhibit C-2.

     

    “Notice of LC
Activity” means a request by Borrower in accordance with the terms of
Section 2.2.4 and substantially in the form of Exhibit C-3.

     

    “NSP” means Northern
States Power Company, a Minnesota corporation.

     

    “NSP Subordinated
Mortgage” means the Subordinated Mortgage, Assignment of Leases and
Rents, Security Agreement and Financing Statement dated August 23, 2004, by MEC
in favor of NSP, as supplemented by the NSP Acknowledgement of
Subordination.

     

    “O&M Agreements”
means the FEC O&M Agreement and the MEC O&M/Major Maintenance
Agreement.

     

    “O&M Accounts”
means the “O&M Accounts” as defined in the Depositary
Agreement.

     

    “O&M Costs” means,
for any period, cash amounts incurred and paid by FEC and/or MEC for the
operation and maintenance of its respective Project or any portion thereof
(other than as funded from the MEC Major Maintenance Reserve Account or the FEC
Major Maintenance Reserve Account), and/or in connection with MEC’s use of any
Alternate Generation Source (as such term is defined in the Power Purchase
Agreement) and for the purchase of goods and services in connection therewith,
in each case including (a) premiums for insurance policies, (b) fuel
supply and fuel transportation costs (to the extent incurred in connection with
the sale of electrical products under the Capacity Sales Agreement (in the case
of the Freeport Project) or the Power Purchase Agreement (in the case of the
Mankato Project)), costs of additives or chemicals and transportation costs
related thereto and
the cost of other consumables, (c) costs of obtaining any other materials,
supplies, spare parts, utilities or services for the Projects, (d) costs of
obtaining, transferring, maintaining, renewing and amending

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    Permits,
(e) franchise, licensing, property, real estate, sales and excise taxes,
(f) general and administrative expenses, (g) employee salaries, wages
and other employment-related costs, (h) business management and
administrative service fees, (i) costs required to be paid by each Project
under any Project Document or Credit Document (other than scheduled Debt
Service) or to satisfy any Legal Requirement or obtain or maintain any Permit,
(j) legal, accounting and consulting fees and other transaction costs and
all other fees payable to the Lenders allocable to FEC or MEC, as the case may
be (other than amounts constituting scheduled Debt Service), (k) all other
fees and expenses necessary for the continued operation and maintenance of the
Projects and the conduct of the business of the Projects, (l) Emergency
Operating Costs (except for Emergency Operating
Costs in connection
with the repair or restoration of any casualty suffered by the Projects to the
extent funded with insurance or similar proceeds applied pursuant to
Section 3.7 of the Depositary Agreement or infusions of equity pursuant to
the Credit Documents), (m) reasonable expenses to keep the Collateral free and
clear of all Liens (other than Permitted Liens), (n) costs of purchasing any
necessary emissions credits, allowances or rights in respect of any Project (and
any carbon, emissions or similar taxes in respect of any Borrower Party’s
interest in any Project), and (o) costs and fees required to be paid by Borrower
under any Credit Document (other than scheduled Debt Service, mandatory
prepayments from cash sweeps and ordinary course settlements under Interest Rate
Agreements), but exclusive in all cases of non-cash charges, including
depreciation or obsolescence charges or reserves therefor, amortization of
intangibles or other bookkeeping entries of a similar nature, and also exclusive
of all interest charges and charges for the payment or amortization of principal
of indebtedness of Borrower (other than such payments with respect to Debt of
the type referred to in clauses (c), (d), (f) and (i) of the definition of
Permitted Debt); provided that to the
extent any of the foregoing O&M Costs are paid by a Person other than a
Project Company, the reimbursement by the Project Company of the same shall
constitute “O&M Costs”.  O&M Costs shall not include
(i) costs of Major Maintenance to the extent paid with funds on deposit in
a Major Maintenance Reserve Account, (ii) Subordinated Payments,
(iii) depreciation, (iv) payments for restoration or repair of the
Projects from the Loss Proceeds Account in accordance with the terms of the
Depositary Agreement, (v) Restricted Payments to any Affiliate of Borrower
(other than payments to the Operator under the terms of the O&M Agreements,
Restricted Payments to Affiliates of Borrower under the terms of the Project
Documents and Restricted Payments made to any Affiliate that are otherwise
permitted pursuant to the  Credit Documents), (vi) any termination or
liquidation payments under any Hedge Transaction, or (vii) Capital Expenditures
other than Emergency Operating Costs to the extent such are Capital
Expenditures.

     

    “Obligations” means
and includes, with respect to any Person, all loans, advances, debts,
liabilities, and obligations, howsoever arising, owed by such Person to the Lead
Arrangers, Administrative Agent, Depositary Agent, Collateral Agent, the LC
Issuers, the Hedge Banks or the Lenders of every kind and description (whether
or not evidenced by any note or instrument and whether or not for the payment of
money), direct or indirect, absolute or contingent, due or to become due, now
existing or hereafter arising, pursuant to the terms of the Credit Agreement or
any of the other Credit Documents, including all interest, fees, charges,
expenses, attorneys’ fees and accountants fees chargeable to such Person and
payable by such Person hereunder or thereunder.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    “Operating Cash Available for
Debt Service” means, for any period, Project Revenues during such period
minus (a) O&M
Costs during such period, and (b) deposits into the MEC Major Maintenance
Reserve Account or the FEC Major Maintenance Reserve Account during such
period.

     

    “Operative Documents”
means, collectively, the Credit Documents and the Project
Documents.

     

    “Operator” means
Calpine Operating Services Company, Inc., a Delaware corporation.

     

    “Optional Prepayment”
has the meaning given in Section 2.1.6(b) of the Credit
Agreement.

     

    “Original Depositary
Agreement” has the meaning given in the Depositary
Agreement.

     

    “Other Taxes” has the
meaning given in Section 2.5.4(a) of the Credit Agreement.

     

    “Parent Company”
means, with respect to a Lender, the bank holding company (as defined in Federal
Reserve Board Regulation Y), if any, of such Lender, and/or any Person owning,
beneficially or of record, directly or indirectly, a majority of the shares of
such Lender.

     

    “Participant” has the
meaning given in Section 9.13 of the Credit Agreement.

     

    “Payment Period” means
the three-month period commencing on a Quarterly Payment Date and ending on the
day prior to the next Quarterly Payment Date.

     

    “PBGC” means the
Pension Benefit Guaranty Corporation established pursuant to Subtitle A of Title
IV of ERISA.

     

    “Permit” means any
action, approval, consent, waiver, exemption, variance, franchise, order,
permit, authorization, right or license required to be obtained from a
Governmental Authority under any Governmental Rule.

     

    “Permitted Capital
Expenditures” shall mean Capital Expenditures incurred by Borrower in
accordance with Prudent Industry Practices that are (a) necessary to operate the
Project in compliance with applicable Legal Requirements or (b) incurred in the
ordinary course of the operation and maintenance of the Project excluding, for
the avoidance of doubt, Major Maintenance.

     

    “Permitted Debt” means
(a) Debt or other obligations incurred under the Credit Documents,
(b) Debt or other obligations incurred by a Project Company pursuant to the
terms of a Project Document (but not for borrowed money), either not more than
90 days past due or being contested in good faith, (c) trade or other
similar Debt incurred by a Project Company in the ordinary course of business
(but not for borrowed money), either not more than 90 days past due or
being contested in good faith, (d) contingent liabilities of Borrower and
the Project

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    Companies,
to the extent otherwise constituting Debt, including those relating to
(i) the acquisition of goods, supplies or merchandise in the normal course
of business or normal trade credit, (ii) the endorsement of negotiable
instruments received in the normal course of its business, and
(iii) contingent liabilities incurred with respect to any Applicable
Permit, Credit Document or Project Document, (e) capital lease obligations
and any other Debt of the Project Companies (including purchase money
obligations incurred by a Project Company to finance the purchase price of
discrete items of equipment not comprising an integral part of a Project that
extend only to the equipment being financed) in an aggregate amount of secured
principal not exceeding $5,000,000 at any one time outstanding,
(f) obligations of a Project Company in respect of surety bonds or similar
instruments in an aggregate amount not exceeding $3,000,000 at any one time
outstanding, (g) Debt incurred to finance an expansion of either Project in
accordance with Section 11.25 of the Credit Agreement, (h) to the extent
constituting Debt, Debt arising from the honoring by a bank or other financial
institution of a check, draft or similar instrument drawn against insufficient
funds in the ordinary course of business or other cash management services in
the ordinary course of business; provided that such
Debt is extinguished within 10 Banking Days of its incurrence, (i) ordinary
course indemnities under agreements that are not Operative Documents or in
connection with the issuance of the title policy pursuant to Section 5.13.3, and
(j) obligations under Permitted Junior Debt.

     

    “Permitted
Investments” means (a) securities issued or directly and fully
guaranteed or insured by the United States of America or any agency or
instrumentality thereof (provided that the full faith and credit of the United
States of America is pledged in support thereof) having a maturity not exceeding
one year from the date of issuance, (b) interest-bearing deposit accounts,
including time deposits and certificates of deposit, of any Lender or any
domestic or foreign commercial bank whose outstanding long-term debt is rated at
least A-1 or the equivalent thereof by S&P or at least P-1 or the equivalent
thereof by Moody’s having capital and surplus in excess of $500,000,000 having a
maturity not exceeding 90 days from the date of acquisition,
(c) commercial paper issued by any domestic corporation rated at least A-1
or the equivalent thereof by S&P or at least P-1 or the equivalent thereof
by Moody’s and, in each case, having a maturity not exceeding 90 days from
the date of acquisition, (d) fully secured repurchase obligations with a
term of not more than seven days for underlying securities of the types
described in clause (a) above entered into with any bank meeting the
qualifications established in clause (b) above, (e) money market
mutual funds whose investment criteria are substantially similar to
items (a) through (d) of this definition, (f) instruments issued by an
investment company
rated at least A or the equivalent thereof by S&P or at least A2 or the
equivalent thereof by Moody’s having a portfolio consisting of 95% or more of
the securities described in items (a) through (e) of this definition,
(g) investment contracts pursuant to which moneys are deposited (to bear
interest at an agreed rate) with a bank, insurance company or other financial
institution whose long-term senior unsecured debt is rated at least A or the
equivalent thereof by S&P or at least A2 or the equivalent thereof by
Moody’s, and (h) cash.

     

    “Permitted Junior
Debt” shall mean Debt that (a) is unsecured, (b) is expressly
subordinated to the prior payment in full in cash of the Obligations under the
Credit Documents on terms reasonably satisfactory to Administrative Agent, (c)
has a final maturity date that is not earlier than, and provides for no
scheduled payments of principal or mandatory redemption obligations prior to,
the date that is one year after the Maturity Date, (d) provides for
payments

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    of
interest solely in-kind (and not in cash) until the date that is one year after
the Maturity Date (except for payments made solely from cash available for
distribution to Sponsor or its Affiliates pursuant to Section 3.10(b) of the
Depositary Agreement and payments in accordance with Section 3.1(b)(v) of the
Depositary Agreement), and (e) the lender of which is an Affiliate of
Borrower.

     

    “Permitted Liens”
means (a) the rights and interests of Collateral Agent and any other
Secured Party in Borrower, the Project Companies and their respective assets as
provided in the Credit Documents, (b) Liens of Borrower and the Project
Companies for any tax, assessment or other governmental charge, either not yet
due or being contested in good faith and by appropriate proceedings and reserved
against as provided under Section 5.16 of this Agreement,
(c) materialmen’s, mechanics’, workers’, repairmen’s, employees’ or other
like Liens of the Project Companies, arising in the ordinary course of business
or in connection with the construction of the Projects (including in connection
with any expansion of any Project approved in accordance with Section 11.25 of
this Agreement or any improvements thereto), which do not in the aggregate
materially detract from the value of the property or assets to which they are
attached or materially impair the construction or use thereof or are either for
amounts not yet due or for amounts being contested in good faith and by
appropriate proceedings, so long as adequate cash reserves have been provided
therefor, (d) Liens of Borrower and the Project Companies arising out of
judgments or awards so long as an appeal or proceeding for review is being
prosecuted in good faith and for the payment of which adequate reserves are
established in accordance with GAAP or bonds or other security reasonably
acceptable to Administrative Agent have been provided or are fully covered by
insurance (other than any customary deductible), (e) (i) Title Exceptions
with respect to the Project Companies and (ii) other easements, rights of way,
title imperfections and similar matters that, in the case of this clause (ii),
in the aggregate, are not substantial in amount and do not and would not
reasonably be expected to materially detract from the value or use of a Project,
(f) Liens, deposits or pledges of the Project Companies to secure statutory
obligations or performance of bids, tenders, contracts (other than for the
repayment of borrowed money) or leases, or for purposes of like general nature
in the ordinary course of its business, not to exceed $2,000,000 in the aggregate at any
time, and with any such Lien to be released as promptly as practicable,
(g) other Liens of the Project Companies incident to the ordinary course of
business that are not incurred in connection with the obtaining of any loan,
advance or credit and that do not in the aggregate materially impair the use of
the property or assets of the Project Companies or the value of such property or
assets for the purposes of such business, (h) the rights and interests of NSP in
MEC as provided under the NSP Subordinated Mortgage (as supplemented by the NSP
Acknowledgement of Subordination), (i) Liens created to secure Debt
incurred pursuant to clause (g) of the definition of Permitted Debt, (j)
Liens in connection with or evidenced by Permitted Debt described in clause (e)
in the definition thereof, (k) Liens not otherwise permitted hereunder so long
as the aggregate outstanding principal amount of the obligations secured thereby
does not exceed $1,500,000 at any one time, (l) (i) any interest or title of a
lessor under any lease of real estate permitted hereunder (including the FEC
Ground Lease) and covering only the assets leased and (ii) any shared facilities
agreements in effect as of the Restatement Date, (m) any zoning, building and
land use or similar Legal Requirement, (n) Liens arising by virtue of any
statutory or common law provision relating to bankers’ liens, rights of set-off
or similar rights, (o) Liens evidenced by the filing of precautionary UCC
financing statements relating solely to operating

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    leases of
personal property entered into in the ordinary course of business, and (p) Liens
in favor of customs and revenue authorities arising as a matter of law to secure
payment of customs duties in connection with the importation of
goods.

     

    “Person” means any
natural person, corporation, partnership, limited liability company, firm,
association, Governmental Authority or any other entity whether acting in an
individual, fiduciary or other capacity.

     

    “Platform” has the
meaning given in 11.26.2 of the Credit Agreement.

     

    “Power Market
Consultant” means Pace Global Energy Services, LLC.

     

    “Power Purchase
Agreement” means the Purchased Power Agreement, dated as of March 11,
2004, between NSP and MEC, as amended by the First Amendment dated as of August
22, 2005.

     

    “Prepayment Account”
has the meaning given in Section 2.2(k) of the Depositary
Agreement.

     

    “Principal Repayment
Dates” means (a) each Quarterly Payment Date, and (b) the
Maturity Date.

     

    “Project Companies”
has the meaning given in the Recitals of the Credit Agreement.

     

    “Project Document
Modification” has the meaning given in Section 6.12.1 of the Credit
Agreement.

     

    “Project Documents”
means, without duplication, the FEC Project Documents and the MEC Project
Documents.

     

    “Project
Revenues”
means, without duplication, all income and cash receipts of Borrower Parties
derived from the ownership or operation of the Projects, including payments
received by MEC under the Power Purchase Agreement, and the MEC O&M/Major
Maintenance Agreement, and payments received by FEC under the Capacity Sales
Agreement, the FEC O&M Agreement, proceeds of any delay in start up
or business interruption or liability insurance (to the extent such liability
insurance proceeds represent reimbursement of third party claims previously paid
by Borrower Parties), income derived from the sale or use of electric capacity,
energy or related products transmitted or distributed or ancillary services or
other related products produced by the Projects, payments for remarketing of
fuel or transportation rights relating thereto and investment income on amounts
in the Accounts (solely to the extent deposited in the applicable Account),
but excluding
(a) net payments, if any, received by Borrower Parties under Hedge
Transactions, as determined in conformity with cash accounting principles,
(b) any receipts derived from the sale of any property pertaining to the
Projects or incidental to the operation of the Projects, as determined in
conformity with cash accounting principles, (c) proceeds of casualty
insurance, (d) the proceeds of any condemnation awards

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    relating
to the Projects, (e) proceeds from the Collateral Documents, (f) proceeds from
the incurrence of Debt and (g) proceeds from equity contributions.

     

    “Projects” has the
meaning given in the Recitals of the Credit Agreement.

     

    “Proportionate Share”
means (a) in the context of voting in matters requiring the vote of all or
a percentage of the Lenders and indemnification obligations of the Lenders under
Section 9.5 of the Credit Agreement, with respect to each Lender (including
without duplication, to the extent provided herein, each Hedge Bank in its
capacity as a Lender under Section 5.18.3 of the Credit Agreement) at any
time, a percentage equal to the quotient of (i) the sum of (A) the
percentage interest of such Lender in the aggregate amount of all Commitments,
as set forth on Exhibit H to the
Credit Agreement (as may be amended pursuant to Article 9 of the Credit
Agreement), multiplied by the aggregate amount of all Commitments plus (B) (1) prior to
the termination of the transactions under the Interest Rate Agreement, zero and
(2) thereafter, the percentage interest of such Lender in the Interest Rate
Agreements, as set forth on Exhibit H to the
Credit Agreement, multiplied by the Hedge Breaking Fees actually payable (and
not on a “marked to market” basis) at such time (reasonably determined upon the
close of the applicable voting period in accordance with the terms of such
Interest Rate Agreement), divided by (ii) the sum
of (A) the aggregate amount of all Commitments plus (B) (1) prior to
the termination of the transactions under the Interest Rate Agreement, zero and
(2) thereafter, the Hedge Breaking Fees actually payable (and not on a “marked
to market” basis) at such time (reasonably determined upon the close of the
applicable voting period in accordance with the terms of such Interest Rate
Agreement), and
(b) with respect to each Lender at any time in the context of funding
Loans, receiving payments, or any purpose under the Credit Agreement other than
as set forth in clause (a) above, the percentage participation of such Lender in
the Total Term Loan Commitment, Total DSR LC Commitment or Total Security Fund
LC Commitment, respectively, as set forth on Exhibit H to the
Credit Agreement (as may be amended pursuant to Article 9 of the Credit
Agreement).  Upon any transfer by a Lender of all or part of its
Commitments, Administrative Agent shall revise Exhibit H to
reflect the Lenders’ applicable Proportionate Shares after giving effect to such
transfer.

     

    “Prudent
Industry Practices” means those practices,
methods, equipment, specifications and standards of safety and performance, as
the same may change from time to time, as are commonly used by independent
electric generation stations in Texas (in the case of the Freeport Project) or
Minnesota (in the case of the Mankato Project) of a type and size similar
to the Projects as good, safe and prudent engineering practices in
connection with the design, construction, operation, maintenance, repair and use
of electrical and other equipment, facilities and improvements of such
electrical station, with commensurate standards of safety, performance,
dependability, efficiency and economy, provided however, that, so
long as the FEC O&M Agreement remains in full force and effect, “Prudent
Industry Practices” means, for FEC, the O&M Standards (as such term is
defined in the FEC O&M Agreement).  “Prudent Industry Practices”
does not necessarily mean one particular practice, method, equipment
specification or standard in all cases, but is instead intended to encompass a
broad range of acceptable practices, methods, equipment specifications and
standards.

     

    “PUHCA” means the
Public Utility Holding Company Act of 2005.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    “Purchase Option” has
the meaning given in the Capacity Sales Agreement.

     

    “PURPA” means the
Public Utility Regulatory Policies Act of 1978, as amended.

     

    “Put Option” has the
meaning given in the Capacity Sales Agreement.

     

    “Qualifying Facility”
means a “qualifying facility” within the meaning of PURPA and FERC’s
implementing regulations pertaining thereto.

     

    “Quarterly Payment
Date” means the last Banking Day of each calendar quarter.

     

    “Rate Margin” means
the applicable rate set forth below:

     

    
      	
              Term
      Period

            	
              Rate
      Margin

            
	
              From
      the Restatement Date until December 31, 2011

            	
              2.875%

            
	
              From
      January 1, 2012 until December 31, 2013

            	
              3.000
      %

            
	
              From
      January 1, 2014 until December 31, 2015

            	
              3.125%

            
	
              From
      and after January 1, 2016

            	
              3.375%

            

    

     

    “Register” has the
meaning given in Section 2.1.7 of the Credit Agreement.

     

    “Regulation D” means
Regulation D of the Board of Governors of the Federal Reserve System (or any
successor).

     

    “Regulatory Change”
means any change after the Closing Date in federal, state, local or foreign
laws, regulations, Legal Requirements or requirements under Applicable Permits,
or the adoption or making after such date of any interpretations, directives or
requests of or under any federal, state, local or foreign laws, regulations,
Legal Requirements or requirements under Applicable Permits (whether or not
having the force of law) by any Governmental Authority charged with the
interpretation or administration thereof.

     

    “Related Parties”
means, with respect to any specified Person, such Person’s Affiliates and the
respective directors, officers, employees, agents and advisors of such Person
and such Person’s Affiliates.

     

    “Relative Proportion”
means, as of any date of determination, the proportion of (a) (i) the aggregate
principal amount of Term Loans outstanding, (ii) the DSR LC Exposure as of such
date, or (iii) the Security Fund LC Exposure as of such date, as applicable, to
(b) sum of the aggregate principal amount of Term Loans outstanding as of such
date plus the
DSR LC Exposure as of such date plus the Security
Fund LC Exposure as of such date; provided that, for
purposes of the foregoing calculation, each of the DSR LC Exposure and Security
Fund LC Exposure (as used in clauses (a) and (b)) shall be deemed to include any
portion of the DSR LC

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    Exposure
or Security Fund LC Exposure that has been cancelled prior to the applicable
date of determination pursuant to Section 2.1.6(d).

     

    “Release” means
disposing, discharging, injecting, spilling, leaking, leaching, dumping,
pumping, pouring, emitting, escaping, emptying, seeping, placing or the like,
into or upon any land or water or air, or otherwise entering into the
environment.

     

    “Rentech” means
Rentech Boiler Systems, Inc, a state of Texas C corporation.

     

    “Reorganization” has
the meaning given such term in Section 3.1.25 of the Credit
Agreement.

     

    “Replacement Obligor”
means a Person (or any guarantor of such Person’s obligations) (a) having, on
the date of such replacement, credit, or acceptable credit support, and
experience equal to or greater than that of the party to the Major Project
Document (including any guaranty thereof) being replaced or (b) acceptable
to the Required Lenders; provided that in each
case, on the date the applicable Replacement Project Document is entered into,
such Person enters into either (i) a consent substantially in the form of the
Consent relating to the Major Project Document being replaced or (ii) a
Consent.

     

    “Replacement Project
Document” shall mean any Project Document entered into by a Borrower
Party with a Replacement Obligor in replacement of a Major Project Document
which either (a) has economic terms which are no less favorable to such Borrower
Party than those in the Major Project Document being replaced and other terms
and conditions which are no less favorable to such Borrower Party in any
material respect than those in the Major Project Document being replaced or (b)
is in form and substance reasonably satisfactory to the Required
Lenders.

     

    “Reportable Event”
means any of the events set forth in Section 4043(b) or (c) of ERISA for
which notice to the PBGC has not been waived.

     

    “Required Lenders”
means, at any time, Lenders having Proportionate Shares which in the aggregate
exceed 50%.

     

    “Reserve
Requirement”
means, for LIBOR Loans, the maximum rate (expressed as a percentage) at which
reserves (including any marginal, supplemental or emergency reserves) are
required to be maintained during the Interest Period therefor under Regulation D
by member banks of the Federal Reserve System in New York City with
deposits exceeding $1,000,000,000 against “Eurocurrency liabilities” (as such
term is used in Regulation D).  Without limiting the effect of
the foregoing, the Reserve Requirement shall reflect any other reserves required
to be maintained by such member banks by reason of any Regulatory Change against
(a) any category of liabilities which includes deposits by reference to
which the LIBO Rate or LIBOR Loans is to be determined, (b) any category of
liabilities or extensions of credit or other assets which include LIBOR Loans,
or (c) any category of liabilities or extensions of credit which are
considered irrevocable commitments to lend.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    “Responsible Officer”
means, as to any Person, its president, executive officer or financial officer,
any vice president, treasurer, or secretary or any natural Person who is a
managing general partner or manager or managing member of a limited liability
company (or any of the preceding with regard to any such managing general
partner, manager or managing member) or any other officer or similar official
thereof, in each case responsible for the administration of the obligations of
such Person in respect of this Agreement and the other Credit
Documents.

     

    “Restatement Date” has
the meaning given in Section 3.1 of the Credit Agreement.

     

    “Restatement Date Operative
Document” means any Operative Document to be entered into on the
Restatement Date.

     

    “Restricted Payment”
shall mean any dividend or other distribution (whether in cash, securities or
other property) with respect to any Equity Interests in, or subordinated Debt
(including Permitted Junior Debt) of, any Borrower Party, or any payment
(whether in cash, securities or other property), including any sinking fund or
similar deposit, on account of the purchase, redemption, defeasance, retirement,
acquisition, cancellation or termination of any Equity Interests in, or
subordinated Debt of, any Borrower Party or any option, warrant or other right
to acquire any such Equity Interest in, or subordinated Debt of, any Borrower
Party.

     

    “Restricted Payment
Conditions” has the meaning given in Section 6.6.1 of the Credit
Agreement.

     

    “Revenue Account” has
the meaning given in Section 2.2(a) of the Depositary Agreement.

     

    “S&P” means
Standard & Poor’s, a division of The McGraw-Hill Companies,
Inc.

     

    “Section 2.5.6
Certificate” has the meaning given in Section 2.5.6 of the Credit
Agreement.

     

    “Secured Parties”
means Administrative Agent, the Lead Arrangers, Collateral Agent, the Depositary
Agent, any LC Issuer, any Hedge Bank which is a counterparty to an Interest Rate
Agreement entered into by Borrower in accordance with the Credit Agreement,
each Lender and each
of their respective successors, transferees and assigns; provided, that no Affiliate of
Sponsor shall be a “Secured Party” hereunder or under any other Credit
Document.

     

    “Security Agreement”
means the Security Agreement, dated as of the Closing Date, entered into
pursuant to the Existing Credit Agreement, between Borrower and Collateral
Agent, as amended pursuant to the First Amendment to Security Agreement, dated
as of the Restatement Date, between Borrower and Collateral Agent.

     

    “Security Fund” has
the meaning given in Section 11.1 of the Power Purchase
Agreement.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    “Security Fund LC” has
the meaning given in Section 2.2.2 of the Credit Agreement.

     

    “Security Fund LC
Commitment” means, at any time with respect to each Lender, such Lender’s
commitment to make Security Fund LC Loans and otherwise reimburse the Security
Fund LC Issuer for any draws under a Security Fund LC issued hereunder, as such
commitment may be (a) reduced from time to time pursuant to Section 2.1.6(d) and
(b) reduced or increased from time to time pursuant to assignments by or to such
Lender under Section 9.14.

     

     “Security Fund LC
Exposure” means, at any time the sum of (a) the aggregate principal
amount of all Security Fund LC Loans outstanding at such time, and (b) the
Stated Amount of the Security Fund LC.

     

    “Security Fund LC
Issuer” means Calyon New York Branch and each other Lender designated as
Security Fund LC Issuer pursuant to Section 2.2.12, in each case in its capacity
as an issuer of the Security Fund LC hereunder, and its successors in such
capacity pursuant to Section 2.2.14.  The Security Fund LC Issuer may,
in its discretion, arrange for the Security Fund LC to be issued by an Affiliate
of such Security Fund LC Issuer, in which case the term “Security Fund LC
Issuer” shall include any such Affiliate with respect to the Security Fund LC
issued by such Affiliate.

     

    “Security Fund LC
Loan” has the meaning given in Section 2.2.5 of the Credit
Agreement.

     

    “Security Fund LC Loan
Note” has the meaning given in Section 2.1.3 of the Credit
Agreement.

     

    “Site” means the FEC
Site and the MEC Site.

     

    “Site Services
Agreement” means the Site Services Agreement, dated as of May 27,
2004 between FEC and Dow.

     

    “SPC” has the meaning
given in Section 9.13.2 of the Credit Agreement.

     

    “Sponsor” means
Calpine Corporation, a Delaware corporation.

     

    “Stated Amount” means
with respect to the DSR Letters of Credit or the Security Fund LC, the total
amount available to be drawn thereunder at the time in question in accordance
with the terms of the DSR Letters of Credit or the Security Fund LC, as
applicable.

     

    “Subject Claims” has
the meaning given in Section 11.14 of the Credit Agreement.

     

    “Subordinated
Payments” means any fees, bonuses, profits and any other amounts payable
by either Project Company to any Affiliate under any Project Document and which
are subject to subordination under a Subordination Agreement.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    “Subordination
Agreements” means the COSCI Subordination Agreements and any other
subordination agreement substantially in the form of Exhibit D-3 to
the Credit Agreement which is approved by the Required Lenders pursuant to
Section 6.8 of the Credit Agreement.

     

    “Subsidiary” means, as
to any Person, a corporation, partnership, limited liability company or other
entity of which such Person: (a) owns 50% or more of the 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 and/or (b) controls the
management, directly or indirectly through one or more
intermediaries.  Unless otherwise qualified, all references to a
“Subsidiary” or to “Subsidiaries” in this Agreement shall refer to a Subsidiary
or Subsidiaries of a Person.

     

    “Super Majority
Lenders” means, at any time, Lenders having Proportionate Shares which in
the aggregate exceed 662⁄3%.

     

    “Syndication Agent”
means WestLB AG, New York Branch, acting in its capacity as Syndication Agent
for the Lenders under the Credit Agreement.

     

    “Taxes” has the
meaning, with respect to the Loans, given in Section 2.5.4(a) of the Credit
Agreement.

     

    “Template Operating
Report” means an operating report required by Section 5.8.1 of the
Credit Agreement, in substantially the form of Exhibit G-6 to
the Credit Agreement.

     

    “Term Loan” has the
meaning given in Section 2.1.1(a)(iv) of the Credit Agreement.

     

    “Term Loan Commitment”
means, at any time with respect to each Lender, such Lender’s Proportionate
Share of the Total Term Loan Commitment at such time.

     

    “Term Note” has the
meaning given in Section 2.1.3 of the Credit Agreement.

     

    “Title Exception”
means those exceptions to coverage listed on Schedule B Part I of the Title
Policy for the Mankato Project and on Schedule B of the Title Policy for the
Freeport Project,
other than the standard printed exceptions contained therein and exception ab.
in Schedule B of the Title Policy for the Freeport Project.

     

    “Title Insurer” means
Stewart Title Guaranty Company.

     

    “Title Policies” means
(i) with respect to the Mankato Project, that certain title insurance policy
issued by the Title Insurer numbered M-9702-533808 and dated as of March 1,
2005, as affected by that certain date down and modification endorsement dated
on or about the date of the recording of the MEC Amendment to Mortgage, and (ii)
with respect to the Freeport Project, that certain title insurance policy issued
by the Title Insurer dated on or about the date of

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    the
recording of the FEC Amendment to Deed of Trust, in each case, including all
amendments thereto, endorsements thereof and substitutions or replacements
therefor.

     

    “Total DSR LC
Commitment” has the meaning given in Section 2.2.1(b) of the Credit
Agreement.

     

    “Total Security Fund LC
Commitment” has the meaning given in Section 2.2.1(a) of the Credit
Agreement.

     

    “Total Term Loan
Commitment” has the meaning given in Section 2.1.1(a) of the Credit
Agreement.

     

    “Type” means the type
of Loan, whether a Base Rate Loan or LIBOR Loan.

     

    “UCC” means the
Uniform Commercial Code as the same may, from time to time, be in effect in the
State of New York; provided, in the
event that, by reason of mandatory provisions of law, any or all of the
perfection or priority of the security interest in any Collateral is governed by
the Uniform Commercial Code as in effect in a jurisdiction other than the State
of New York the term “UCC” shall mean the Uniform Commercial Code as in effect
in such other jurisdiction for purposes of the provisions hereof and of the
other Credit Documents relating to such perfection or priority and for purposes
of definitions related to such provisions.

     

    “Unsatisfied
Condition” means a condition in a Permit that has not been satisfied and
that either (a) must be satisfied before such Permit can be come effective,
(b) must be satisfied as of the date on which a representation is made or a
condition precedent must be satisfied under the Credit Agreement, or
(c) must be satisfied as of a future date but with respect to which facts
or circumstances exist which, to Borrower’s knowledge, could reasonably be
expected to result in a failure to satisfy such Permit condition.

     

    “Unutilized DSR LC
Commitment” means the aggregate amount of the DSR LC Commitment minus the Stated Amount of
the DSR Letters of Credit minus the aggregate principal
amount of DSR LC Loans.

     

    “Unutilized Security Fund LC
Commitment” means the aggregate amount of the Security Fund LC Commitment
minus the Stated Amount
of the Security Fund LC minus the aggregate principal
amount of Security Fund LC Loans.

     

    “Water Services
Agreement” means the Water Services Agreement, dated November 10, 2004,
between MEC and the City of Mankato, Minnesota. 

     

    “Withdrawal Liability”
shall mean liability to a Multiemployer Plan as a result of a complete or
partial withdrawal from such Multiemployer Plan, as such terms are defined in
Part 1 of Subtitle E of Title IV of ERISA.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

                 
RULES OF INTERPRETATION

     

    1.           The
singular includes the plural and the plural includes the singular.

     

    2.           “or”
is not exclusive.

     

    3.           A
reference to a Governmental Rule includes any amendment or modification to such
Governmental Rule, and all regulations, rulings and other Governmental Rules
promulgated under such Governmental Rule.

     

    4.           A
reference to a Person includes its permitted successors, permitted replacements
and permitted assigns.

     

    5.           Accounting
terms have the meanings assigned to them by GAAP, as applied by the accounting
entity to which they refer.

     

    6.           The
words “include”, “includes” and “including” are not limiting.

     

    7.           A
reference in a document to an Article, Section, Exhibit, Schedule, Annex or
Appendix is to the Article, Section, Exhibit, Schedule, Annex or Appendix of
such document unless otherwise indicated.  Exhibits, Schedules,
Annexes or Appendices to any document shall be deemed incorporated by reference
in such document.  In the event of any conflict between the provisions
of the Credit Agreement (exclusive of the Exhibits, Schedules, Annexes and
Appendices thereto) and any Exhibit, Schedule, Annex or Appendix thereto, the
provisions of the Credit Agreement shall control.

     

    8.           Unless
otherwise expressly provided, references to any document, instrument or
agreement (a) shall include all exhibits, schedules and other attachments
thereto, (b) shall include all documents, instruments or agreements issued
or executed in replacement thereof, and (c) shall mean such document,
instrument or agreement, or replacement or predecessor thereto, as amended,
amended and restated, modified and supplemented from time to time and in effect
at any given time.

     

    9.           The
words “hereof”, “herein” and “hereunder” and words of similar import when used
in any document shall refer to such document as a whole and not to any
particular provision of such document.

     

    10.         References
to “days” shall mean calendar days, unless the term “Banking Days” shall be
used.  References to a time of day shall mean such time in
New York, New York, unless otherwise specified.

     

    11.         If,
at any time after the Restatement Date, Moody’s or S&P shall change its
respective system of classifications, then any Moody’s or S&P “rating”
referred to herein shall be considered to be at or above a specified level if it
is at or above the new rating which most closely corresponds to the specified
level under the old rating system.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    12.         The
Credit Documents are the result of negotiations between, and have been reviewed
by Borrower, each Affiliate of Borrower party thereto, Administrative Agent, the
Lead Arrangers, each Lender and their respective
counsel.  Accordingly, the Credit Documents shall be deemed to be the
product of all parties thereto, and no ambiguity shall be construed in favor of
or against Borrower, any Affiliate of Borrower party thereto, Administrative
Agent or any Lender solely as a result of any such party having drafted or
proposed the ambiguous provision.ex101to8k07319_112242009.htm

    Exhibit 10.1

     

    
      THIRD SUPPLEMENTAL INDENTURE, dated as
of November 24, 2009 (the “Third Supplemental Indenture”), by and among GENCORP
INC., an Ohio corporation (the “Issuer”), the guarantors party hereto (the
“Guarantors”), EASTON DEVELOPMENT COMPANY, LLC, a California limited liability
company (the “New Subsidiary Guarantor”), and THE BANK OF NEW YORK MELLON TRUST
COMPANY, N.A.(formerly known as The Bank of New York Trust Company, N.A. and
successor to The Bank of New York ), a national banking association organized
under the laws of the United States of America, as trustee (the
“Trustee”).

       

      RECITALS

       

      WHEREAS, the Issuer, the Guarantors,
and the Trustee have heretofore executed and delivered an Indenture, dated as of
August 11, 2003, as amended by the First Supplemental Indenture dated as of
October 29, 2004 and Second Supplemental Indenture dated as of June 27,
2006 (as amended, the “Indenture”), pursuant to which the Issuer issued
$150,000,000 principal amount of its 91⁄2% Senior Subordinated Notes due 2013 (the
“Notes”);

       

      WHEREAS, pursuant to Section 4.18 of
the Indenture, each Domestic Subsidiary that is a Material Domestic Subsidiary
shall, not later than the date it becomes a Material Domestic Subsidiary,
execute and deliver to the Trustee a supplemental indenture pursuant to which
such Subsidiary shall unconditionally guarantee all of the Issuer’s obligations
under the Notes and the Indenture on the terms set forth in the
Indenture;

       

      WHEREAS, on the date hereof, the Board
of Directors of the Issuer has designated the New Subsidiary Guarantor to be a
Material Domestic Subsidiary under the Indenture;

       

      WHEREAS, pursuant to Section 9.1(f) of
the Indenture, the Issuer, the Guarantors and the Trustee may amend or
supplement the Indenture or the Notes without the consent of any Holder to add a
Guarantor that will unconditionally guarantee the Notes; and

       

      WHEREAS, the execution and delivery of
this Third Supplemental Indenture by the Issuer has been authorized by
resolutions of the Board of Directors of the Issuer, the execution and delivery
of this Third Supplemental Indenture by the Guarantors has been authorized by
the board of directors, manager or members of each Guarantor, the execution and
delivery of this Third Supplemental Indenture by the New Subsidiary Guarantor
has been authorized by the board of managers of the New Subsidiary Guarantor,
and all acts, conditions and requirements necessary to make this Third
Supplemental Indenture a valid and binding agreement in accordance with its
terms and for the purposes herein set forth have been done and taken, and the
execution and delivery of this Third Supplemental Indenture have been in all
respects duly authorized.

       

      NOW, THEREFORE, in consideration of the
above premises, each party hereto agrees, for the benefit of the other party and
for the equal and ratable benefit of the Holders of the Notes, as
follows:

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

       

      Section
1.      Definitions.

       

      For all
purposes of this Third Supplemental Indenture, except as otherwise expressly
provided or unless the context otherwise requires, the terms used herein shall
have the respective meanings assigned to them in the Indenture.

       

      Section
2.      Guarantee.

       

      The New
Subsidiary Guarantor hereby agrees, jointly and severally with all other
Guarantors, to unconditionally guarantee the Issuer’s obligations under the
Notes on the terms and subject to the conditions set forth in Article 10 of the
Indenture and to be bound by all other applicable provisions of the
Indenture.

       

      Section
3.      Concerning the
Trustee.

       

      The Trustee accepts the trusts of the
Indenture, as supplemented by this Third Supplemental Indenture, and agrees to
perform the same, but only upon the terms and conditions set forth in the
Indenture, as supplemented by this Third Supplemental Indenture, to which the
parties hereto and the Holders from time to time of the Notes agree and, except
as expressly set forth in the Indenture, as supplemented by this Third
Supplemental Indenture, shall incur no liability or responsibility in respect
thereof. Without limiting the generality of the foregoing, the Trustee assumes
no responsibility for the correctness of the recitals herein contained, which
shall be taken as the statements of the Issuer. The Trustee makes no
representation and shall have no responsibility as to the validity or
sufficiency of this Third Supplemental Indenture.

       

      Section
4.      Miscellaneous.

       

      (a)      Except
as hereby expressly amended, the Indenture is in all respects ratified and
confirmed and all the terms, provisions and conditions thereof shall be and
remain in full force and effect.   This Third Supplemental
Indenture shall form a part of the Indenture for all purposes, and every holder
of Notes heretofore or hereafter authenticated and delivered shall be bound
hereby.

       

      (b)      All
agreements of the Issuer in this Third Supplemental Indenture shall bind the
Issuer’s successors. All agreements of the Trustee in this Third Supplemental
Indenture shall bind its successors.

       

      (c)      THIS
THIRD SUPPLEMENTAL INDENTURE SHALL BE GOVERNED BY THE LAWS OF THE STATE OF NEW
YORK AS APPLIED TO CONTRACTS MADE AND PERFORMED WITHIN THE STATE OF NEW YORK
WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW.

       

      (d)      If and
to the extent that any provision of this Third Supplemental Indenture limits,
qualifies or conflicts with another provision that is required to be included in
this Third Supplemental Indenture or in the Indenture by the Trust Indenture
Act, the required provision shall control.

       

      (e)      The
titles and headings of the sections of this Third Supplemental Indenture have
been inserted for convenience of reference only, and are not to be considered a
part hereof and shall in no way modify or restrict any of the terms or
provisions hereof.

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

       

      (f)      This
Third Supplemental Indenture may be executed in any number of counterparts, each
of which shall be deemed an original, but all of which together shall represent
one and the same agreement.

       

      (g)      In case
any provision of this Third Supplemental Indenture shall be determined to be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions hereof or of the Indenture shall not in any way be
affected or impaired thereby.

       

      [Signature
page on next page]

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

       

      IN WITNESS WHEREOF, the parties hereto
have caused this Third Supplemental Indenture to be duly executed, and their
respective corporate seals to be hereunto affixed, as of the date first written
above.

       

      
        	 	
                ISSUER:

                 

                GENCORP
      INC.

                 

              
	 
      	 
      
	 
      	
                By:

              	
                
                  /s/
      Kathleen E. Redd

                

              
	 
      	 
      	
                Name:

              	
                Kathleen
      E. Redd

              
	 
      	 
      	
                Title:

              	
                Vice
      President, Chief Financial Officer and
Secretary

              

      

      

      
        	 
      	
                GUARANTORS:

                 

                AEROJET-GENERAL
      CORPORATION

                 

              
	 
      	
                By:

              	
                
                  /s/
      Kathleen E. Redd

                

              
	 
      	 
      	
                Name:

              	
                Kathleen
      E. Redd

              
	 
      	 
      	
                Title:

              	
                Vice
      President and Chief Financial
Officer

              

      

      

      
        	 
      	 
      
	 
      	
                AEROJET
      ORDNANCE TENNESSEE, INC.

                 

              
	 
      	
                By:

              	
                
                  /s/
      Diane L. Wallace

                

              
	 
      	 
      	
                Name:

              	
                Diane
      L. Wallace

              
	 
      	 
      	
                Title:

              	
                Vice
      President

              

      

      

      

      
        	 	
                AEROJET
      INVESTMENTS LTD.

                 

              
	 
      	 
      
	 
      	
                By:

              	
                
                  /s/
      Diane L. Wallace

                

              
	 
      	 
      	
                Name:

              	
                Diane
      L. Wallace

              
	 
      	 
      	
                Title:

              	
                President

              

      

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

       

      
        	 
      	
                RKO
      GENERAL, INC.

              
	 
      	 
      
	 
      	
                By:

              	
                
                  /s/
      Kathleen E. Redd

                

              
	 
      	 
      	
                Name:

              	
                Kathleen
      E. Redd

              
	 
      	 
      	
                Title:

              	
                Treasurer

              
	 
      	 
      

      

      

      
        	 
      	
                NEW
      SUBSIDIARY GUARANTOR:

                 

                EASTON
      DEVELOPMENT COMPANY, LLC

                 

              
	 
      	
                By:

              	
                
                  /s/
      Kathleen E. Redd

                

              
	 
      	 
      	
                Name:

              	
                Kathleen
      E. Redd

              
	 
      	 
      	
                Title:

              	
                Chief
      Financial Officer and Secretary

              

      

      

      
        	 
      	
                TRUSTEE:

                 

                THE
      BANK OF NEW YORK MELLON TRUST COMPANY, N.A.

                 

              
	 
      	 
      
	 
      	
                By:

              	
                
                  /s/
      John (Alex) Briffett

                

              
	 
      	 
      	
                Name:

              	
                John
      (Alex) Briffett

              
	 
      	 
      	
                Title:

              	
                Senior
      Associate

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00166-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00166-of-00352.parquet"}]]