Letter of Credit Agreement (2004)Full Document 

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                         dated as of September 30, 2004,

                                     between

                              CALPINE CORPORATION,
                                as the Borrower,

                                       and

                             BAYERISCHE LANDESBANK,
                    ACTING THROUGH ITS CAYMAN ISLANDS BRANCH,
                                  as the Issuer





                                TABLE OF CONTENTS

                                                                            Page


ARTICLE I DEFINITIONS AND ACCOUNTING TERMS.....................................2

     SECTION 1.1.   Defined Terms..............................................2
     SECTION 1.2.   Use of Defined Terms......................................17
     SECTION 1.3.   Cross-References..........................................17
     SECTION 1.4.   Accounting and Financial Determinations...................17

ARTICLE II COMMITMENT AND LETTERS OF CREDIT PROCEDURES........................18

     SECTION 2.1.   Commitment to Issue Letters of Credit.....................18
     SECTION 2.2.   Reduction of Commitment Amount............................18

ARTICLE III REPAYMENTS, INTEREST AND FEES.....................................19

     SECTION 3.1.   Interest Provisions.......................................19
     SECTION 3.2.   Fees......................................................19

ARTICLE IV LETTERS OF CREDIT..................................................20

     SECTION 4.1.   Issuance Requests.........................................20
     SECTION 4.2.   Issuances and Extensions..................................21
     SECTION 4.3.   Disbursements.............................................21
     SECTION 4.4.   Reimbursement.............................................21
     SECTION 4.5.   Cash Collateral...........................................21
     SECTION 4.6.   Nature of Reimbursement Obligations.......................21
     SECTION 4.7.   Increased Costs; Indemnity................................22
     SECTION 4.8.   Existing Letters of Credit................................24
     SECTION 4.9.   Determination of Equivalent Amount........................24

ARTICLE V CERTAIN ADDITIONAL PROVISIONS.......................................24

     SECTION 5.1.   Increased Capital Costs...................................24
     SECTION 5.2.   Taxes.....................................................24
     SECTION 5.3.   Payments, Computations, etc...............................26
     SECTION 5.4.   Use of Proceeds...........................................26

ARTICLE VI CONDITIONS PRECEDENT...............................................26

     SECTION 6.1.   Effectiveness; Initial Credit Extension...................26
     SECTION 6.2.   All Credit Extensions.....................................27

ARTICLE VII REPRESENTATIONS AND WARRANTIES....................................28

     SECTION 7.1.   Organization, etc.........................................29



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     SECTION 7.2.   Due Authorization, Non-Contravention, etc.................29
     SECTION 7.3.   Government Approval, Regulation, etc......................29
     SECTION 7.4.   Validity, etc.............................................29
     SECTION 7.5.   Financial Information.....................................30
     SECTION 7.6.   No Material Adverse Effect................................30
     SECTION 7.7.   Litigation, Labor Controversies, etc......................30
     SECTION 7.8.   Subsidiaries..............................................30
     SECTION 7.9.   Regulations U and X.......................................30
     SECTION 7.10.   Accuracy of Information..................................30

ARTICLE VIII COVENANTS........................................................31

     SECTION 8.1.   Covenants.................................................31

ARTICLE IX EVENTS OF DEFAULT..................................................33


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