EXHIBIT 10.5.2
EXECUTION COPY
AMENDMENT TO LETTER OF CREDIT AGREEMENT
This AMENDMENT, dated as of September 30, 2004 (this "Amendment"), to the
Letter of Credit Agreement, dated as of July 16, 2003 (as amended, supplemented
or otherwise modified from time to time, the "L/C Agreement"), between CALPINE
CORPORATION, a Delaware corporation (together with its successors, the
"Borrower"), and THE BANK OF NOVA SCOTIA ("Scotia Capital"), as administrative
agent (in such capacity, the "Agent").
W I T N E S S E T H:
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WHEREAS, the Borrower and Scotia Capital have heretofore entered into (i)
the Amended and Restated Credit Agreement, dated as of July 16, 2003 (as
amended, supplemented or otherwise modified from time to time, the "Credit
Agreement"), among the Borrower, the various financial institutions as are or
may become parties thereto (the "Participating Lenders"), and Scotia Capital, as
administrative agent and (ii) the L/C Agreement;
WHEREAS, on or about September 2, 2004, all outstanding loans under the
Credit Agreement were repaid by the Borrower, all commitments thereunder were
terminated and all outstanding letters of credit issued by Scotia Capital
thereunder (the "Scotia Letters of Credit") and participated in by each
Participating Lender thereunder were fully cash collateralized pursuant to the
Cash Collateral Agreement, dated as of September 2, 2004 (the "Cash Collateral
Agreement"), made by the Borrower in favor of Scotia Capital, in each case, as
required under the Credit Agreement, with the proceeds (the "Gas Sale Proceeds")
of the sale by the Borrower of certain Designated Assets (as defined in the
Credit Agreement), which Designated Assets constituted collateral for the
obligations of the Borrower under the Credit Agreement;
WHEREAS, the Borrower intends to issue $785,000,000 of First Priority
Senior Secured Notes due 2014 pursuant to that certain Indenture, dated as of
September 30, 2004, between the Borrower and Wilmington Trust Company, as
Trustee, and to use a portion of the proceeds thereof (such portion, the "Bond
Proceeds Collateral") to cash collateralize the Scotia Letters of Credit as
replacement cash collateral for the Gas Sale Proceeds, as set forth in this
Amendment;
WHEREAS, the Borrower and the Agent now desire to amend the L/C Agreement,
inter alia, to deem the Scotia Letters of Credit issued pursuant to the L/C
Agreement rather than pursuant to the Credit Agreement, as hereinafter provided;
and
WHEREAS, in consideration of Scotia Capital's agreement to such amendment,
the termination of the Credit Agreement, its release of the Participating
Lenders and the Gas Sale Proceeds and its undertaking of the unilateral
obligation (rather than shared with the Participating Lenders) to pay any drafts
presented against the Scotia Letters of Credit, the Borrower has agreed to cash
collateralize the Scotia Letters of Credit by substituting the Gas Sale Proceeds
under the Cash Collateral Agreement with the Bond Proceeds Collateral hereunder
and under the L/C Agreement;
NOW, THEREFORE, in consideration of the premises and the mutual agreements
herein contained and for other good and valuable consideration, the receipt of
which is hereby acknowledged, the Borrower and the Agent hereby agree as
follows:
SECTION 1. Defined Terms. Unless otherwise defined herein, capitalized
terms used herein shall have the meanings set forth in the L/C Agreement.
SECTION 2. Amendment of Section 1.1 (Defined Terms). (a) Section 1.1 of the
L/C Agreement is hereby amended by inserting the new defined terms in the
appropriate alphabetical order:
"Amendment" means the Amendment to this Agreement, dated as of
September 30, 2004, between the Borrower and the Agent.
"Amendment Effective Date" means the date upon which all conditions
precedent set forth in the Amendment shall have been satisfied or waived.
"Canadian Dollars" and the sign "Cdn$" shall each mean freely
transferable lawful money of Canada.
"Dollar Equivalent Foreign Currency Letter of Credit Outstandings"
means, on any date, an amount equal to the sum of (a) the Equivalent Amount
of the aggregate Stated Amount of all Foreign Currency Letters of Credit
then outstanding and undrawn (as such aggregate Stated Amount shall be
adjusted, from time to time, as a result of drawings, the issuance or
expiration of Foreign Currency Letters of Credit, or otherwise) plus (b)
the Equivalent Amount of the then aggregate amount of all Disbursements in
respect of Foreign Currency Letters of Credit that have not yet been
reimbursed at such time.
"Equivalent Amount" means, on any date, and in respect of any amount
denominated in a Foreign Currency, the equivalent amount in U.S. Dollars of
such amount, determined by the Issuer using the Exchange Rate for the
applicable Foreign Currency on such date, or in the case of calculations of
amounts of fees payable pursuant to Section 3.2.1, Section 3.2.2 or Section
3.2.3, the Exchange Rate for such Foreign Currency determined from time to
time pursuant to Section 4.12.
"Equivalent Amount Determination Date" is defined in Section 4.12.
"Exchange Rate" means, on any date, the quoted spot rate offered by
the Issuer to exchange U.S. Dollars for Canadian Dollars at the opening of
business on such date.
"Foreign Currency" means Canadian Dollars.
"Foreign Currency Letter of Credit" means any Letter of Credit
denominated in a Foreign Currency.
"Priority Lien Debt" is defined in the Second Priority Term Loan
Agreement, and includes the 2004 Senior Notes.
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"Scotia Letters of Credit" is defined in Section 4.11.
"2004 Senior Note Indenture" means that certain Indenture, dated as of
September 30, 2004, between the Borrower and Wilmington Trust Company, as
Trustee.
"2004 Senior Notes" means the $785,000,000 of First Priority Senior
Secured Notes due 2014 issued by the Borrower pursuant to the 2004 Senior
Note Indenture.
(b) Section 1.1 of the L/C Agreement is further amended by deleting the
definitions of "Senior Note Indentures", "Senior Notes" and "2003 Senior Note
Indenture" in their entireties and substituting in lieu thereof the following:
"Letter of Credit Outstandings" means, on any date, an amount equal to
the sum of (a) the aggregate Stated Amount at such time of all Letters of
Credit (other than Foreign Currency Letters of Credit) then outstanding and
undrawn (as such aggregate Stated Amount shall be adjusted, from time to
time, as a result of drawings, the issuance or expiration of Letters of
Credit, or otherwise), plus (b) the then aggregate amount of all unpaid and
outstanding Reimbursement Obligations (other than with respect to Foreign
Currency Letters of Credit), plus (c) an amount equal to the Dollar
Equivalent Foreign Currency Letter of Credit Outstandings on such date.
"Senior Note Indentures" means, collectively, the 7 3/4% Senior Note
Indenture, the 7?% Senior Note Indenture, the 7?% Senior Note Indenture,
the 8 3/4% Senior Note Indenture, the Shelf Indenture (to the extent
relating solely to the Senior Notes), the 10 1/2% Senior Note Indenture,
the 2003 Senior Note Indenture, the Second Priority Term Loan Agreement,
any other documentation under which the Parity Lien Debt is incurred, the
CCEF Indenture, the CCEFII Indenture, the 2004 Senior Note Indenture and
any other documentation under which Priority Lien Debt is incurred.
"Senior Notes" means, collectively, the 7 3/4% Senior Notes, the 7?%
Senior Notes, the 7?% Senior Notes, the 8 1/4% Senior Notes, the 8 1/2%
Senior Notes, the 8 3/4% Senior Notes, the 8?% Senior Notes, the 10 1/2%
Senior Notes, the Convertible Senior Notes, the 2003 Senior Notes, the
Second Priority B Loans, the Parity Lien Debt, the CCEF Notes, the CCEFII
Notes, the 2004 Senior Notes and any other Priority Lien Debt.
"2003 Senior Note Indenture" means those certain Indentures, each
dated as of July 16, 2003, between the Borrower and Wilmington Trust
Company, as Trustee.
SECTION 3. Amendment of Section 2.1.1 (Lenders Not Permitted or Required to
Issue or Participate in Letters of Credit Under Certain Circumstances). Section
2.1.1 of the L/C Agreement is hereby amended by deleting the text thereof in its
entirety and substituting in lieu thereof the following text:
"The Issuer shall not be permitted or required to issue any Letter of
Credit prior to the Commitment Termination Date, if, after giving effect
thereto, (a) all Letter of Credit Outstandings would exceed the Commitment
Amount or (b) all Letter of Credit Outstandings would exceed the amount
then on deposit by the Borrower in U.S. Dollars in the Cash Collateral
Account."
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SECTION 4. Amendment of Section 2.2.2 (Additional Cash Collateral). Section
2.2.2 of the L/C Agreement is hereby amended by deleting the text thereof in its
entirety and substituting in lieu thereof the following text:
"To the extent that at any time the aggregate amount of all Letter of
Credit Outstandings exceeds the Commitment Amount in effect at such time or
the aggregate amount of all Letter of Credit Outstandings exceeds the
amount then on deposit by the Borrower in U.S. Dollars in the Cash
Collateral Account, the Borrower must immediately deposit with the Issuer
in the Cash Collateral Account additional cash collateral in U.S. Dollars
and in immediately available funds in an amount equal to such excess. To
the extent that at any time the amount then on deposit by the Borrower in
U.S. Dollars in the Cash Collateral Account exceeds the amount of all
Letter of Credit Outstandings at such time, the Borrower may request the
release of such excess pursuant to Section 10.7. For purposes of this
Section 2.2.2, on each Wednesday (or the next succeeding Business Day, if
any such Wednesday is not a Business Day), the Issuer shall determine the
aggregate amount of Dollar Equivalent Foreign Currency Letter of Credit
Outstandings on such date."
SECTION 5. Amendment of Section 3.2.1 (Commitment Fees). Section 3.2.1 of
the L/C Agreement is hereby amended by deleting the text thereof in its entirety
and substituting in lieu thereof the following text:
"The Borrower agrees to pay to the Agent for the account of each
Lender, for the period (including any portion thereof when its Commitment
is suspended by reason of the Borrower's inability to satisfy any condition
of Article VI) commencing on the Closing Date and continuing through the
Commitment Termination Date, a commitment fee, in U.S. Dollars, at the rate
of 0.10% per annum, calculated on such Lender's Percentage of the average
daily unused portion of the Commitment Amount, with the Equivalent Amount
used in computing Dollar Equivalent Foreign Currency Letter of Credit
Outstandings being determined from time to time in accordance with Section
4.12. Such fee shall be payable by the Borrower in arrears on each
Quarterly Payment Date, commencing in each case with the first such date
following the Closing Date, and on the Commitment Termination Date."
SECTION 6. Amendment of Section 3.2.2 (Letter of Credit Fee). Section 3.2.2
of the L/C Agreement is hereby amended by deleting the text thereof in its
entirety and substituting in lieu thereof the following text:
"The Borrower agrees to pay to the Agent, for the account of the
Lenders, for each Letter of Credit issued for the period from and including
the date of the issuance (or deemed issuance, in the case of any Existing
Letter of Credit or Scotia Letter of Credit) of such Letter of Credit to
(and including) the date upon which (or on the next succeeding Business Day
upon which) such Letter of Credit expires or is returned to the Issuer, a
fee, in U.S. Dollars, on the average daily Stated Amount of such Letter of
Credit (or the Equivalent Amount thereof with respect to any Foreign
Currency Letter of Credit, determined from time to time in accordance with
Section 4.12) calculated at a per annum rate equal to 0.05%. Such fee shall
be payable by the Borrower in arrears on each
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Quarterly Payment Date, commencing in each case on the first such date
after the issuance of such Letter of Credit, and on the date of termination
or expiry of the last Letter of Credit outstanding hereunder (for any
period then ending for which such fee shall not theretofore have been
paid)."
SECTION 7. Amendment of Section 3.2.3 (Letter of Credit Issuing Fee).
Section 3.2.3 of the L/C Agreement is hereby amended by deleting the text
thereof in its entirety and substituting in lieu thereof the following text:
"The Borrower agrees to pay to the Agent, for the account of each
Issuer, for each Letter of Credit issued by such Issuer for the period from
and including the date of the issuance (or deemed issuance, in the case of
any Existing Letter of Credit or Scotia Letter of Credit) of such Letter of
Credit to (and including) the date upon which (or on the next succeeding
Business Day upon which) such Letter of Credit expires or is returned to
the Issuer, an issuing fee, in Dollars, on the average daily Stated Amount
of such Letter of Credit (or the Equivalent Amount thereof with respect to
any Foreign Currency Letter of Credit, determined from time to time in
accordance with Section 4.12) at such rates as may be agreed in writing by
the Borrower and the Issuers from time to time. Such fee shall be payable
by the Borrower in arrears on each Quarterly Payment Date and on the date
of termination or expiry of the last Letter of Credit outstanding hereunder
for any period then ending for which such fee shall not theretofore have
been paid, commencing on the first such date after the issuance of such
Letter of Credit."
SECTION 8. Amendment of Section 4.1 (Issuance Requests). Section 4.1 of the
L/C Agreement is hereby amended by deleting the parenthetical phrase "(each,
together with the Existing Letters of Credit, a "Letter of Credit")" and
substituting in lieu thereof the parenthetical phrase "(each, together with the
Existing Letters of Credit and the Scotia Letters of Credit, a "Letter of
Credit")".
SECTION 9. Amendment of Section 4.5 (Disbursements). Section 4.5 of the L/C
Agreement is hereby amended by deleting the text thereof in its entirety and
substituting in lieu thereof the following text:
"The Issuer will notify the Borrower promptly of the presentment for
payment of any Letter of Credit, together with notice of the date (a
"Disbursement Date") such payment shall be made (each such payment, a
"Disbursement"). Unless otherwise agreed by the Issuer and the Borrower,
drawings under any Letter of Credit issued under Section 4.1 shall be made
on sight. Subject to the terms and provisions of such Letter of Credit, the
Issuer shall make such payment to the beneficiary (or its designee) of such
Letter of Credit. Prior to 2:00 p.m., New York time, on the Disbursement
Date, the Borrower will reimburse the Issuer in U.S. Dollars for all
amounts which it has disbursed under such Letter of Credit; provided that,
if such Disbursement is made under a Foreign Currency Letter of Credit, the
Issuer shall determine the Equivalent Amount of such Disbursement on the
Disbursement Date related thereto and shall notify the Borrower of such
Equivalent Amount, and automatically and with no further action required,
the Borrower's obligation to reimburse such Disbursement shall be
permanently converted on such Disbursement Date into an obligation to
reimburse the Equivalent Amount of
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such Disbursement. To the extent the Issuer is not reimbursed in full on
the date payment is made under a Letter of Credit, the Borrower's
Reimbursement Obligation shall accrue interest at the Alternate Base Rate
plus the Applicable Margin for two Business Days and thereafter at the
Post-Maturity Rate described in Section 3.1.1, payable on demand, until
reimbursed in full."
SECTION 10. Amendment of Section 4.7 (Cash Collateral). Section 4.7 of the
L/C Agreement is hereby amended by deleting the text thereof in its entirety and
substituting in lieu thereof the following text:
"At any time when a Reimbursement Obligation or any other Obligation
becomes due and payable, the Agent will be entitled to draw amounts from
the Cash Collateral Account to satisfy such Reimbursement Obligation or
other Obligation."
SECTION 11. New Section 4.11. New Section 4.11 is hereby inserted into
Article IV of the L/C Agreement as follows:
"SECTION 4.11. Scotia Letters of Credit. On the Amendment Effective
Date, the letters of credit issued by Scotia Capital under the Amended and
Restated Credit Agreement and listed on Schedule 4.11 hereto (the "Scotia
Letters of Credit") shall be deemed for all purposes to be Letters of
Credit outstanding under this Agreement and entitled to the benefits of
this Agreement and the other Loan Documents, and shall be governed by the
applications and agreements pertaining thereto and by this Agreement. For
purposes of Section 2.1, the Scotia Letters of Credit shall be deemed to
utilize pro rata the Commitment of each Lender."
SECTION 12. New Section 4.12. New Section 4.12 is hereby inserted into
Article IV of the L/C Agreement as follows:
"SECTION 4.12. Determination of Equivalent Amount. For purposes of
determining the Equivalent Amount from time to time in connection with
calculations of the amounts of fees accrued or payable pursuant to Section
3.2.1, Section 3.2.2 and Section 3.2.3, not later than 12:00 p.m., New York
time, on each Quarterly Payment Date and on each other date upon which such
fees are to be paid (each, an "Equivalent Amount Determination Date"), the
Issuer shall determine the Exchange Rate as of such Equivalent Amount
Determination Date with respect to each Foreign Currency in respect of
which there are outstanding Foreign Currency Letters of Credit at such time
(after giving effect to any Letters of Credit to be issued or Reimbursement
Obligations to be repaid on such date). The Exchange Rate so determined
shall become effective on such Equivalent Amount Determination Date and
shall remain effective until the next succeeding Equivalent Amount
Determination Date."
SECTION 13. New Section 8.1.4. New Section 8.1.4 is hereby inserted into
Article VIII of the L/C Agreement as follows:
"SECTION 8.1.4. Early Termination. Notwithstanding any other provision
of this Agreement to the contrary, the Borrower agrees to cause the
termination and return to the Issuer of all Letters of Credit by not later
than October 31, 2004."
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SECTION 14. Amendment of Section 9.1.3 (Non-Performance of Covenants and
Obligations). Section 9.1.3 of the L/C Agreement is hereby amended by deleting
the text thereof in its entirety and substituting in lieu thereof the following
text:
"Any Obligor shall default in the due performance and observance of
any agreement contained herein or in any other Loan Document executed by it
(other than as provided in Section 9.1.1 and Section 9.1.9), and such
default shall continue unremedied for a period of 30 days after notice
thereof shall have been given to the Borrower by the Agent or any Lender
(or such longer period as the Required Lenders in their discretion, may
agree, provided that such Obligor has commenced such cure within such 30
day period and thereafter diligently pursues such cure to completion)."
SECTION 15. New Section 9.1.9. New Section 9.1.9 is hereby inserted into
Article IX of the L/C Agreement as follows:
"SECTION 9.1.9. Non-Performance of Early Termination Obligation. The
Borrower shall default in the due performance and observance of Section
8.1.4."
SECTION 16. Amendment of Section 9.2 (Action if Event of Default). Section
9.2 of the L/C Agreement is hereby amended by deleting the text thereof in its
entirety and substituting in lieu thereof the following text:
"If any Event of Default shall occur for any reason, whether voluntary
or involuntary, and be continuing, (a) the Agent, upon the direction of the
Required Lenders, shall by notice to the Borrower declare that all
Commitments (if not theretofore terminated) be terminated, whereupon
without further notice, the Commitments shall terminate and the Agent may
exercise any and all remedies available under the Loan Documents and
applicable law, including withdrawing amounts from the Cash Collateral
Account pursuant to Section 4.7, and (b) the fees described in Section
3.2.2 and Section 3.2.3 shall accrue at the respective rates per annum set
forth in such Sections plus 2% and shall be payable on demand."
SECTION 17. Amendment of Section 10.7 (Collateral Matters). Section
10.7(a)(iii) of the L/C Agreement is hereby amended by deleting the text thereof
in its entirety and substituting in lieu thereof the following text:
"if requested by the Borrower, to the extent the amount then on
deposit by the Borrower in U.S. Dollars in the Cash Collateral Account
exceeds an amount equal to the sum of the Letter of Credit Outstandings and
all other Obligations then outstanding; provided that prior to any release
of Collateral pursuant to this Section 10.7(a)(iii), the Borrower shall
have paid all fees then due and payable under Section 3.2.1, Section 3.2.2
and Section 3.2.3 as of the most recent Quarterly Payment Date."
SECTION 18. New Section 11.16. New Section 11.16 is hereby inserted into
Article XI of the L/C Agreement as follows:
"SECTION 11.16. Judgment Currency. The Obligations of the Borrower and
any other Obligor in respect of any sum due to the Issuer hereunder, or
under or in
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respect of any other Loan Document shall, notwithstanding any judgment in a
currency (the "Judgment Currency") other than the currency in which such
sum was originally denominated (the "Original Currency"), be discharged
only to the extent that on the Business Day following receipt by the Issuer
of any sum adjudged to be so due in the Judgment Currency, the Issuer, in
accordance with normal banking procedures, purchases the Original Currency
with the Judgment Currency. If the amount of Original Currency so purchased
is less than the sum originally due to the Issuer, the Borrower agrees as a
separate obligation and notwithstanding any such judgment, to indemnify the
Issuer against such loss, and if the amount of Original Currency so
purchased exceeds the sum originally due to the Issuer, the Issuer agrees
to remit any excess to the applicable Obligor. If, for the purpose of
obtaining judgment in any court, it is necessary to convert a sum due under
any Loan Document in another currency into U.S. Dollars or Canadian
Dollars, as the case may be, the parties hereto agree, to the fullest
extent that they may effectively do so, that the rate of exchange used
shall be that at which, in accordance with normal banking procedures, the
Issuer could purchase such other currency with U.S. Dollars or Canadian
Dollars, as the case may be, in New York, at the close of business on the
Business Day immediately preceding the day on which final judgment is
given, together with any premiums and costs of exchange payable in
connection with such purchase."
SECTION 19. New Schedule 4.11. The L/C Agreement is hereby amended by
inserting new Schedule 4.11 therein in the form of Annex A attached to this
Amendment.
SECTION 20. Effectiveness. This Amendment shall become effective upon
fulfillment of the following conditions precedent: (a) the Borrower shall have
delivered to the Agent a duly executed copy of this Amendment; (b) the Borrower
(as Pledgor under the Cash Collateral Agreement) shall have deposited cash
constituting Bond Proceeds Collateral in an amount equal to the Stated Amount of
the Scotia Letters of Credit ($17,146,466.32) into the Cash Collateral Account;
(c) the Borrower shall have paid all fees under Section 3.3 of the Amended and
Restated Credit Agreement which are payable upon the termination of the last
Letter of Credit (as defined in the Amended and Restated Credit Agreement)
outstanding thereunder, (d) the Agent shall have received such other documents
as the Agent shall have reasonably requested; and (e) no Default or Event of
Default shall have occurred and be continuing on the date hereof after giving
effect to this Amendment.
SECTION 21. Representations and Warranties. The Borrower hereby represents
and warrants that the representations and warranties contained in the L/C
Agreement and in each other Loan Document will be, after giving effect to this
Amendment, true and correct in all material respects, as if made on and as of
the date hereof, except for representations and warranties which speak as of a
certain date, which representations and warranties shall be true and correct in
all material respect as of such date.
SECTION 22. Continuing Effect of L/C Agreement. This Amendment shall not
constitute an amendment or waiver of any other provision of the L/C Agreement or
the Loan Documents not expressly referred to herein and shall not be construed
as a waiver or consent to any further or future action on the part of the
Borrower that would require a waiver or consent of the Agent and/or the Lenders.
Except as expressly amended hereby, the provisions of the L/C
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Agreement and the Loan Documents are and shall remain in full force and effect.
All references to the L/C Agreement in any other document, instrument, agreement
or writing shall hereafter be deemed to refer to the L/C Agreement as amended
hereby.
SECTION 23. Counterparts. This Amendment may be executed in counterparts
and all of the said counterparts taken together shall be deemed to constitute
one and the same instrument. Delivery of an executed signature page of this
Amendment by facsimile transmission shall be effective as delivery of a manually
executed counterpart hereof.
SECTION 24. Governing Law. THIS AMENDMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK.
SECTION 25. Expenses. The Borrower agrees to pay or reimburse the Agent for
all of its reasonable out-of-pocket costs and expenses incurred in connection
with the preparation, negotiation and execution of this Amendment, including the
reasonable fees and disbursements of counsel to the Agent.
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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed by their respective officers thereunto duly authorized as of the
day and year first above written.
CALPINE CORPORATION
By: /s/ Eric Pryor
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Name: Eric Pryor
Title: Senior Vice President
THE BANK OF NOVA SCOTIA,
as Agent
By: /s/ Thane A. Rettew
--------------------------------------
Name: Thane A. Rettew
Title: Director
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