Exhibit 10.2.1.7
WAIVER AGREEMENT
THIS WAIVER AGREEMENT (this "Agreement") is entered into as of
the
9th day of June, 2006, by and among CALPINE CONSTRUCTION FINANCE
COMPANY, L.P.,
a Delaware limited
partnership (the
"Borrower"),
CALPINE HERMISTON, LLC, a
Delaware limited
liability company ("Calpine LLC"), CPN HERMISTON, LLC, a
Delaware limited liability company ("CPN LLC"), and HERMISTON POWER
PARTNERSHIP,
an Oregon general
partnership (the "Hermiston Partnership" and, together with
Calpine LLC and CPN
LLC, the "Guarantors"), the lenders party hereto (the
"Lenders"), and
GOLDMAN SACHS CREDIT
PARTNERS L.P., as
administrative
agent
(together with its successors in such capacity, the "Administrative
Agent").
RECITALS
WHEREAS, the
Borrower, the Guarantors, the Lenders, the
Administrative Agent
and the Sole
Lead Arranger entered into a Credit and
Guarantee Agreement,
dated as of August 14,
2003 (as amended on September 12,
2003, January 13, 2004, March 5, 2004, and March 15, 2006, and as
may be further
amended from
time to time,
the "Credit Agreement"), pursuant to which the
Borrower borrowed, on a non-recourse basis as described in the
Credit Agreement,
$385,000,000 in
aggregate principal
amount of First
Priority Senior Secured
Institutional Term Loans due 2009 (the "Term Loans");
WHEREAS, on December 20, 2005, Calpine Corporation ("Calpine") and
certain of
its controlled subsidiaries, including, among others, Calpine
Operating Services
Company, Inc. and Calpine Energy Services,
L.P. ("CES"),
filed a voluntary
proceeding for relief
under Chapter 11 of
the United States
Bankruptcy Code
with the United States Bankruptcy Court for the Southern
District of New York (the "Proceeding");
WHEREAS, CES,
the Borrower and certain of the Borrower's
subsidiaries are
parties to the Index Based Gas Sale and Power Purchase
Agreement dated as of August 14, 2003, as amended (the "PPA"),
pursuant to which
the Borrower purchases natural gas from CES for its power
generating facilities,
and CES purchases power generated by the facilities from the
Borrower;
WHEREAS, on
November 1, 2005, as permitted under the Credit
Agreement, the
Borrower used net proceeds of approximately $212.0 million from
the sale of one of its
facilities to make a prepayment to CES for gas under the
PPA (the "Gas Prepay Transaction");
WHEREAS, ordinarily
under the PPA, the cost of gas consumed by the
Borrower's facilities
is offset against the cost of power generated by the
facilities, with CES
paying the Borrower only the net amount due, such payments
generally being made on the 25th of each month for services
provided during
the
prior month; however, due to the Gas Prepay Transaction, CES was
obligated for a
period of time to pay the full cost for the power under the PPA,
without offset,
which resulted in
larger than usual
payments owing to the
Borrower under the
PPA;
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WHEREAS, CES failed to
timely make a number of payments owing to
the Borrower
under the PPA,
including in respect of gas deliveries during
February 2006, approximately $18.5 million due on March 27, 2006
(the "March PPA
Payment" );
WHEREAS, the
failure by CES to
timely make the March
PPA Payment
constitutes an Event
of Default under the
Credit Agreement (the "March PPA
Payment Default");
WHEREAS, the Borrower has failed to timely provide to the Lenders
a
financial report for the periods ended December 31, 2005 and March
31, 2006 (the
"Financial Reports")
as required
to be provided to them pursuant to Section
5.01(a) of the Credit Agreement;
WHEREAS, the
failure by the Borrower to timely provide the
Financial Reports
constitutes a Default (the "Reporting Default, " and together
with the March PPA Payment Default, the "Specified Defaults");
WHEREAS, pursuant to a waiver request, commenced as of June 6,
2006
and completed as of June 9, 2006 (the "Waiver Request"),
the Borrower has
asked
the Lenders to waive the Specified Defaults; and
WHEREAS, the Lenders,
on the terms and
subject to the
conditions
hereinafter provided, are willing to waive the Specified
Defaults.
NOW THEREFORE,
in consideration of the premises and the mutual
agreements set
forth, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto hereby agree as follows:
1. Definitions. Unless
otherwise defined herein, capitalized terms
used herein that are not otherwise defined herein shall have the respective
meanings assigned to such terms in the Credit Agreement
2. Waiver.
(a) Upon satisfaction of the conditions set
forth in Section 3
of this Agreement,
the Lenders, pursuant to the terms of Section
7.04 of the
Credit Agreement,
hereby waive
application of
Sections 7.01(d) and 7.01(i) of
the Credit Agreement
(the "Waiver") solely to the extent applicable to the
Specified Defaults,
such Waiver being
effective on the first
date that all of
the conditions
set forth in Section 3 of this Agreement shall have been
satisfied (the "Waiver Effective Date").
(b) Except
for the Waiver expressly set forth above in
subsection (a), the Administrative Agent and the Lenders reserve each
and every
right and remedy
they may have
under the Credit
Agreement and the Security
Documents (the "Term Loan Documents") and under applicable law with respect to
any Default or Event of Default.
3. Conditions. The
effectiveness of
Section 2(a)of this Agreement
is subject to the
satisfaction of the following conditions precedent (unless
specifically waived in writing by the Requisite Lenders):
2
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(a) the Borrower and
the Guarantors named as signatories hereto
and the Requisite Lenders shall have executed and delivered to
