Calpine Corp – ‘10-K’ for 12/31/03 – EX-10.2.4

On:  Wednesday, 3/24/04, at 9:50pm ET   ·   As of:  3/25/04   ·   For:  12/31/03   ·   Accession #:  891618-4-798   ·   File #:  1-12079

in

this entire Filing. an “Entity” Search.

Show

Documents searched

and

each “hit”. the 1st “hit”.

↓↑Hints

Annual Report   —   Form 10-K
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: 10-K        Annual Report                                       HTML   3.19M 
 2: EX-4.14.3   Instrument Defining the Rights of Security Holders     6     27K 
 3: EX-4.14.4   Instrument Defining the Rights of Security Holders     7     36K 
 4: EX-4.16     Instrument Defining the Rights of Security Holders   104    507K 
 5: EX-4.17.1   Instrument Defining the Rights of Security Holders    98    474K 
 6: EX-4.17.2   Instrument Defining the Rights of Security Holders    17     91K 
 7: EX-4.19     Instrument Defining the Rights of Security Holders   160    719K 
 8: EX-4.20     Instrument Defining the Rights of Security Holders   164    722K 
 9: EX-4.21     Instrument Defining the Rights of Security Holders   181    789K 
10: EX-10.1.1.2  Material Contract                                   188    707K 
17: EX-10.1.10.2  Material Contract                                    4     24K 
11: EX-10.1.2.6  Material Contract                                    20     37K 
12: EX-10.1.2.7  Material Contract                                    17     40K 
13: EX-10.1.2.8  Material Contract                                     2     16K 
14: EX-10.1.2.9  Material Contract                                    23     33K 
18: EX-10.1.25  Material Contract                                     28    115K 
15: EX-10.1.7.2  Material Contract                                     6     25K 
16: EX-10.1.8.2  Material Contract                                     4     22K 
19: EX-10.2.2.3  Material Contract                                    28     38K 
20: EX-10.2.2.4  Material Contract                                    45     71K 
21: EX-10.2.3   Material Contract                                    170    635K 
22: EX-10.2.4   Material Contract                                    171    639K 
23: EX-10.3.1   Material Contract                                     54    147K 
24: EX-10.3.7   Material Contract                                      6     28K 
25: EX-12.1     Statement re: Computation of Ratios                    1     14K 
26: EX-21.1     Subsidiaries of the Registrant                         8     42K 
27: EX-23.1     Consent of Experts or Counsel                          1     13K 
28: EX-23.2     Consent of Experts or Counsel                          1     12K 
29: EX-23.3     Consent of Experts or Counsel                          1     12K 
30: EX-23.4     Consent of Experts or Counsel                          1     11K 
31: EX-31.1     Certification per Sarbanes-Oxley Act (Section 302)     2±    15K 
32: EX-31.2     Certification per Sarbanes-Oxley Act (Section 302)     2±    15K 
33: EX-32.1     Certification per Sarbanes-Oxley Act (Section 906)     1     12K 
34: EX-99.1     Miscellaneous Exhibit                                 15     78K 
35: EX-99.2     Miscellaneous Exhibit                                  1     12K 

EX-10.2.4   —   Material Contract
Exhibit Table of Contents

EX-10.2.4
1st Page of 171
TOC
↑Top
Previous
Next
↓Bottom
Just 1st
 
                                                                  EXHIBIT 10.2.4

                                                               EXECUTION VERSION

THE LOANS TO BE MADE HEREUNDER SHALL BE ISSUED WITH ORIGINAL ISSUE DISCOUNT FOR 
UNITED STATES FEDERAL INCOME TAX PURPOSES AND ARE SUBJECT TO TREASURY           
REGULATIONS REGARDING THE REPORTING OF ORIGINAL ISSUE DISCOUNT. FURTHER         
INFORMATION MAY BE OBTAINED BY SUBMITTING A REQUEST TO THE CHIEF FINANCIAL      
OFFICER OF THE COMPANY AT 50 WEST SAN FERNANDO STREET, 5TH FLOOR, SAN JOSE,     
CALIFORNIA 95113.                                                               

$100,000,000

 SECOND PRIORITY SECURED INSTITUTIONAL TERM LOANS DUE 2010

CREDIT AND GUARANTEE AGREEMENT

Dated as of March 23, 2004

 among

 CALPINE GENERATING COMPANY, LLC
The Borrower

 THE GUARANTORS PARTY HERETO FROM TIME TO TIME
The Guarantors

THE LENDERS PARTY HERETO FROM TIME TO TIME
 The Lenders

 MORGAN STANLEY SENIOR FUNDING, INC.
Administrative Agent

 and

 MORGAN STANLEY SENIOR FUNDING, INC.
Sole Lead Arranger and Sole Bookrunner

EX-10.2.4
2nd Page of 171
TOC
1st
Previous
Next
↓Bottom
Just 2nd
 TABLE OF CONTENTS

                                                        [Enlarge/Download Table]

                                                                                                    PAGE
                                                    ARTICLE I.                                          
                                      DEFINITIONS AND RULES OF CONSTRUCTION                             
                                                                                                        
SECTION 1.01. Definitions..........................................................................    3
SECTION 1.02. Rules of Construction................................................................   47

                                                     ARTICLE II.                                        
                                          THE SECOND PRIORITY TERM LOANS                                

SECTION 2.01. Second Priority Term Loans...........................................................   48
SECTION 2.02. Amount of Second Priority Term Loans; Availability of Funds..........................   49
SECTION 2.03. Use of Proceeds......................................................................   49
SECTION 2.04. Evidence of Debt; Register; Lenders' Books and Records; Notes........................   49
SECTION 2.05. Interest.............................................................................   50
SECTION 2.06. Continuation Notice..................................................................   51
SECTION 2.07. Default Interest.....................................................................   52
SECTION 2.08. Fees.................................................................................   53
SECTION 2.09. Payments.............................................................................   53
SECTION 2.10. Voluntary Prepayments................................................................   53
SECTION 2.11. Mandatory Repayment Offers...........................................................   54
SECTION 2.12. General Provisions Regarding Payments................................................   56
SECTION 2.13. Ratable Sharing......................................................................   57
SECTION 2.14. Making or Maintaining Second Priority Term Loans.....................................   57
SECTION 2.15. Increased Costs; Capital Adequacy....................................................   59
SECTION 2.16. Taxes; Withholding, etc..............................................................   60
SECTION 2.17. Removal or Replacement of a Lender...................................................   63

                                                    ARTICLE III.                                        
                                                 CONDITIONS PRECEDENT                                   

SECTION 3.01. Resolutions..........................................................................   64
SECTION 3.02. Incumbency...........................................................................   64
SECTION 3.03. Formation Documents..................................................................   64
SECTION 3.04. Good Standing Certificates...........................................................   64
SECTION 3.05. Financial Officer's Certificate......................................................   65
SECTION 3.06. Security.............................................................................   65
SECTION 3.07. Consummation of Notes Offering, First Priority Term Loan                                  
                Agreement, Revolving Loan Agreement and Second Priority Term Loan Documents........   67
SECTION 3.08. Ratings..............................................................................   67
SECTION 3.09. No Material Adverse Change...........................................................   67
SECTION 3.10. Third Party Approvals................................................................   68

i 

EX-10.2.4
3rd Page of 171
TOC
1st
Previous
Next
↓Bottom
Just 3rd
                                                        [Enlarge/Download Table]
                                                                                                       
SECTION 3.11. Opinions............................................................................. 68 
SECTION 3.12. Officer's Certificates............................................................... 68 
SECTION 3.13. Title Policies....................................................................... 68 
SECTION 3.14. Evidence of Insurance................................................................ 69 
SECTION 3.15. Other Financing Documents............................................................ 69 
SECTION 3.16. No Default........................................................................... 69 
SECTION 3.17. Fees................................................................................. 69 
SECTION 3.18. Funding Notice....................................................................... 69 
SECTION 3.19. Delivery of Financials............................................................... 69 
SECTION 3.20. Site Assessment Reports.............................................................. 70 
SECTION 3.21. Major Project Documents.............................................................. 70 

                                                  ARTICLE IV.                                          
                                         REPRESENTATIONS AND WARRANTIES                                

SECTION 4.01. Organization......................................................................... 70 
SECTION 4.02. Financing Documents and Major Project Documents...................................... 71 
SECTION 4.03. Collateral........................................................................... 71 
SECTION 4.04. Governmental Approvals............................................................... 72 
SECTION 4.05. Compliance with Law.................................................................. 72 
SECTION 4.06. Ownership of Property; Liens......................................................... 72 
SECTION 4.07. Governmental Authorizations; Permits................................................. 72 
SECTION 4.08. Labor Disputes....................................................................... 73 
SECTION 4.09. Intellectual Property Rights......................................................... 73 
SECTION 4.10. Hazardous Substances................................................................. 73 
SECTION 4.11. Litigation........................................................................... 73 
SECTION 4.12. Financial Information................................................................ 73 
SECTION 4.13. Disclosure; Projections.............................................................. 73 
SECTION 4.14. Adverse Change....................................................................... 74 
SECTION 4.15. Taxes................................................................................ 74 
SECTION 4.16. Investment Company Act............................................................... 75 
SECTION 4.17. ERISA................................................................................ 75 
SECTION 4.18. Governmental Regulation.............................................................. 75 
SECTION 4.19. Margin Stock, Etc.................................................................... 76 
SECTION 4.20. No Violations or Defaults............................................................ 76 
SECTION 4.21. Solvency............................................................................. 76 
SECTION 4.22. Capitalization....................................................................... 77 
SECTION 4.23. Other Indebtedness................................................................... 77 

                                                    ARTICLE V.                                         
                                                     COVENANTS                                         

SECTION 5.01. Reports.............................................................................. 77 
SECTION 5.02. Compliance Certificate............................................................... 77 
SECTION 5.03. Stay, Extension and Usury Laws....................................................... 78 
SECTION 5.04. Restricted Payments.................................................................. 78 

ii

EX-10.2.4
4th Page of 171
TOC
1st
Previous
Next
↓Bottom
Just 4th
                                                        [Enlarge/Download Table]
                                                                                                       
SECTION 5.05. Dividend and Other Payment Restrictions Affecting Subsidiaries....................... 79 
SECTION 5.06. Incurrence of Indebtedness and Issuance of Preferred Equity.......................... 81 
SECTION 5.07. Asset Sales; Application of Net Proceeds............................................. 84 
SECTION 5.08. Transactions with Affiliates......................................................... 86 
SECTION 5.09. Liens................................................................................ 88 
SECTION 5.10. Business Activities.................................................................. 88 
SECTION 5.11. Payments for Consent................................................................. 89 
SECTION 5.12. Offer to Prepay Upon Change of Control............................................... 89 
SECTION 5.13. Restrictions on Activities of CalGen Finance......................................... 89 
SECTION 5.14. Additional Subsidiaries.............................................................. 89 
SECTION 5.15. Limitation on Issuances and Sales of Equity Interests in Subsidiaries................ 90 
SECTION 5.16. Deposit of Revenues.................................................................. 90 
SECTION 5.17. Maintenance of Insurance............................................................. 90 
SECTION 5.18. Coverage Ratio; Kilowatt Test........................................................ 90 
SECTION 5.19. Further Assurances; Ratings.......................................................... 91 
SECTION 5.20. Suspension of Certain Covenants...................................................... 91 

                                                   ARTICLE VI.                                         
                                                    SUCCESSORS                                         

SECTION 6.01. Merger, Consolidation, or Sale of Assets............................................. 91 
SECTION 6.02. Successor Corporation Substituted.................................................... 92 

                                                  ARTICLE VII.                                         
                                              DEFAULTS AND REMEDIES                                    

SECTION 7.01. Events of Default.................................................................... 92 
SECTION 7.02. Acceleration......................................................................... 94 
SECTION 7.03. Other Remedies....................................................................... 94 
SECTION 7.04. Waiver of Past Defaults; Rescission.................................................. 94 
SECTION 7.05. Control by Majority.................................................................. 94 
SECTION 7.06. Collection Suit by Administrative Agent.............................................. 94 
SECTION 7.07. Priorities........................................................................... 95 

                                                 ARTICLE VIII.                                         
                                                     AGENTS                                            

SECTION 8.01. Appointment of Agents................................................................ 95 
SECTION 8.02. Powers and Duties.................................................................... 96 
SECTION 8.03. General Immunity..................................................................... 96 
SECTION 8.04. Agents Entitled to Act as Lender..................................................... 97 
SECTION 8.05. Lenders' Representations, Warranties and Acknowledgment.............................. 97 
SECTION 8.06. Right to Indemnity................................................................... 98 
SECTION 8.07. Successor Administrative Agent....................................................... 98 
SECTION 8.08. Withholding Tax...................................................................... 98 

iii 

EX-10.2.4
5th Page of 171
TOC
1st
Previous
Next
↓Bottom
Just 5th
 ARTICLE IX.
 COLLATERAL AND SECURITY

ARTICLE X.
 RANKING OF LIENS AND COLLATERAL SHARING

 ARTICLE XI.
 SECOND PRIORITY TERM LOAN GUARANTEE

                                                        [Enlarge/Download Table]
                                                                                                        
SECTION 11.01. Guarantee............................................................................ 100
SECTION 11.02. Right of Contribution................................................................ 101
SECTION 11.03. Subordination........................................................................ 101
SECTION 11.04. No Subrogation....................................................................... 102
SECTION 11.05. Amendments, etc. with respect to the Second Priority Term Loan Obligations........... 102
SECTION 11.06. Guarantee Absolute and Unconditional................................................. 103
SECTION 11.07. Waiver............................................................................... 105
SECTION 11.08. Bankruptcy........................................................................... 106
SECTION 11.09. Reinstatement........................................................................ 108
SECTION 11.10. Payments............................................................................. 108

                                          ARTICLE XII.                                                  
                                         MISCELLANEOUS                                                  

SECTION 12.01. Notices.............................................................................. 108
SECTION 12.02. Expenses............................................................................. 108
SECTION 12.03. Indemnity............................................................................ 109
SECTION 12.04. Set-Off.............................................................................. 110
SECTION 12.05. Amendments and Waivers............................................................... 110
SECTION 12.06. Successors and Assigns; Participations............................................... 112
SECTION 12.07. Independence of Covenants............................................................ 116
SECTION 12.08. Survival of Representations, Warranties and Agreements............................... 116
SECTION 12.09. No Waiver; Remedies Cumulative....................................................... 117
SECTION 12.10. Marshalling; Payments Set Aside...................................................... 117
SECTION 12.11. Severability......................................................................... 117
SECTION 12.12. Second Priority Term Loan Obligations Several; Independent Nature of Lenders' Rights. 117
SECTION 12.13. Headings............................................................................. 117
SECTION 12.14. Applicable Law....................................................................... 118
SECTION 12.15. Consent to Jurisdiction.............................................................. 118
SECTION 12.16. Waiver Of Jury Trial................................................................. 118
SECTION 12.17. Confidentiality...................................................................... 119
SECTION 12.18. Usury Savings Clause................................................................. 119
SECTION 12.19. Counterparts; Execution by Facsimile................................................. 120
SECTION 12.20. Effectiveness........................................................................ 120
SECTION 12.21. Statements Required in Certificate or Opinion........................................ 120
SECTION 12.22. No Recourse Against the Borrower or the Guarantors................................... 121

iv

EX-10.2.4
6th Page of 171
TOC
1st
Previous
Next
↓Bottom
Just 6th
APPENDICES:                                                                     
Appendix A:       Initial Second Priority Term Loan Commitments                 
Appendix B:       Notice Addresses                                              

EXHIBITS:                                                                       

Exhibit A:        Subordination Terms                                           
Exhibit B:        Assignment and Assumption Agreement                           
Exhibit C:        Certificate Re Non-Bank Status                                
Exhibit D:        Continuation Notice                                           
Exhibit E:        Funding Notice                                                
Exhibit F:        Second Priority Term Loan Note                                
Exhibit G:        Form of Opinions                                              

SCHEDULES:                                                                      

Schedule A:                Third Party Project Documents                        
Schedule 2.09:             Amortization Schedule                                
Schedule 4.01:             Capital Structure                                    
Schedule 4.11:             Litigation                                           
Schedule 4.18(b):          Qualifying Facilities                                
Schedule 4.18(c):          Exempt Wholesale Generators                          

v 

EX-10.2.4
7th Page of 171
TOC
1st
Previous
Next
↓Bottom
Just 7th
CREDIT AND GUARANTEE AGREEMENT

       This CREDIT AND GUARANTEE AGREEMENT, dated as of March 23, 2004 (this
"Agreement"), is entered into by and among CALPINE GENERATING COMPANY, LLC, a   
Delaware limited liability company (the "Borrower"), the GUARANTORS party hereto
from time to time, the LENDERS party hereto from time to time, MORGAN STANLEY   
SENIOR FUNDING, INC., as administrative agent (together with its successors and 
permitted assigns in such capacity, the "Administrative Agent") and MORGAN      
STANLEY SENIOR FUNDING, INC., as sole lead arranger and sole bookrunner.        

RECITALS

     WHEREAS, the Borrower intends to borrow, on a non-recourse basis as
described in Section 12.22 (No Recourse), $100,000,000 in aggregate principal   
amount of second priority secured institutional term loans due 2010 (the "Second
Priority Term Loans") under this Agreement;                                     

WHEREAS, the Borrower:                                        

                  (a)      intends to issue, together with CalGen Finance Corp.,
      a Delaware corporation and a Wholly Owned Subsidiary of the Borrower
("CalGen Finance"), as co-issuer, on a non-recourse basis:    

                         (i) $235,000,000 in aggregate principal amount of
                its First Priority Secured Floating Rate Notes due 2009 (the
                "First Priority Notes"), pursuant to the Indenture, dated as
                  of the date hereof (the "First Priority Indenture"), among the
               Borrower, CalGen Finance, the Guarantors party thereto from
               time to time and Wilmington Trust FSB, as trustee (together
               with its successors and permitted assigns in such capacity,
the "First Priority Indenture Trustee");    

                        (ii) $640,000,000 in aggregate principal amount of
                 its Second Priority Secured Floating Rate Notes due 2010 (the
                 "Second Priority Notes"), pursuant to the Indenture, dated as
               of the date hereof (the "Second Priority Indenture"), among
              the Borrower, CalGen Finance, the Guarantors party thereto
          from time to time and Wilmington Trust FSB, as trustee
               (together with its successors and permitted assigns in such
           capacity, the "Second Priority Indenture Trustee"); and

                            (iii) (A) $680,000,000 in aggregate principal amount
              of its Third Priority Secured Floating Rate Notes due 2011
       (the "Third Priority Floating Rate Notes"), and (B)
                  $150,000,000 in aggregate principal amount of its 11.50% Third
              Priority Secured Notes due 2011 (the "Third Priority Fixed
                Rate Notes" and, together with the First Priority Notes, the
              Second Priority Notes and the Third Priority Floating Rate
               Notes, the "Notes"), pursuant to the Indenture, dated as of
                 the date hereof (the "Third Priority Indenture" and, together
             with the First Priority Indenture and the Second Priority
            Indenture, the "Indentures"), among the Borrower, CalGen
               Finance, the Guarantors party thereto from time to time and
                  Wilmington Trust FSB, as trustee (together with its successors
               and permitted assigns in such capacity, the "Third Priority
Indenture Trustee");                        

1 

EX-10.2.4
8th Page of 171
TOC
1st
Previous
Next
↓Bottom
Just 8th
        (b)      intends to borrow, on a non-recourse basis,
      $600,000,000 in aggregate principal amount of first priority secured
         institutional term loans due 2009 (the "First Priority Term Loans" and,
  together with the Second Priority Term Loans, the "Term Loans"),
    pursuant to a Credit and Guarantee Agreement, dated as of the date
     hereof (the "First Priority Term Loan Agreement" and, together with
      this Agreement, the "Term Loan Agreements"), among the Borrower, the
   Guarantors party thereto from time to time, Morgan Stanley Senior
Funding, Inc., as the administrative agent (together with its 
        successors and permitted assigns in such capacity, the "First Priority
        Term Loan Administrative Agent"), Morgan Stanley Senior Funding, Inc.,
     as sole lead arranger, Morgan Stanley Senior Funding, Inc., as sole
   book-runner, and the lenders party thereto from time to time; and

               (c)      has entered into that certain Amended and Restated
    Credit Agreement, dated as of the date hereof (the "Revolving Loan
         Agreement"), among the Borrower, the Guarantors party thereto from time
        to time, the lenders party thereto from time to time, The Bank of Nova
   Scotia, as administrative agent (together with its successors and
  permitted assigns in such capacity, the "Revolver Administrative
    Agent"), and each of the other agents and arrangers party thereto,
   which provides for the borrowing on a non-recourse basis of up to
      $200,000,000 in aggregate principal amount of first priority secured
revolving loans (the "Revolving Loans");                      

        WHEREAS, each Guarantor is a Wholly Owned Subsidiary of the Borrower
and each Guarantor will receive substantial direct and indirect benefit from the
making of the Second Priority Term Loans and the use of proceeds therefrom;     

     WHEREAS, the Guarantors shall guarantee, on a non-recourse basis as
described in Section 12.22 (No Recourse), payment of the Second Priority Term   
Loans and all other Second Priority Term Loan Obligations pursuant to the terms 
hereof;                                                                         

     WHEREAS, the Borrower and the Guarantors intend to secure the First
Priority Term Loans, the Second Priority Term Loans, all other First Priority   
Term Loan Obligations, all other Second Priority Term Loan Obligations, the     
Notes, all other Note Obligations and all other First Priority Lien Obligations 
(including the Revolving Loan Obligations), Second Priority Lien Obligations and
Third Priority Lien Obligations with a lien on all present and future           
Collateral; and                                                                 

WHEREAS, Calpine CalGen Holdings, Inc., a Delaware corporation
("Holdings"), CalGen Finance, the Borrower, the Guarantors, the Administrative  
Agent, the First Priority Term Loan Administrative Agent, the Revolver          
Administrative Agent, the First Priority Indenture Trustee, the Second Priority 
Indenture Trustee, the Third Priority Indenture Trustee, and Wilmington Trust   
Company as collateral agent (together with its successors and permitted assigns,
the "Collateral Agent") have entered into the Collateral Trust Agreement (as    
defined below), which sets forth the terms on which the Borrower and the        
Guarantors, among others, have appointed the Collateral Agent as trustee for the
present and future holders of the Secured Obligations to (a) receive, hold,     
maintain, administer, and enforce (i) all Security Documents and (ii) all       
interests, rights, powers and remedies of the Collateral Agent thereunder, and  
(b)                                                                             

2 

EX-10.2.4
9th Page of 171
TOC
1st
Previous
Next
↓Bottom
Just 9th
distribute the proceeds of the Collateral in a manner consistent with the       
priority of liens established by the Collateral Trust Agreement.                

 AGREEMENT

NOW THEREFORE, in consideration of the premises and the mutual
agreements herein set forth, the receipt and sufficiency of which are hereby    
acknowledged, the parties hereto hereby agree as follows:                       

ARTICLE I.

 DEFINITIONS AND RULES OF CONSTRUCTION

SECTION 1.01. Definitions.                                                      

         Unless the context otherwise requires, the following capitalized terms,
when used in this Agreement, including in its preamble and recitals, shall have 
the following meanings:                                                         

"Acquired Debt" means, with respect to any specified Person:  

                  (a)      Indebtedness of any other Person existing at the time
         such other Person is merged with or into or became a Subsidiary of such
   specified Person, whether or not such Indebtedness is incurred in
         connection with, or in contemplation of, such other Person merging with
  or into, or becoming a Subsidiary of, such specified Person; and

                 (b)      Indebtedness secured by a Lien encumbering any asset
acquired by such specified Person.                            

    "Adjusted LIBOR Rate" means, with respect to the relevant Interest
Period, the greater of (a) 1.25% and (b) the quotient of (i) the LIBOR Rate     
applicable to such Interest Period, divided by (ii) one minus the Applicable    
Reserve Requirement (expressed as a decimal) applicable to such Interest Period.

"Administrative Agent" is defined in the Preamble hereto.     

"Administrative Services Agreement" means that certain Master 
Administrative Services Agreement, dated as of the date hereof, among the       
Borrower, CalGen Finance, each of the Subsidiaries of the Borrower from time to 
time party thereto and Calpine Administrative Services Company, Inc.            

     "Affected Lender" is defined in Section 2.14 (Making or Maintaining
Second Priority Term Loans).                                                    

    "Affected Loans" is defined in Section 2.14 (Making or Maintaining
Second Priority Term Loans).                                                    

        "Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common      
control with such specified                                                     

3 

EX-10.2.4
10th Page of 171
TOC
1st
Previous
Next
↓Bottom
Just 10th
Person. For purposes of this definition, "control," as used with respect to any 
Person, means the possession, directly or indirectly, of the power to direct or 
cause the direction of the management or policies of such Person, whether       
through the ownership of voting securities, by agreement or otherwise; provided,
that beneficial ownership of 10% or more of the Voting Stock of a Person will be
deemed to be control. For purposes of this definition, the terms "controlling," 
"controlled by" and "under common control with" have correlative meanings.      

      "Affiliate Subordinated Indebtedness" means Indebtedness incurred by
the Borrower pursuant to any arrangement with an Affiliate of the Borrower;     
provided, that such Indebtedness (a) is contractually subordinated in right of  
payment and in all other respects to the Second Priority Term Loan Obligations  
and all other Secured Obligations on the terms described in Exhibit A, including
an agreement by the holders of such Indebtedness not to exercise any remedies   
until the Secured Obligations Termination Date and is not secured other than by 
unperfected security interests, (b) does not provide for mandatory redemption or
other redemption thereof until at least six months after final Stated Maturity  
of the Second Priority Term Loans, (c) provides for payment of interest thereon 
in the form of cash or additional Affiliate Subordinated Indebtedness having a  
principal amount equal to the amount of interest due (i.e., pay-in-kind), and   
(d) is otherwise in the form set forth in Exhibit A.                            

       "Affiliate Transaction" is defined in Section 5.08 (Transactions With
Affiliates).                                                                    

       "Agents" means the Administrative Agent, the Collateral Agent and the
Sole Lead Arranger.                                                             

       "Aggregate Amounts Due" is defined in Section 2.13 (Ratable Sharing).

"Agreement" is defined in the Preamble hereto.                

        "Applicable Reserve Requirement" means, at any time, the maximum rate,
expressed as a decimal, at which reserves (including any basic marginal,        
special, supplemental, emergency or other reserves) are required to be          
maintained with respect thereto against "Eurocurrency liabilities" (as such term
is defined in Regulation D) under regulations issued from time to time by the   
Board of Governors of the Federal Reserve System or other applicable banking    
regulator. Without limiting the effect of the foregoing, the Applicable Reserve 
Requirement shall reflect any other reserves required to be maintained by such  
member banks with respect to (a) any category of liabilities which includes     
deposits by reference to which the applicable Adjusted LIBOR Rate or any other  
interest rate of a Second Priority Term Loan is to be determined, or (b) any    
category of extensions of credit or other assets which include Second Priority  
Term Loans. Each Second Priority Term Loan shall be deemed to constitute        
Eurocurrency liabilities and as such shall be deemed subject to reserve         
requirements without benefits of credit for proration, exceptions or offsets    
that may be available from time to time to the applicable Lender. The rate of   
interest on Second Priority Term Loans shall be adjusted automatically on and as
of the effective date of any change in the Applicable Reserve Requirement.      

"Asset Sale" means:                                           

                (a)      the sale, lease, conveyance or other disposition of
  any assets or rights by the Borrower or any of its Subsidiaries;
provided, that the sale, conveyance or other                  

4 

EX-10.2.4
11th Page of 171
TOC
1st
Previous
Next
↓Bottom
Just 11th
       disposition of all or substantially all of the assets of the Borrower
and its Subsidiaries taken as a whole will be governed by the 
      provisions of Section 6.01 (Merger, Consolidation or Sale of Assets)
        and not by the provisions of Section 5.07 (Asset Sales; Application of
Net Proceeds); and                                            

           (b)      the issuance of Equity Interests in any of the
       Borrower's Subsidiaries or the sale of Equity Interests in any of its
Subsidiaries.                                                 

Notwithstanding the preceding, none of the following items will be deemed to be 
an Asset Sale:                                                                  

        (a)      any single transaction or series of related
      transactions that involves assets having a Fair Market Value of less
         than $25,000,000 (other than any transaction which involves the sale of
         an undivided interest, participation or Equity Interest in any Facility
      or any Subsidiary of the Borrower, each of which shall constitute an
Asset Sale);                                                  

               (b)      a transfer of assets between or among the Borrower
and the Guarantors,                                           

               (c)      an issuance of Equity Interests by a Subsidiary to
the Borrower or to a Guarantor;                               

                (d)      the sale or lease of products, services or accounts
     receivable in the ordinary course of business and any sale or other
     disposition of damaged, worn-out or obsolete assets in the ordinary
course of business;                                           

          (e)      the sale or other disposition of cash or Cash
Equivalents;                                                  

           (f)      a Restricted Payment that does not violate the
covenant in Section 5.04 (Restricted Payments) or a Permitted 
Investment;                                                   

               (g)      an issuance of Equity Interests in the Borrower in
accordance with the terms of this Agreement; and              

              (h)      the sale of the Columbia Facility pursuant to the
Columbia FILOT Arrangement.                                   

     "Assignment Agreement" means an Assignment and Assumption Agreement
substantially in the form of Exhibit B with such amendments or modifications    
thereto as may be approved by the Administrative Agent.                         

    "Bank Book" means that certain confidential information memorandum
titled "Calpine Generating Company, LLC, $600,000,000 First Priority Secured    
Term Loan B, $100,000,000 Second Priority Secured Term Loan B" dated March 2004.

     "Bankruptcy Case" means any case under the Bankruptcy Law commenced
voluntarily or involuntarily against the Borrower or any other Obligor.         

  "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,                                        

5 

EX-10.2.4
12th Page of 171
TOC
1st
Previous
Next
↓Bottom
Just 12th
or shall consent to the institution of an involuntary case thereunder against   
it; or such Person shall file a petition or consent or 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 90 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 90 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.                                    

    "Base Rate" means, for any day, a fluctuating rate of interest per
annum equal to the higher of (a) the Prime Rate for such day and (b) the sum of 
(i) the Federal Funds Effective Rate for such day and (ii) one half of one      
percent (0.50%) per annum.                                                      

        "Base Rate Loan" means a Second Priority Term Loan bearing interest at
a rate determined by reference to the Base Rate.                                

  "Beck Report" is defined in Section 3.05(d) (Financial Officer's
Certificate).                                                                   

        "Beneficial Owner" has the meaning assigned to such term in Rule 13d-3
and Rule 13d-5 under the Exchange Act, except that in calculating the beneficial
ownership of any particular "person" (as that term is used in Section 13(d)(3)  
of the Exchange Act), such "person" will be deemed to have beneficial ownership 
of all securities that such "person" has the right to acquire by conversion or  
exercise of other securities, whether such right is currently exercisable or is 
exercisable only after the passage of time. The terms "Beneficially Owns" and   
"Beneficially Owned" have a corresponding meaning.                              

"Board of Directors" means:                                   

                  (a)      with respect to a corporation, the board of directors
       of the corporation or any committee thereof duly authorized to act on
behalf of such board;                                         

6 

EX-10.2.4
13th Page of 171
TOC
1st
Previous
Next
↓Bottom
Just 13th
                  (b)      with respect to a partnership, the Board of Directors
 of the general partner of the partnership or any committee duly
       authorized and empowered to take action on behalf of such partnership
by the partnership agreement of such partnership;             

             (c)      with respect to a limited liability company, the
     managing member or members or any controlling committee of managing
members thereof; and                                          

           (d)      with respect to any other Person, the board or
committee of such Person serving a similar function.          

"Borrower" is defined in the Preamble hereto.                 

        "Business Day" shall mean any day other than a Saturday, Sunday or day
on which commercial banks in New York City are authorized or required by law to 
close; provided, however, that when used in connection with a LIBOR Rate Loan   
(including with respect to all notices and determinations in connection         
therewith and any payments of principal, interest or other amounts thereon), the
term "Business Day" shall also exclude any day on which banks are not open for  
dealings in dollar deposits in the London interbank market.                     

   "CalGen Companies" means the Borrower and the Subsidiaries of the
Borrower.                                                                       

   "CalGen Expansion Company" means CalGen Expansion Company, LLC, a
Delaware limited liability company.                                             

"CalGen Finance" is defined in the Recitals hereto.           

"Calpine" means Calpine Corporation, a Delaware corporation.  

    "Calpine Performance Guaranty" means that certain Affiliated Party
Guaranty, dated as of the date hereof, by Calpine in favor of the Borrower and  
each of the Facility Owners.                                                    

      "Calpine Project Undertaking" means that certain Project Undertaking
and Agreement, dated as of the date hereof, among the Borrower, each of the     
Facility Owners and Calpine.                                                    

        "Capital Lease Obligations" means, at the time any determination is to
be made, the amount of the liability in respect of a capital lease that would at
that time be required to be capitalized on a balance sheet in accordance with   
GAAP, and the Stated Maturity thereof shall be the date of the last payment of  
rent or any other amount due under such lease prior to the first date upon which
such lease may be prepaid by the lessee without payment of a penalty.           

"Capital Stock" means:                                        

           (a)      in the case of a corporation, corporate stock;

                  (b)      in the case of an association or business entity, any
        and all shares, interests, participations, rights or other equivalents
(however designated) of corporate stock;                      

7 

EX-10.2.4
14th Page of 171
TOC
1st
Previous
Next
↓Bottom
Just 14th
              (c)      in the case of a partnership or limited liability
company, partnership interests (whether general or limited) or
membership interests; and                                     

                  (d)      any other interest or participation that confers on a
      Person the right to receive a share of the profits and losses of, or
        distributions of assets of, the issuing Person, but excluding from all
      of the foregoing any debt securities convertible into Capital Stock,
        whether or not such debt securities include any right of participation
with Capital Stock.                                           

"Cash Equivalents" means:                                     

(a)      United States dollars;             

                  (b)      securities issued or directly and fully guaranteed or
insured by the United States government (or any agency or     
     instrumentality thereof), the Canadian government (or any agency or
     instrumentality thereof) or the government of a member state of the
         European Union (or any agency or instrumentality thereof), in each case
    the payment of which is backed by the full faith and credit of the
    United States, Canada or the relevant member state of the European
       Union, as the case may be, and having maturities of not more than six
months from the date of acquisition;                          

                 (c)      certificates of deposit and eurodollar time deposits
     with maturities of six months or less from the date of acquisition,
   bankers' acceptances with maturities not exceeding six months and
     overnight bank deposits, in each case, with any lender party to the
      Credit Facilities or any domestic commercial bank having capital and
surplus in excess of $500,000,000 and a Thomson Bank Watch (or
successor rating agency) Rating of "B" or better;             

                (d)      repurchase obligations with a term of not more than
        seven days for underlying securities of the types described in clauses
       (b) and (c) above entered into with any financial institution meeting
the qualifications specified in clause (c) above;             

             (e)      overnight deposits with entities whose unsecured
       commercial paper or other unsecured short-term debt obligations have,
        at the time of such investment, credit ratings of at least P-1 (or its
   equivalent) or higher from Moody's and A-1 (or its equivalent) or
higher from S&P; and                                          

              (e)      investments in money market funds or money market
  mutual funds which have, at the time of such investments, credit
        ratings of at least P-1 (or its equivalent) or higher from Moody's and
A-1 (or its equivalent) or higher from S&P.                   

      "Casualty Event" means any damage to or destruction of a Facility in
excess of $20,000,000.                                                          

       "Certificate re Non-Bank Status" means a certificate substantially in
the form of Exhibit C.                                                          

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

8 

EX-10.2.4
15th Page of 171
TOC
1st
Previous
Next
↓Bottom
Just 15th
   "Change of Control" means the occurrence of any of the following:

                  (a)      the adoption of a plan relating to the liquidation or
dissolution of the Borrower;                                  

               (b)      the consummation of any transaction (including any
       merger or consolidation) the result of which is that any "person" (as
     that term is used in Section 13(d) of the Exchange Act) becomes the
   Beneficial Owner, directly or indirectly, of more than 50% of the
         Voting Stock of Calpine, measured by voting power rather than number of
shares; or                                                    

                  (c)      the first day on which Calpine fails to own, directly
    or indirectly, 100% of the issued and outstanding Equity Interests
         (other than Perpetual Preferred Stock) of the Borrower (other than as a
      result of the issuance of Perpetual Preferred Stock by any direct or
indirect parent of the Borrower).                             

        "Closing Date" means the date on which all of the conditions precedent
set forth in Article III shall have been satisfied or waived in accordance with 
Section 12.05 (Amendments and Waivers).                                         

    "Closing Date Facilities" means the electric generating facilities
(including any electric generating facilities under construction) owned by      
Baytown Energy Center, LP; Carville Energy LLC; Channel Energy Center, LP;      
Columbia Energy LLC; Corpus Christi Cogeneration LP; Decatur Energy Center, LLC;
Delta Energy Center, LLC, Freestone Power Generation LP; Goldendale Energy      
Center, LLC, Los Medanos Energy Center, LLC; Morgan Energy Center, LLC; Calpine 
Oneta Power, L.P.; Pastoria Energy Facility L.L.C. and Zion Energy LLC.         

       "Closing Date Mortgages" is defined in Section 3.13 (Title Policies).

    "Closing Date Mortgage Policies" is defined in Section 3.13 (Title
Policies).                                                                      

    "Closing Date Mortgaged Properties" means all of the real property
interests owned or leased by any of the Guarantors, and "Closing Date Mortgaged 
Property" means all of the real property interests owned or leased by a         
Guarantor.                                                                      

         "Code" means the Internal Revenue Code of 1986, as amended from time to
time.                                                                           

         "Collateral" means (a) all of the Capital Stock of the Borrower held by
Holdings, (b) all of the Capital Stock of CalGen Expansion Company held by the  
Borrower, and (c) all assets and properties of the Borrower and each of the     
Guarantors (other than the Excluded Assets and the Excluded Subsidiaries), in   
each case as more particularly provided for in the Security Documents.          

     "Collateral Agent" has the meaning provided in the Recitals hereto.

      "Collateral Trust Agreement" means that certain Collateral Trust and
Intercreditor Agreement, dated as of the date hereof, by and among Holdings, the
Borrower, the Guarantors, the Administrative Agent, the First Priority Term Loan
Administrative Agent, the Revolver                                              

9 

EX-10.2.4
16th Page of 171
TOC
1st
Previous
Next
↓Bottom
Just 16th
Administrative Agent, the First Priority Indenture Trustee, the Second Priority 
Indenture Trustee, the Third Priority Indenture Trustee, the Collateral Agent   
and each other party from time to time a party thereto.                         

      "Columbia Facility" means the Facility owned by Columbia Energy LLC.

       "Columbia FILOT Arrangement" means a fee-in-lieu-of-taxes arrangement
pursuant to which the Columbia Facility will be sold to Calhoun County, South   
Carolina, or a Person acting on its behalf, and leased to Columbia Energy LLC   
for a nominal annual amount in lieu of certain ad valorem taxes that would      
otherwise be owed to Calhoun County in connection with the Columbia Facility,   
together with the payment of a fee to Calhoun County in lieu of such ad valorem 
taxes; provided, that (a) Columbia Energy LLC has the right under such          
arrangement to repurchase the Columbia Facility for nominal consideration upon  
completion or termination of the lease agreement, (b) the leasehold interest    
held by Columbia Energy LLC is part of the Collateral, (c) the arrangement is   
not reasonably expected to have a material adverse effect on the operation or   
financial condition of the Columbia Facility and (d) the arrangement does not   
impair the Columbia Facility's status as a QF.                                  

    "Condemnation Event" means any Facility (or any portion thereof in
excess of $20,000,000) is condemned, confiscated, requisitioned, captured,      
seized or subjected to forfeiture, or title thereto is taken, by any            
governmental authority (or any Person acting under color of governmental        
authority).                                                                     

      "Consolidated Cash Flow" means, with respect to any specified Person
for any period, the Consolidated Net Income of such Person for such period plus,
without duplication:                                                            

               (a)      an amount equal to any extraordinary loss plus any
net loss realized by such Person or any of its Subsidiaries in
        connection with an Asset Sale, to the extent such losses were deducted
in computing such Consolidated Net Income; plus               

              (b)      provision for taxes based on income or profits of
      such Person and its Subsidiaries for such period, to the extent that
      such provision for taxes was deducted in computing such Consolidated
Net Income; plus                                              

                  (c)      the Fixed Charges of such Person and its Subsidiaries
         for such period, to the extent that such Fixed Charges were deducted in
computing such Consolidated Net Income; plus                  

                  (d)      depreciation, amortization (including amortization of
      intangibles but excluding amortization of prepaid cash expenses that
         were paid in a prior period) and other non-cash expenses (excluding any
         such non-cash expense to the extent that it represents an accrual of or
     reserve for cash expenses in any future period or amortization of a
      prepaid cash expense that was paid in a prior period) of such Person
and its Subsidiaries for such period to the extent that such  
         depreciation, amortization and other non-cash expenses were deducted in
computing such Consolidated Net Income; minus                 

            (e)      non-cash items increasing such Consolidated Net
  Income for such period, other than the accrual of revenue in the
ordinary course of business,                                  

10

EX-10.2.4
17th Page of 171
TOC
1st
Previous
Next
↓Bottom
Just 17th
in each case, on a consolidated basis and determined in accordance with GAAP.   

      "Consolidated EBITDA" means, for any period, Consolidated Net Income
for such period plus (a) without duplication and to the extent deducted in      
determining such Consolidated Net Income, the sum of (i) any and all interest   
expense for such period, including, without limitation, Consolidated Interest   
Expense and any interest expense attributable to Affiliate Subordinated         
Indebtedness, (ii) consolidated income tax expense for such period, (iii) all   
amounts attributable to depreciation and amortization for such period, (iv) any 
extraordinary or non-recurring non-cash charges (other than the write-down of   
current assets) for such period (including any such non-cash charges for such   
period relating to the application of fresh start accounting principals), (v)   
any non-cash goodwill or other intangible asset impairment charges incurred     
after the date hereof resulting from the application of Statement Number 142 of 
the Financial Accounting Standards Board, (vi) any non-recurring expenses       
incurred in connection with the transactions contemplated by the Financing      
Documents and (vii) any non-cash compensation charges, including any such       
charges arising from stock options, restricted stock grants and other equity    
incentive programs (provided that, to the extent all or any portion of the      
income of any Subsidiary of the Borrower or other Person is excluded from       
Consolidated Net Income pursuant to the definition thereof for all or any       
portion of such period, any amounts set forth in the preceding clauses (i)      
through (vii) that are attributable to such Subsidiary or other Person shall be 
not be included for purposes of this clause (a) for such period or portion      
thereof), plus (b) without duplication, the cash amount of (i) prepayments      
received by the Borrower or any of its Subsidiaries under any Major Project     
Document during such period and (ii) any distributions received by the Borrower 
or any of its Subsidiaries pursuant to the Index Hedge during such period, and  
minus (c) without duplication (i) all cash payments made during such period on  
account of reserves, restructuring charges and other non-cash charges added to  
Consolidated Net Income pursuant to clause (a) above in a previous period and   
(ii) to the extent included in determining such Consolidated Net Income, any    
extraordinary gains and all non-cash items of income for such period, all       
determined on a consolidated basis in accordance with GAAP; provided that, if   
the Borrower has any Subsidiary that is not a Wholly Owned Subsidiary,          
Consolidated EBITDA shall be reduced (to the extent not otherwise reduced by    
GAAP) by an amount equal to (A) the sum of (1) the consolidated net income      
(loss) of such Subsidiary (to the extent included in Consolidated Net Income)   
and (2) the amounts set forth in clause (a)(i)-(vii) above attributable to such 
Subsidiary multiplied by (B) the percentage of Equity Interests in such         
Subsidiary not directly or indirectly owned by the Borrower on the last day of  
such period. Notwithstanding anything to the contrary herein, for each of the   
first four fiscal quarters ended after the Closing Date, Consolidated EBITDA    
will be calculated on a Pro Forma basis as if all transactions entered into by  
the Borrower on the Closing Date were entered into on the first day of the      
period for which Consolidated EBITDA is being measured.                         

         "Consolidated Interest Coverage Ratio" means, on any date, the ratio of
(a) Consolidated EBITDA of the Borrower and its Subsidiaries for the period of  
four consecutive fiscal quarters most recently ended on or prior to such date,  
taken as one accounting period, to (b) Consolidated Interest Expense of the     
Borrower and its Subsidiaries for the period of four consecutive fiscal quarters
most recently ended on or prior to such date, taken as one accounting period.   

        "Consolidated Interest Expense" means, for any period, (a) the sum of,
without duplication, (i) the interest expense (including imputed interest       
expense in respect of Capital                                                   

11

EX-10.2.4
18th Page of 171
TOC
1st
Previous
Next
↓Bottom
Just 18th
Lease Obligations and Synthetic Lease Obligations but excluding any interest    
expense attributable to Affiliate Subordinated Indebtedness) of the Borrower and
its Subsidiaries for such period (including all commissions, discounts and other
fees and charges owed by the Borrower and its Subsidiaries with respect to      
letters of credit and bankers' acceptance financing), net of interest income, in
each case determined on a consolidated basis in accordance with GAAP, plus (ii) 
any interest accrued (other than interest accrued with respect to Affiliate     
Subordinated Indebtedness) during such period in respect of Indebtedness of the 
Borrower or any Subsidiary of the Borrower that is required to be capitalized   
rather than included in consolidated interest expense for such period in        
accordance with GAAP, minus (b) to the extent included in such consolidated     
interest expense for such period, amounts attributable to the amortization of   
financing costs and non-cash amounts attributable to the amortization of debt   
discounts. For purposes of this definition, interest expense shall be determined
after giving effect to any net payments made or received by the Borrower or any 
Subsidiary of the Borrower with respect to interest rate Hedging Obligations.   
Notwithstanding anything to the contrary herein, for each of the first four     
fiscal quarters ended after the Closing Date, Consolidated Interest Expense will
be calculated on a Pro Forma basis as if all transactions entered into by the   
Borrower on the Closing Date were entered into on the first day of the period   
for which Consolidated Interest Expense is being measured.                      

       "Consolidated Net Income" means, with respect to any specified Person
for any period, the aggregate of the Net Income of such Person and its          
Subsidiaries for such period, on a consolidated basis, determined in accordance 
with GAAP; provided, that:                                                      

                 (a)      the Net Income of any Subsidiary will be excluded to
    the extent that the declaration or payment of dividends or similar
        distributions by that Subsidiary of that Net Income is not at the date
    of determination permitted without any prior governmental approval
       (that has not been obtained) or, directly or indirectly, by operation
     of the terms of its charter or any agreement, instrument, judgment,
       decree, order, statute, rule or governmental regulation applicable to
that Subsidiary or its stockholders; and                      

            (b)      the cumulative effect of a change in accounting
principles will be excluded.                                  

        "Continuation Notice" means a Continuation Notice substantially in the
form of Exhibit D.                                                              

     "Credit Facilities" means one or more debt facilities or commercial
paper facilities (including the debt facilities provided under this Agreement,  
the First Priority Term Loan Agreement and the Revolving Loan Agreement), in    
each case with banks or other institutional lenders providing for revolving     
credit loans, term loans, receivables financing (including through the sale of  
receivables to such lenders or to special purpose entities formed to borrow from
such lenders against such receivables) or letters of credit, in each case, as   
amended, restated, modified, renewed, refunded, replaced or refinanced          
(including by means of sales of debt securities to institutional investors) in  
whole or in part from time to time.                                             

       "Default" means any event that is, or with the passage of time or the
giving of notice or both would be, an Event of Default.                         

12

EX-10.2.4
19th Page of 171
TOC
1st
Previous
Next
↓Bottom
Just 19th
"Default Rate" is defined in Section 2.07 (Default Interest). 

        "Disqualified Stock" means any Capital Stock that, by its terms (or by
the terms of any security into which it is convertible, or for which it is      
exchangeable, in each case at the option of the holder of the Capital Stock), or
upon the happening of any event, matures or is mandatorily redeemable, pursuant 
to a sinking fund obligation or otherwise, or redeemable at the option of the   
holder of the Capital Stock, in whole or in part, on or prior to the date that  
is 91 days after the Stated Maturity of the Second Priority Term Loans.         
Notwithstanding the preceding sentence, any Capital Stock that would constitute 
Disqualified Stock solely because the holders of the Capital Stock have the     
right to require the Borrower to repurchase such Capital Stock upon the         
occurrence of a change of control or an asset sale will not constitute          
Disqualified Stock if the terms of such Capital Stock provide that the Borrower 
may not repurchase or redeem any such Capital Stock pursuant to such provisions 
unless such repurchase or redemption complies with Section 5.04 (Restricted     
Payments). The amount of Disqualified Stock deemed to be outstanding at any time
for purposes of this Agreement will be the maximum amount that the Borrower and 
its Subsidiaries may become obligated to pay upon the maturity of, or pursuant  
to any mandatory redemption provisions of, such Disqualified Stock, exclusive of
accrued dividends.                                                              

       "Dollars" and the sign "$" mean the lawful money of the United States
of America.                                                                     

       "Eligible Assignee" means (a) any Lender, any Affiliate of any Lender
and any Related Fund (any two or more Related Funds being treated as a single   
Eligible Assignee for all purposes hereof), and (b) any commercial bank,        
insurance company, investment or mutual fund or other entity that is an         
"accredited investor" (as defined in Regulation D under the Securities Act) and 
which extends credit or buys loans as one of its businesses.                    

    "Environmental Consultants" means E Cubed, Inc., ENSR Corporation,
Environmental Consulting & Technology, Inc., STS Consultants, Ltd and Separation
Systems Consultants, Inc.                                                       

        "Environmental Law" is defined in Section 4.10 (Hazardous Substances).

     "Equally and Ratably" is defined in the Collateral Trust Agreement.

        "Equity Contributions" means contributions of cash or Cash Equivalents
to the common equity capital of the Borrower by Persons other than the Borrower 
and its Subsidiaries.                                                           

     "Equity Interests" means Capital Stock and all warrants, options or
other rights to acquire Capital Stock (but excluding any debt security that is  
convertible into, or exchangeable for, Capital Stock).                          

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

"ERISA Affiliate" means any trade or business (whether or not 
incorporated) that is treated as a single employer together with Borrower or any
of its Subsidiaries under Section 52 or 414 of the Code or Title IV of ERISA.   

"ERISA Plan" means any employee benefit plan (including any   
Multiemployer Plan) under Section 3(3) of ERISA (a) maintained by Borrower or   
its Subsidiaries or any ERISA                                                   

13

EX-10.2.4
20th Page of 171
TOC
1st
Previous
Next
↓Bottom
Just 20th
Affiliate, or to which any of them contributes or is obligated to contribute, or
has contributed or been obligated to contribute, or has any liability, and (b)  
covered by Title IV of ERISA or to which Section 302 of ERISA, Section 412 of   
the Code or Subtitle J of the Code applies.                                     

  "Estimated Peak Capacity" means, with respect to a Facility, the
nominal, as-tested new and clean capacity of such Facility, as corrected to     
average ambient conditions, plus all incremental peaking capability of such     
Facility derived from duct firing, power augmentation, steam injection or other 
means.                                                                          

    "Event of Default" is defined in Section 7.01 (Events of Default).

"EWG" is defined in Section 4.18 (Governmental Regulation).   

"Excess Cash Flow" means, for any period:                     

(a)      the sum of:                        

                           (i) all revenues (excluding (A) non-cash revenues and
          (B) any payments received from contract monetizations,
               contract buy-outs and similar transactions) received by the
     Borrower and its Subsidiaries during such period,

                           (ii) all Net Proceeds of Asset Sales, Casualty Events
                and Condemnation Events, and all net proceeds from the sale,
                  lease, conveyance or other disposition of any assets or rights
                not constituting "Asset Sales," in each case received by the
                  Borrower and its Subsidiaries during such period and remaining
               after application of such proceeds to a Mandatory Repayment
               Offer pursuant to Section 2.11 (Mandatory Repayment Offers)
                and Section 5.07 (Asset Sales; Application of Net Proceeds),
and                                         

                         (iii) all Excess Expansion Asset Financing Proceeds
             received by the Borrower and its Subsidiaries during such
period; less                                

(b)      the sum of:                        

                     (i) all costs, expenses, fees and other charges
                (including liquidated damages or other damages or penalties)
             incurred by the Borrower and its Subsidiaries during such
       period in connection with the ownership, operation,
                 maintenance and use of the Facilities, including all payments
                  under Major Project Documents and other agreements relating to
           the Facilities (other than Major Maintenance Expenses),

                      (ii) all trustee fees, collateral agent fees and
              other similar administrative fees and expenses paid by the
     Borrower and its Subsidiaries during such period,

                     (iii) the Fixed Charges of the Borrower and its
                Subsidiaries during such period (other than Fixed Charges of
                 the kind referred to in clause (d) of the definition of Fixed
      Charges and Fixed Charges relating to Subordinated
                 Indebtedness or any other Indebtedness of the Borrower or any
                 of its Subsidiaries that is contractually subordinated to the
Second Priority Term Loan Obligations),     

                           (iv) all payments of principal of Indebtedness of the
                 Borrower and its Subsidiaries required to be made (whether or
                 not actually made) during such period, other than payments of
principal of Subordinated                   

14

EX-10.2.4
21st Page of 171
TOC
1st
Previous
Next
↓Bottom
Just 21st
                 Indebtedness or any other Indebtedness of the Borrower or any
                 of its Subsidiaries that is contractually subordinated to the
Second Priority Term Loan Obligations, and  

                  (v) all amounts paid by the Borrower and its
                  Subsidiaries for capital expenditures to the Facilities during
   such period, other than Excluded CapEx Amounts.

         "Excess Expansion Asset Financing Proceeds" means the excess of (a) the
aggregate amount of proceeds of Expansion Debt incurred to finance costs        
associated with Expansion Assets in accordance with Section 5.06(b)(iii) and    
Equity Contributions made in connection therewith, over (b) the amount of such  
proceeds and Equity Contributions required to finance costs associated with such
Expansion Assets in compliance with the conditions set forth in Section         
5.06(b)(iii).                                                                   

       "Exchange Act" means the Securities Exchange Act of 1934, as amended.

"Excluded Assets" means                                       

                  (a) the fixtures and equipment relating to any Facility if, to
      the extent that and for so long as (i) the ownership or operation of
         such Facility is regulated by any federal or state regulatory authority
    and (ii) under the law applicable to such regulatory authority the
grant of a security interest in such fixtures and equipment is
         prohibited or a security interest in such fixtures and equipment may be
       granted only after completion of a filing with, or receipt of consent
from, such regulatory authority which has not been effectively
       completed or received; provided, that (A) such fixtures and equipment
     will be an Excluded Asset only to the extent and for so long as the
         conditions set forth in clauses (i) and (ii) in this clause (a) are and
     remain satisfied and to the extent such assets otherwise constitute
         Collateral, will cease to be an Excluded Asset, and will become subject
     to the security interests granted to the Collateral Agent under the
        Security Documents, immediately and automatically at such time as such
 conditions cease to exist, including by reason of the effective
        completion of any required filing or effective receipt of any required
        regulatory approval, and (B) unless prohibited by law, the proceeds of
        any sale, lease or other disposition of any such fixtures or equipment
      that are Excluded Assets shall not be an Excluded Asset and shall at
      all times be and remain subject to the security interests granted to
  the Collateral Agent under the security documents except as such
      proceeds are applied and used by the Borrower or its Subsidiaries in
        the ordinary course of business and applied in accordance with Section
5.07 (Asset Sales; Application of Net Proceeds);              

        (b) with respect to personal property, any contract,
         agreement, lease, license, permit, franchise, power, authority or right
if, to the extent that and for so long as (i)                 

EX-10.2.4
22nd Page of 171
TOC
1st
Previous
Next
↓Bottom
Just 22nd
         grant of a security interest therein constitutes or would result in the
 abandonment, invalidation or unenforceability of such contract,
         agreement, lease, license, permit, franchise, power, authority or right
         or the termination of or a default under the instrument or agreement by
    which such contract, agreement, lease, license, permit, franchise,
  power, authority or right is governed and (ii) such abandonment,
        invalidation, unenforceability, termination or default is not rendered
      ineffective pursuant to Sections 9-406, 9-407, 9-408 or 9-409 of the
       Uniform Commercial Code (or any successor provisions) of any relevant
       jurisdiction or any other applicable Legal Requirement (including the
   United States bankruptcy code); provided, that (A) such contract,
         agreement, lease, license, permit, franchise, power, authority or right
     will be an Excluded Asset only to the extent and for so long as the
         conditions set forth in clauses (i) and (ii) of this clause (b) are and
remain satisfied and to the extent that such assets otherwise 
     constitute Collateral, will cease to be an Excluded Asset, and will
    become subject to the security interests granted to the Collateral
      Agent under the Security Documents, immediately and automatically at
         such time as such conditions cease to exist, including by reason of any
         waiver or consent under the applicable instrument or agreement, and (B)
  the proceeds of any sale, lease or other disposition of any such
contract, agreement, lease, license, permit, franchise, power,
         authority or right that is or becomes an Excluded Asset shall not be an
    Excluded Asset and shall at all times be and remain subject to the
       security interests granted to the Collateral Agent under the Security
        Documents except as such proceeds are applied and used by the Borrower
       or its Subsidiaries in the ordinary course of business and applied in
accordance with Section 5.07 (Asset Sales; Application of Net 
Proceeds);                                                    

          (c)      with respect to any real property, any lease,
         license, permit, franchise, power, authority or right if, to the extent
  that and for so long as the grant of a security interest therein
 constitutes or would result in the abandonment, invalidation or
    unenforceability of such lease, license, permit, franchise, power,
 authority or right or the termination of or a default under the
instrument or agreement by which such lease, license, permit, 
       franchise, power, authority or right is governed; provided, that such
         lease, license, permit, franchise, power, authority or right will be an
        Excluded Asset only to the extent and for as long as the condition set
    forth above is and remains satisfied and to the extent such assets
      otherwise constitute Collateral, will cease to be an Excluded Asset,
  and will become subject to the security interests granted to the
       Collateral Agent under the Security Documents except as such proceeds
 are applied and used by the Borrower or its Subsidiaries in the
         ordinary course of business and applied in accordance with Section 5.07
(Asset Sales; Application of Net Proceeds);                   

(d)      any Excluded Subsidiary Securities;

         (e)      any property or assets owned by the Excluded
Subsidiary;                                                   

               (f)      any Expansion Assets; provided, that any Expansion
Assets will be Excluded Assets only if and for so long as the 
limitations imposed by the debt instruments of Calpine and its
         Subsidiaries on the ability to grant a Lien on such Expansion Assets to
         secure the Secured Obligations continue to be applicable, as determined
in good faith by the Borrower; and                            

16

EX-10.2.4
23rd Page of 171
TOC
1st
Previous
Next
↓Bottom
Just 23rd
               (g)      the Borrower's rights under or with respect to the
Working Capital Facility.                                     

     "Excluded CapEx Amounts" means amounts paid by the Borrower and its
Subsidiaries for capital expenditures to the Facilities using funds derived from
either of the following funding sources:                                        

                  (a)      Equity Contributions, other than Equity Contributions
made to comply with Section 5.06(b)(iii); and                 

              (b)      proceeds of Expansion Debt incurred in accordance
with Section 5.06(b)(iii).                                    

        "Excluded Subsidiary" means Goldendale Energy Center, LLC, only if and
for so long as the limitations imposed by the debt instruments of Calpine and   
its Subsidiaries on Goldendale Energy Center, LLC's ability to be a Guarantor   
and grant a Lien on its property and assets to secure the Secured Obligations   
continue to be applicable to Goldendale Energy Center, LLC, as determined in    
good faith by the Borrower.                                                     

"Excluded Subsidiary Securities" means Capital Stock or other 
securities of any Subsidiary of the Borrower, other than the Equity Interests in
CalGen Expansion Company.                                                       

  "Existing Credit Administrative Agent" means Credit Suisse First
Boston, acting through its New York Branch, as the administrative agent under   
the Existing Senior Secured Credit Facility.                                    

       "Existing Purchase Option" means an Asset Sale required in accordance
with any of the following, without giving effect to any amendments or other     
modifications thereto after the Closing Date:                                   

             (a)      the exercise by Eastman Chemical Company (or its
        successors and permitted assigns) of any of its purchase options under
    the Energy Services Agreement, dated as of August 15, 2000, and as
      amended to the Closing Date, between Columbia Energy LLC and Eastman
Chemical Company;                                             

                 (b)      the exercise by Solutia, Inc. (or its successors and
    permitted assigns) of its purchase option upon an event of default
     under the Second Amended and Restated Lease, Steam Sales and Shared
         Services Agreement, dated as of January 31, 2001, and as amended to the
     Closing Date, between Decatur Energy Center, LLC and Solutia, Inc.;

                 (c)      the exercise by Bayer Corporation (or its successors
         and permitted assigns) of its purchase option under the Energy Services
        Agreement, dated as of January 12, 2000, and as amended to the Closing
Date, between Baytown Energy Center, LP and Bayer Corporation;

                 (d)      the exercise by Lyondell-CITGO Refining L.P. (or its
    successors and permitted assigns) of any of its OPTIONS to acquire
  certain property under the Amended and Restated Ground Lease and
Easement Agreement, dated as of March 30, 2001, and           

17

EX-10.2.4
24th Page of 171
TOC
1st
Previous
Next
↓Bottom
Just 24th
       as amended to the Closing Date, between Channel Energy Center, LP and
Lyondell-CITGO Refining L.P.;                                 

                 (e)      the exercise by CITGO Refining and Chemicals Company
      L.P. (or its successors and permitted assigns) of its right of first
        offer under the Energy Services Agreement, dated as of March 23, 1999,
and as amended to the Closing Date, between Corpus Christi    
     Cogeneration, LP and CITGO Refining and Chemicals Company L.P.; and

                (f)      the exercise by Flint Hills Resources, L.P. (or its
        successors and permitted assigns) its purchase option under the Energy
      Services Agreement, dated as of July 24, 2003, and as amended to the
       Closing Date, between Corpus Christi Cogeneration, LP and Flint Hills
Resources, L.P.                                               

       "Existing Senior Secured Credit Facility" means the Credit Agreement,
dated as of October 16, 2000, among the Borrower, the Existing Credit           
Administrative Agent, the financial institutions thereto from time to time as   
lenders and the other agents and arrangers party thereto.                       

      "Expansion Assets" means the assets (including real property rights,
contractual rights, rights under permits, other general intangibles and other   
ancillary rights) added to a Facility in connection with the addition of        
capacity to, or other expansion of, such Facility; provided, that such Expansion
Assets are not necessary for the operation of such Facility or any other        
Facility (other than the Expansion Assets themselves), are readily              
distinguishable from such Facility and can be removed or separated from such    
Facility, dismantled or operated independently of the operation of the Facility 
without impairing the Facility or any other Facility in any material respect.   

 "Expansion Debt" means Indebtedness incurred for the purpose of
financing the development, construction or purchase of, or repairs, improvements
or additions to, Expansion Assets relating to one or more Facilities, including 
any Indebtedness existing at the time such Expansion Assets are acquired,       
whether or not such Indebtedness is incurred in connection with, or in          
contemplation of, the acquisition of such Expansion Assets; provided, that such 
Indebtedness was incurred to finance the development, construction or purchase  
of, or repairs, improvements or additions to, such Expansion Assets.            

       "Facilities" means the Closing Date Facilities and any other electric
generating facilities acquired or constructed after the Closing Date in         
accordance with the terms hereof; provided that any Facility disposed of in     
accordance with the terms hereof shall from and after the date of any such      
disposition be deemed not to be a Facility hereunder from and after the date of 
such disposition.                                                               

         "Facility Owners" means Baytown Energy Center, LP; Carville Energy LLC;
Channel Energy Center, LP; Columbia Energy LLC; Corpus Christi Cogeneration LP; 
Decatur Energy Center, LLC; Delta Energy Center, LLC, Freestone Power Generation
LP; Goldendale Energy Center, LLC, Los Medanos Energy Center, LLC; Morgan Energy
Center, LLC; Calpine Oneta Power, L.P.; Pastoria Energy Facility L.L.C. and Zion
Energy LLC.                                                                     

18

EX-10.2.4
25th Page of 171
TOC
1st
Previous
Next
↓Bottom
Just 25th
     "Fair Market Value" means the value that would be paid by a willing
buyer to a willing seller in a transaction not involving distress or necessity  
of either party, (a) determined in good faith by an Officer of the Borrower and 
evidenced by an Officer's Certificate delivered to the Administrative Agent, if 
such value is less than or equal to $10,000,000, or (b) determined in good faith
by the Board of Directors of the Borrower and evidenced by a resolution         
delivered to the Administrative Agent, if such value is greater than            
$10,000,000.                                                                    

        "Federal Funds Effective Rate" means for any day, an interest rate per
annum equal to the weighted average of the rates on overnight Federal funds     
transactions with members of the Federal Reserve System arranged by Federal     
funds brokers on such day, as published for such day (or, if such day is not a  
Business Day, for the immediately preceding Business Day) by the Federal Reserve
Bank of New York, or, if such rate is not so published for any day which is a   
Business Day, the Federal Funds Rate for such day shall be the average rate     
charged to the Administrative Agent, in its capacity as a Lender, on such day on
such transactions as determined by the Administrative Agent.                    

"FERC" is defined in Section 4.18 (Governmental Regulation).  

     "Financing Documents" means this Agreement, the First Priority Term
Loan Agreement, the Revolving Loan Agreement, the Purchase Agreement, the       
Indentures, the Notes, the Registration Rights Agreement, the Security Documents
and all other security documents and intercreditor agreements entered into by   
Holdings, the Borrower or any Subsidiary thereof (on the one hand) and any Agent
or any Lender (on the other hand) in connection therewith.                      

"Financing Statements" is defined in Section 3.06 (Security). 

         "First Priority Debt Representative" is defined in the Collateral Trust
Agreement.                                                                      

"First Priority Indenture" is defined in the Recitals hereto. 

       "First Priority Indenture Trustee" is defined in the Recitals hereto.

   "First Priority Lien" means a Lien granted by the Borrower or any
Guarantor under a Security Document to the Collateral Agent upon any assets or  
property of the Borrower or any Guarantor to secure First Priority Lien         
Obligations.                                                                    

   "First Priority Lien Cap" means as of any date, (a) the principal
amount of First Priority Notes, plus (b) the principal amount of all            
Indebtedness outstanding under the First Priority Term Loan Agreement on the    
Closing Date, plus the Indebtedness outstanding under any other Credit Facility 
(including the Revolving Loan Agreement), all in an aggregate principal amount  
not to exceed the amount provided for in Section 5.06(b)(i)(A), less (c) the    
amount of Second Priority Lien Debt and Third Priority Lien Debt incurred after 
the Closing Date the net proceeds of which are used to repay First Priority Lien
Debt, plus (d) the amount of accrued interest, fees and expenses, including     
premiums, paid in connection with the incurrence of any Permitted Refinancing   
Indebtedness with respect to the Indebtedness described in clauses (a) and (b), 
plus (e) the notional amount of Hedging Obligations incurred to hedge or manage 
interest rate risk with respect to other First Priority Lien Debt having an     
aggregate notional amount not to exceed, together with the aggregate notional   
amount of any outstanding Hedging Obligations constituting                      

19

EX-10.2.4
26th Page of 171
TOC
1st
Previous
Next
↓Bottom
Just 26th
Second Priority Lien Debt, $500,000,000. For purposes of this definition of     
First Priority Lien Cap, all letters of credit will be valued at the face amount
thereof, whether or not drawn.                                                  

        "First Priority Lien Debt" means, collectively, (a) the First Priority
Notes, (b) the Indebtedness under the First Priority Term Loan Agreement, (c)   
the Indebtedness under the Revolving Loan Agreement, (d) Hedging Obligations    
incurred to hedge or manage interest rate risk with respect to other First      
Priority Lien Debt having an aggregate notional amount not to exceed, together  
with the aggregate notional amount of any outstanding Hedging Obligations       
constituting Second Priority Lien Debt, $500,000,000, (e) Indebtedness under any
other Credit Facility that is secured by a First Priority Lien, and (f) any     
other Indebtedness the net proceeds of which are used to refund, refinance,     
replace, defease, discharge or otherwise acquire or retire any other First      
Priority Lien Debt; provided, however, such Indebtedness shall constitute First 
Priority Lien Debt only if, in the case of clauses (d), (e) or (f) of this      
definition, (i) such Indebtedness was permitted to be incurred and so secured   
under each applicable Financing Document (or the lenders under such Indebtedness
obtained an Officer's Certificate of the Borrower at the time of incurrence to  
the effect that such Indebtedness was permitted to be incurred and so secured   
under each applicable Financing Document), (ii) on or before the date on which  
such Indebtedness is incurred by the Borrower or the applicable Subsidiary, such
Indebtedness is designated by the Borrower, in an Officer's Certificate         
delivered to each First Priority Debt Representative and the Collateral Agent,  
as First Priority Lien Debt for the purposes of the Collateral Trust Agreement  
and the other First Priority Lien Documents; (iii) such Indebtedness is governed
by an agreement that includes a Sharing Confirmation, a Lien Priority           
Confirmation and an agreement by the holder of such Indebtedness and the        
applicable First Priority Debt Representative to vote with respect to such      
Indebtedness as described in the Collateral Trust Agreement; and (iv) all       
requirements set forth in the Collateral Trust Agreement as to the confirmation,
grant or perfection of the Collateral Agent's Liens to secure such Indebtedness 
or Obligations in respect thereof are satisfied (and the satisfaction of such   
requirements will be conclusively established if the Borrower delivers to the   
Collateral Agent an Officer's Certificate stating that such requirements have   
been satisfied and that such Indebtedness is First Priority Lien Debt).         

    "First Priority Lien Documents" means the First Priority Term Loan
Agreement, the First Priority Notes, the Guarantees related thereto, the First  
Priority Indenture, the Revolving Loan Agreement, each agreement governing any  
other series of First Priority Lien Debt and all other agreements governing,    
securing or relating to any First Priority Lien Obligations.                    

      "First Priority Lien Obligations" means the First Priority Lien Debt
and all other Obligations in respect of First Priority Lien Debt.               

"First Priority Notes" is defined in the Recitals hereto.     

     "First Priority Notes Indenture" is defined in the Recitals hereto.

      "First Priority Secured Parties" shall mean the holders of the First
Priority Lien Obligations (including the holders of the First Priority Notes,   
the lenders under the First Priority Term Loan Agreement, the First Priority    
Term Loan Administrative Agent and the lenders under the Revolving Loan         
Agreement).                                                                     

20

EX-10.2.4
27th Page of 171
TOC
1st
Previous
Next
↓Bottom
Just 27th
   "First Priority Term Loan Administrative Agent" is defined in the
Recitals hereto.                                                                

         "First Priority Term Loan Agreement" is defined in the Recitals hereto.

         "First Priority Term Loan Documents" means the First Priority Term Loan
Agreement and the Security Documents which relate to any of the First Priority  
Term Loan Obligations and all other agreements related thereto.                 

      "First Priority Term Loan Obligations" means the First Priority Term
Loans and all other Obligations under the First Priority Term Loan Documents    
relating to such loans.                                                         

"First Priority Term Loans" is defined in the Recitals hereto.

   "Fixed Charge Coverage Ratio" means with respect to any specified
Person for any period, the ratio of the Consolidated Cash Flow of such Person   
for such period to the Fixed Charges of such Person for such period. In the     
event that the specified Person or any of its Subsidiaries incurs, assumes,     
guarantees, repays, repurchases, redeems, defeases or otherwise discharges any  
Indebtedness (other than ordinary working capital borrowings) or issues,        
repurchases or redeems preferred equity subsequent to the commencement of the   
period for which the Fixed Charge Coverage Ratio is being calculated and on or  
prior to the date on which the event for which the calculation of the Fixed     
Charge Coverage Ratio is made (the "Calculation Date"), then the Fixed Charge   
Coverage Ratio will be calculated giving Pro Forma effect to such incurrence,   
assumption, Guarantee, repayment, repurchase, redemption, defeasance or other   
discharge of Indebtedness, or such issuance, repurchase or redemption of        
preferred equity, and the use of the proceeds therefrom, as if the same had     
occurred at the beginning of the such period.                                   

    In addition, for purposes of calculating the Fixed Charge Coverage
Ratio:                                                                          

              (a)      acquisitions that have been made by the specified
 Person or any of its Subsidiaries, including through mergers or
      consolidations, or any Person or any of its Subsidiaries acquired by
    the specified Person or any of its Subsidiaries, and including any
        related financing transactions and including increases in ownership of
       Subsidiaries, during the applicable reference period or subsequent to
       such reference period and on or prior to the Calculation Date will be
         given Pro Forma effect as if they had occurred on the first day of such
reference period;                                             

       (b)      the Consolidated Cash Flow attributable to
     discontinued operations, as determined in accordance with GAAP, and
        operations or businesses (and ownership interests therein) disposed of
prior to the Calculation Date, will be excluded;              

           (c)      the Fixed Charges attributable to discontinued
      operations, as determined in accordance with GAAP, and operations or
       businesses (and ownership interests therein) disposed of prior to the
     Calculation Date, will be excluded, but only to the extent that the
       obligations giving rise to such Fixed Charges will not be obligations
  of the specified Person or any of its Subsidiaries following the
Calculation Date;                                             

21

EX-10.2.4
28th Page of 171
TOC
1st
Previous
Next
↓Bottom
Just 28th
               (d)      any Person that is a Subsidiary on the Calculation
        Date will be deemed to have been a Subsidiary at all times during such
reference period;                                             

       (e)      any Person that is not a Subsidiary on the
      Calculation Date will be deemed not to have been a Subsidiary at any
time during such reference period; and                        

         (f)      if any Indebtedness bears a floating rate of
        interest, the interest expense on such Indebtedness will be calculated
as if the rate in effect on the Calculation Date had been the 
      applicable rate for the entire reference period (taking into account
        any Hedging Obligation applicable to such Indebtedness if such Hedging
         Obligation has a remaining term as at the Calculation Date in excess of
12 months).                                                   

     "Fixed Charges" means, with respect to any specified Person for any
period, the sum, without duplication, of:                                       

                 (a)      the consolidated interest expense of such Person and
      its Subsidiaries for such period, whether paid or accrued, including
  amortization of debt issuance costs and original issue discount,
    non-cash interest payments, the interest component of any deferred
        payment obligations, the interest component of all payments associated
       with Capital Lease Obligations, commissions, discounts and other fees
 and charges incurred in respect of letter of credit or bankers'
      acceptance financings, and net of the effect of all payments made or
        received pursuant to Hedging Obligations in respect of interest rates,
      plus one-third of all payments with respect to operating leases, but
    excluding the consolidated interest expense of such Person and its
  Subsidiaries for such period, whether paid or accrued, under any
Affiliate Subordinated Indebtedness; plus                     

             (b)      the consolidated interest of such Person and its
         Subsidiaries that was capitalized during such period, but excluding the
       consolidated capitalized interest of such Person and its Subsidiaries
     for such period under any Affiliate Subordinated Indebtedness; plus

             (c)      any interest accruing on Indebtedness of another
        Person that is Guaranteed by such Person or one of its Subsidiaries or
        secured by a Lien on assets of such Person or one of its Subsidiaries,
whether or not such Guarantee or Lien is called upon; plus    

              (d)      the product of (i) all dividends, whether paid or
       accrued and whether or not in cash, on any series of preferred equity
    of such Person or any of its Subsidiaries, other than dividends on
      Equity Interests payable solely in Equity Interests of CalGen (other
        than Disqualified Stock) or to CalGen or a Subsidiary of CalGen, times
       (ii) a fraction, the numerator of which is one and the denominator of
    which is one minus the effective combined federal, state and local
        statutory tax rate of such Person for the immediately preceding fiscal
year, expressed as a decimal,                                 

in each case, on a consolidated basis and determined in accordance with GAAP.   

"FPA" is defined in Section 4.18 (Governmental Regulation).   

         "Funding Notice" means a notice substantially in the form of Exhibit E.

22

EX-10.2.4
29th Page of 171
TOC
1st
Previous
Next
↓Bottom
Just 29th
        "GAAP" means generally accepted accounting principles set forth in the
statements and pronouncements of the Financial Accounting Standards Board or in 
such other statements by such other entity as have been approved by a           
significant segment of the accounting profession, which are in effect on the    
applicable date of determination.                                               

     "Goldendale Facility" means the Facility owned by Goldendale Energy
Center, LLC.                                                                    

        "Governmental Authority" means any federal, state, municipal, national
or other government, governmental department, commission, board, bureau, court, 
agency or instrumentality or political subdivision thereof or any entity or     
officer exercising executive, legislative, judicial, regulatory or              
administrative functions of or pertaining to any government or any court, in    
each case whether associated with a state of the United States, the United      
States, or a foreign entity or government.                                      

        "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.                         

       "Guarantee" means a guarantee other than by endorsement of negotiable
instruments for collection in the ordinary course of business, direct or        
indirect, in any manner including, by way of a pledge of assets or through      
letters of credit or reimbursement agreements in respect thereof, of all or any 
part of any Indebtedness (whether arising by virtue of partnership arrangements,
or by agreements to keep-well, to purchase assets, goods, securities or         
services, to take or pay or to maintain financial statement conditions or       
otherwise).                                                                     

"Guarantors" means                                            

                  (a)      CalGen Expansion Company; CPN Freestone, LLC; Calpine
         Freestone, LLC; Freestone Power Generation LP; Calpine Freestone Energy
    GP, LLC; Calpine Freestone Energy, LP; Calpine Power Equipment LP;
      Calpine Channel Energy Center LP, LLC; Calpine Channel Energy Center
   GP, LLC; Channel Power GP, LLC; Channel Power, LP; Channel Energy
    Center, LP; CalGen Equipment Finance Holdings, LLC; CalGen Project
      Equipment Finance Company One, LLC; CalGen Project Equipment Finance
      Company Three LLC; CalGen Equipment Finance Company, LLC; Nueces Bay
   Energy LLC; Calpine Northbrook Southcoast Investors, LLC; Calpine
   Corpus Christi Energy GP, LLC; Calpine Corpus Christi Energy, LP;
     Corpus Christi Cogeneration LP; Zion Energy LLC; Los Medanos Energy
      Center, LLC; Morgan Energy Center, LLC; Carville Energy LLC; Decatur
         Energy Center, LLC; Calpine Oneta Power I, LLC; Calpine Oneta Power II,
        LLC; Calpine Oneta Power, L.P.; Calpine Baytown Energy Center LP, LLC;
   Calpine Baytown Energy Center GP, LLC; Baytown Energy Center, LP;
      Baytown Power GP, LLC; Baytown Power, LP; Columbia Energy LLC; Delta
        Energy Center, LLC; CalGen Project Equipment Finance Company Two, LLC;
      Pastoria Energy Facility L.L.C.; and Calpine Pastoria Holdings, LLC;
and                                                           

                (b)      any other Subsidiary of the Borrower that becomes a
Guarantor in accordance with the provisions of this Agreement;

and their respective successors and assigns.                                    

23

EX-10.2.4
30th Page of 171
TOC
1st
Previous
Next
↓Bottom
Just 30th
        "Hedging Obligations" means, with respect to any specified Person, the
Obligations of such Person under:                                               

                 (a)      interest rate swap agreements (whether from fixed to
       floating or from floating to fixed), interest rate cap agreements and
interest rate collar agreements;                              

                (b)      other agreements or arrangements designed to manage
interest rate risk; and                                       

                 (c)      other agreements or arrangements designed to protect
such Person against fluctuations in currency exchange rates or
commodity prices.                                             

       "Highest Lawful Rate" means the maximum lawful interest rate, if any,
that at any time or from time to time may be contracted for, charged, or        
received under the laws applicable to any Lender which are presently in effect  
or, to the extent allowed by law, under such applicable laws which may hereafter
be in effect and which allow a higher maximum nonusurious interest rate than    
applicable laws now allow.                                                      

"Holding Companies" means                                     

           (a)      Calpine Baytown Energy Center LP, LLC; Calpine
      Baytown Energy Center GP, LLC; Baytown Power GP, LLC; Baytown Power,
       LP; Channel Power, LP; Calpine Channel Energy Center LP, LLC; Calpine
      Channel Energy Center GP, LLC; Channel Power GP, LLC; Calpine Corpus
       Christi Energy GP, LLC; Calpine Corpus Christi Energy, LP; Nueces Bay
Energy LLC; Calpine Northbrook Southcoast Investors, LLC; CPN 
      Freestone, LLC; Calpine Freestone, LLC; Calpine Freestone Energy GP,
        LLC; Calpine Freestone Energy, LP; Calpine Oneta Power I, LLC; Calpine
  Oneta Power II, LLC; CalGen Equipment Finance Holdings, LLC; and
Calpine Pastoria Holdings, LLC; and                           

                (b)      any other Subsidiary of the Borrower that becomes a
      Holding Company in accordance with the provisions of this Agreement;

and their respective successors and assigns.                                    

"Holdings" is defined in the Recitals hereto.                 

         "Increased-Cost Lender" is defined in Section 2.17 (Removal Replacement
of a Lender).                                                                   

 "Indebtedness" means, with respect to any specified Person, any
indebtedness of such Person (excluding accrued expenses and trade payables),    
whether or not contingent:                                                      

(a)      in respect of borrowed money;      

             (b)      evidenced by bonds, notes, debentures or similar
  instruments or letters of credit (or reimbursement agreements in
respect thereof);                                             

(c)      in respect of bankers' acceptances;

24

EX-10.2.4
31st Page of 171
TOC
1st
Previous
Next
↓Bottom
Just 31st
    (d)      representing Capital Lease Obligations;

                (e)      representing the balance deferred and unpaid of the
     purchase price of any property or services due more than six months
    after such property is acquired or such services are completed; or

  (f)      representing any Hedging Obligations,

if and to the extent any of the preceding items (other than letters of credit   
and Hedging Obligations) would appear as a liability upon a balance sheet of the
specified Person prepared in accordance with GAAP. In addition, the term        
"Indebtedness" includes all Indebtedness of others secured by a Lien on any     
asset of the specified Person (whether or not such Indebtedness is assumed by   
the specified Person) and, to the extent not otherwise included, the Guarantee  
by the specified Person of any Indebtedness of any other Person.                

    The amount of any Indebtedness outstanding as of any date will be:

                (i)      the accreted value of the Indebtedness, in the case
of any Indebtedness issued with original issue discount;      

                  (ii)     the principal amount of the Indebtedness, in the case
of any other Indebtedness; and                                

                 (iii)    in respect of Indebtedness of another Person secured
 by a Lien on the assets of the specified Person, the lesser of:

                         (A)      the Fair Market Value of such asset at the
date of determination, and                  

                          (B)      the amount of the Indebtedness of the other
Person.                                     

Notwithstanding anything to the contrary in this definition of
Indebtedness, with respect to any contingent obligations (other than with       
respect to contractual obligations to repurchase goods sold or distributed,     
which shall be included to the extent reflected on the balance sheet of such    
Person in accordance with GAAP) of a Person, the maximum liability of such      
Indebtedness shall be as determined by such Person's Board of Directors, in good
faith, as, in light of the facts and circumstances existing at the time,        
reasonably likely to be incurred upon the occurrence of the contingency giving  
rise to such obligation.                                                        

 "Indemnified Liabilities" has the meaning assigned to it in the
Collateral Trust Agreement.                                                     

"Indemnitee" is defined in Section 12.03 (Indemnity).         

"Indentures" is defined in the Recitals hereto.               

25

EX-10.2.4
32nd Page of 171
TOC
1st
Previous
Next
↓Bottom
Just 32nd
 "Independent Engineer" means R.W. Beck or any other independent
engineering company of national standing selected by the Borrower and reasonably
acceptable to the Administrative Agent.                                         

        "Index Based Gas Sale and Power Purchase Agreement" means that certain
Index Based Gas Sale and Power Purchase Agreement, dated as of the date hereof, 
among the Borrower, each Facility Owner and CES.                                

 "Index Hedge" means, collectively, (a) that certain ISDA Master
Agreement (MULTICURRENCY-CROSS BORDER), dated as of March 12, 2004, between the 
Borrower and MSCG, as supplemented by that certain Schedule to the Master       
Agreement, dated as of March 12, 2004, between the Borrower and MSCG and by that
certain Amended and Restated Confirmation, dated as of March 12, 2004, between  
the Borrower and MSCG, and (b) that certain Guaranty, dated as of March 12,     
2004, by Morgan Stanley for the benefit of the Borrower.                        

"Insolvency Proceeding" means                                 

   (a)      any proceeding for the reorganization,
recapitalization or adjustment or marshalling of the assets or
       liabilities of the Borrower or any other Obligor, any receivership or
         assignment for the benefit of creditors relating to the Borrower or any
 other Obligor or any similar case or proceeding relative to the
       Borrower or any other Obligor or its creditors, as such, in each case
whether or not voluntary;                                     

                (b)      any liquidation, dissolution, marshalling of assets
      or liabilities or other winding up of or relating to the Borrower or
         any other Obligor, in each case whether or not voluntary and whether or
not involving bankruptcy or insolvency; or                    

                (c)      any other proceeding of any type or nature in which
    substantially all claims of creditors of the Borrower or any other
     Obligor are determined and any payment or distribution is or may be
made on account of such claims.                               

         "intellectual property rights" is defined in Section 4.09 (Intellectual
Property Rights).                                                               

     "Interest Payment Date" means (a) July 1, 2004, (b) each October 1,
January 1, April 1 and July 1 thereafter, and (c) in all cases, upon prepayment 
of any Second Priority Term Loans (to the extent thereof and including any      
optional or mandatory prepayments or redemptions), upon conversion from a Base  
Rate Loan to a LIBOR Rate Loan or a LIBOR Rate Loan to a Base Rate Loan, and on 
the Maturity Date.                                                              

         "Interest Period" means the period of one, two, three or six months, as
selected by the Borrower in the applicable Continuation Notice commencing on the
day on which the immediately preceding Interest Period expires; provided, (a) if
an Interest Period would otherwise expire on a day that is not a Business Day,  
such Interest Period shall expire on the next succeeding Business Day unless no 
further Business Day occurs in such month, in which case such Interest Period   
shall expire on the immediately preceding Business Day; (b) any Interest Period 
that begins on the last Business Day of a calendar month (or on a day for which 
there is no numerically corresponding day in the calendar month at the end of   
such Interest Period) shall,                                                    

26

EX-10.2.4
33rd Page of 171
TOC
1st
Previous
Next
↓Bottom
Just 33rd
subject to clause (c) of this definition, end on the last Business Day of such  
calendar month; (c) no Interest Period shall extend beyond the Maturity Date;   
and (d) the first Interest Period is deemed to begin on the Closing Date and    
expire on March 31, 2004.                                                       

        "Interest Rate Determination Date" means, with respect to any Interest
Period, the date that is two Business Days prior to the first day of such       
Interest Period.                                                                

         "Investment Company Act" is defined in Section 4.16 (Investment Company
Act).                                                                           

         "Investments" means, with respect to any Person, all direct or indirect
investments by such Person in other Persons (including Affiliates) in the form  
of loans (including Guarantees or other obligations), advances or capital       
contributions (excluding commission, travel and similar advances to officers and
employees made in the ordinary course of business), purchases or other          
acquisitions for consideration of Indebtedness, Equity Interests or other       
securities, together with all items that are or would be classified as          
investments on a balance sheet prepared in accordance with GAAP. If the Borrower
or any of its Subsidiaries sells or otherwise disposes of any Equity Interests  
of any direct or indirect Subsidiary of the Borrower such that, after giving    
effect to any such sale or disposition, such Person is no longer a Subsidiary of
the Borrower, the Borrower will be deemed to have made an Investment on the date
of any such sale or disposition equal to the Fair Market Value of the Borrower's
Investments in such Subsidiary that were not sold or disposed of in an amount   
determined as provided in the final paragraph of Section 5.04 (Restricted       
Payments). Except as otherwise provided in this Agreement, the amount of an     
Investment will be determined at the time the Investment is made and without    
giving effect to subsequent changes in value.                                   

"Legal Requirements" means, as to any Person, the articles of 
incorporation, bylaws or other organizational or governing documents of such    
Person, and 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" means each financial institution listed on the signature pages
hereto as a Lender, and any other Person that becomes a party hereto pursuant to
an Assignment Agreement.                                                        

 "LIBOR Rate" means, with respect to any LIBOR Rate Loan for any
Interest Period, the rate per annum determined by the Administrative Agent at   
approximately 11:00 a.m. (London time) on the applicable Interest Rate          
Determination Date by reference to the British Bankers' Association Interest    
Settlement Rates for deposits in dollars (as set forth by the Bloomberg         
Information Service or any successor thereto or any other service selected by   
the Administrative Agent which has been nominated by the British Bankers'       
Association as an authorized information vendor for the purpose of displaying   
such rates) 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 "LIBOR Rate" shall be the rate per annum at  
which the Administrative Agent or one of its affiliate banks offers to place    
deposits in Dollars with first-class banks in the London interbank market in    
London, England for such relevant Interest Period at approximately 11:00 a.m.   
(London time) on the applicable Interest Rate Determination Date, in amounts    
equal to $1,000,000.                                                            

27

EX-10.2.4
34th Page of 171
TOC
1st
Previous
Next
↓Bottom
Just 34th
         "LIBOR Rate Loan" means a Second Priority Term Loan bearing interest at
a rate determined by reference to the Adjusted LIBOR Rate.                      

      "Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset,  
whether or not filed, recorded or otherwise perfected under applicable law,     
including any conditional sale or other title retention agreement, any lease in 
the nature thereof, any option or other agreement to sell or give a security    
interest in and any filing of or agreement to give any financing statement under
the Uniform Commercial Code (or equivalent statutes) of any jurisdiction.       

 "Lien Priority Confirmation" is defined in the Collateral Trust
Agreement.                                                                      

      "Loan Agreements" means this Agreement, the First Priority Term Loan
Agreement and the Revolving Loan Agreement.                                     

        "Major Maintenance Expenses" means all costs, expenses, fees and other
charges (including liquidated damages or other damages or penalties) incurred by
the Borrower and its Subsidiaries during a period for major maintenance of the  
Facilities under the Master Maintenance Services Agreement or otherwise.        

         "Major Project Documents" means the WECC Fixed Price Gas Sale and Power
Purchase Agreement, the Index Based Gas Sale and Power Purchase Agreement, the  
Index Hedge, the Working Capital Facility, the Master Operation and Maintenance 
Agreement, the Master Maintenance Services Agreement, the Calpine Performance   
Guaranty, the Master Construction Management Agreement, the Calpine Project     
Undertaking and the Administrative Services Agreement.                          

   "Mandatory Repayment Offer" is defined in Section 2.11 (Mandatory
Repayment Offers).                                                              

      "Master Construction Management Agreement" means that certain Master
Construction Management Agreement, dated as of the date hereof, among the       
Borrower, Columbia Energy LLC, Goldendale Energy Center, LLC, Pastoria Energy   
Facility, LLC and Calpine Construction Management Company, Inc.                 

   "Master Maintenance Services Agreement" means that certain Master
Maintenance Services Agreement, dated as of the date hereof, among the Borrower,
each Facility Owner and Calpine Operating Services Company, Inc.                

        "Master Operation and Maintenance Agreement" means that certain Master
Operation and Maintenance Agreement, dated as of the date hereof, among the     
Borrower, each Facility Owner and Calpine Operating Services Company, Inc.      

      "Material Adverse Effect" means a material adverse effect on (a) the
current or reasonably anticipated business, property, results of operation or   
financial condition of the Borrower and its Subsidiaries taken as a whole, (b)  
the ability of the Borrower and its Subsidiaries to perform their obligations   
under this Agreement and the other Second Priority                              

28

EX-10.2.4
35th Page of 171
TOC
1st
Previous
Next
↓Bottom
Just 35th
Term Loan Documents or (c) the value of, or the validity or priority of the     
Collateral Agent's security interests in, the Collateral taken as a whole.      

       "Materially Adverse" means, with respect to an event or circumstance,
that such event or circumstance has had or is reasonably expected to have a     
material adverse effect on the Borrower and its Subsidiaries, taken as a whole; 
it being understood that an event or circumstance would have a material adverse 
effect on the Borrower and its Subsidiaries, taken as a whole, if the Excess    
Cash Flow for the Borrower's most recently ended four full fiscal quarters for  
which internal financial statements are available immediately preceding the date
on which such event or circumstance occurred or commenced to exist, as          
applicable, would have decreased by more than 5.0%, determined on a Pro Forma   
basis.                                                                          

         "Maturity Date" means the earlier of (a) April 1, 2010 and (b) the date
that all Second Priority Term Loans shall become due and payable in full        
hereunder, whether by acceleration or otherwise.                                

"Moody's" means Moody's Investors Service, Inc.               

        "Mortgages" means each of the mortgages and deeds of trust encumbering
any of the properties of any of the Guarantors including the Closing Date       
Mortgages and the mortgages and/or deeds of trust entered into pursuant to      
Section 5.14 (Additional Subsidiaries).                                         

"MSCG" means Morgan Stanley Capital Group, Inc.               

"MSSF" means Morgan Stanley Senior Funding, Inc.              

      "Multiemployer Plan" means any "Multiemployer Plan" (as such term is
defined in Section 3(37) or 4001(a)(3) of ERISA).                               

   "Net Income" means, with respect to any specified Person, the net
income (loss) of such Person, determined in accordance with GAAP and before any 
reduction in respect of preferred stock dividends, excluding, however:          

               (a)      any gain (but not loss), together with any related
         provision for taxes on such gain (but not loss), realized in connection
     with (a) any Asset Sale or (b) the disposition of any securities by
     such Person or any of its Subsidiaries or the extinguishment of any
Indebtedness of such Person or any of its Subsidiaries; and   

                 (b)      any extraordinary gain (but not loss), together with
     any related provision for taxes on such extraordinary gain (but not
loss).                                                        

"Net Proceeds" means:                                         

                 (a)      the aggregate cash proceeds received by the Borrower
        or any of its Subsidiaries in respect of any Asset Sale (including any
  cash received upon the sale or other disposition of any non-cash
    consideration received in any Asset Sale), net of the direct costs
         relating to such Asset Sale, including legal, accounting and investment
        banking fees, sales commissions, any relocation expenses incurred as a
result of the Asset                                           

29

EX-10.2.4
36th Page of 171
TOC
1st
Previous
Next
↓Bottom
Just 36th
 Sale, and any taxes paid or payable by the Borrower, any of its
      Subsidiaries or Calpine as a result of the Asset Sale, in each case,
       after taking into account any available tax credits or deductions and
     any tax sharing arrangements, amounts required to be applied to the
         repayment of Indebtedness secured by a Lien on the asset or assets that
      were the subject of the Asset Sale (other than Secured Obligations),
     and any reserve for adjustment in respect of the sale price of such
asset or assets established in accordance with GAAP;          

                  (b)      all proceeds of any insurance, indemnity, warranty or
       guaranty payable from time to time with respect to any Casualty Event
      that are not applied to the repair, replacement or rebuilding of the
     applicable Facility to the extent commercially feasible, other than
   business interruption insurance proceeds, net of the direct costs
relating to the collection of such proceeds; and              

                  (c)      all payments (in any form whatsoever) made or due and
        payable from time to time in connection with any Condemnation Event by
 any governmental authority (or any Person acting under color of
         governmental authority) that are not applied to the repair, replacement
     or rebuilding of the applicable Facility to the extent commercially
      feasible, net of the direct costs relating to the collection of such
proceeds.                                                     

"Non-Consenting Lender" is defined in Section 2.17 (Removal or
Replacement of a Lender).                                                       

   "Non-U.S. Lender" is defined in Section 2.16 (Taxes; Withholding,
etc.).                                                                          

        "Note Documents" means the Indentures, the Notes, the Note Guarantees,
the Collateral Trust Agreement, each Sharing Confirmation, the other Security   
Documents which relate to any of the Note Obligations and all other agreements  
related thereto.                                                                

"Note Guarantee" means the Guarantee by each Guarantor of the 
Borrower's obligations under each Indenture and on the Notes issued in          
connection therewith, including the payment, when due and payable, of principal,
interest and premium, if any, thereunder, executed pursuant to the provisions of
each Indenture.                                                                 

       "Note Obligations" means the Notes, the Note Guarantees and all other
Obligations of any Obligor under the Note Documents.                            

"Notes" is defined in the Recitals hereto.                    

        "Obligations" means any principal (including reimbursement obligations
with respect to letters of credit whether or not drawn), interest, premium (if  
any), fees, indemnifications, reimbursements, expenses and other liabilities    
payable under the documentation governing or securing any Indebtedness.         

       "Obligor" means Holdings, the Borrower, the Guarantors and each other
Subsidiary of the Borrower that has granted the Collateral Agent a Lien upon any
of the Collateral as security for any Secured Obligations.                      

         "Offer Amount" is defined in Section 2.11 (Mandatory Repayment Offers).

30

EX-10.2.4
37th Page of 171
TOC
1st
Previous
Next
↓Bottom
Just 37th
         "Offer Period" is defined in Section 2.11 (Mandatory Repayment Offers).

     "Offering Memorandum" means the Offering Memorandum dated March 17,
2004 of the Borrower and CalGen Finance, as amended or supplemented.            

         "Officer" means, with respect to any Person, the chairman of the board,
the chief executive officer, the president, the chief operating officer, the    
chief financial officer, the treasurer, any assistant treasurer, the controller,
the secretary or any vice-president of such Person.                             

     "Officer's Certificate" means a certificate signed on behalf of the
Borrower by one Officer of the Borrower that meets the requirements of Section  
12.21.                                                                          

         "Other Taxes" means any and all present and future stamp or documentary
taxes or any other excise or property taxes, charges or similar levies arising  
from any payment made under any of the Second Priority Term Loan Documents or   
from the execution, delivery or enforcement of, or otherwise with respect to,   
any of the Second Priority Term Loan Documents.                                 

   "Payment Default" is defined in Section 7.01 (Events of Default).

"Payout Amount" is defined in Section 3.06(a)(iv) (Security). 

       "PBGC" means the Pension Benefit Guaranty Corporation referred to and
defined in ERISA and any successor entity performing similar functions.         

       "Permitted Business" means the ownership, construction, operation and
maintenance of the Closing Date Facilities and any substantially similar        
electric generating facilities located in the United States, together with any  
related assets or facilities, including gas pipelines supplying natural gas to  
such generating facilities, electric transmission lines carrying energy         
generated from such generating facilities, and any related gas or electric      
interconnection facilities.                                                     

       "Permitted Counterparty Lien" means a Lien in favor of a counterparty
under a PPA; provided, that the following conditions are satisfied:             

                  (a)      the counterparty is not an Affiliate of the Borrower;

                 (b)      the Lien does not secure any Indebtedness and (i) is
         granted solely to secure the performance obligations of the Borrower or
      the applicable Subsidiary under the PPA and/or any obligation of the
     Borrower or the applicable Subsidiary to make a termination payment
    under the PPA upon the occurrence of the event described in clause
   (c)(iii)(A) below or the termination by the counterparty upon the
        occurrence of any of the events described in clause (c)(iii)(B) below,
      or (ii) creates rights designed to enable the counterparty to assume
   operational control of the relevant Facility or Facilities (e.g.,
        step-in rights) or otherwise continue performance of the Borrower's or
the applicable Subsidiary's obligations under the PPA;        

                  (c)      the counterparty can exercise its rights with respect
      to the Lien only (i) for so long as the counterparty remains current
with respect to all of its payment obligations                

31

EX-10.2.4
38th Page of 171
TOC
1st
Previous
Next
↓Bottom
Just 38th
      under the PPA and is not otherwise in a continuing default under the
         PPA, (ii) if the counterparty continues to acknowledge the existence of
    the Liens securing the Secured Obligations (unless and until Liens
      securing the Secured Obligations are eliminated in connection with a
    foreclosure of the Permitted Counterparty Liens as contemplated by
         clause (d) of this definition), and (iii) if either (A) the Borrower or
      the applicable Subsidiary has terminated, rejected or repudiated the
    PPA (including any rejection or similar act by or on behalf of the
         Borrower or the applicable Subsidiary in connection with any bankruptcy
  proceeding) or (B) the Borrower or the applicable Subsidiary has
      intentionally breached its obligations under the PPA; provided, that
       the following actions will be considered an intentional breach by the
       Borrower or the applicable Subsidiary under the PPA: (1) the Borrower
         or the applicable Subsidiary provides or delivers capacity or energy to
        a third party if the Borrower or the applicable Subsidiary is required
    under the PPA to provide or deliver such capacity or energy to the
    counterparty; (2) the Borrower or the applicable Subsidiary of the
    Borrower fails to operate or attempt to operate one or more of the
   relevant Facilities at a time when the Borrower or the applicable
       Subsidiary of the Borrower was required, under the PPA, to operate or
      attempt to operate such Facility or Facilities and such operation or
         attempted operation is not prevented by force majeure, forced outage or
     other events or circumstances outside the reasonable control of the
     Person responsible therefor; (3) any failure by the Borrower or the
         applicable Subsidiary to comply with any provisions of the PPA designed
 to enable the counterparty to assume operational control of the
     relevant Facility or Facilities (e.g., step-in rights) or otherwise
         take actions necessary to continue performance of the Borrower's or the
        applicable Subsidiary's obligations under the PPA, in each case to the
     extent the Borrower or the applicable Subsidiary is then capable of
       complying with such provisions; or (4) any failure by the Borrower or
         the applicable Subsidiary to pay to the counterparty any amount due and
     payable in accordance with the terms and conditions of the PPA; and

           (d)      the counterparty's exercise of its rights with
         respect to the Lien is limited to (i) the taking of actions pursuant to
         any provisions of the PPA designed to enable the counterparty to assume
   operational control of the relevant Facility or Facilities (e.g.,
       step-in rights) or otherwise necessary to continue performance of the
        Borrower's or the applicable Subsidiary's obligations under the PPA or
        (i) the recovery of any termination payment due under the PPA upon the
      occurrence of the event described in clause (c)(iii)(A) above or the
   termination by the counterparty upon the occurrence of any of the
events described in clause (c)(iii)(B) above.                 

         "Permitted Debt" is defined in Section 5.06 (Incurrence of Indebtedness
and Issuance of Preferred Equity).                                              

"Permitted Investment" means:                                 

              (a)      any Investment in the Borrower or in a Guarantor;

             (b)      (i) any Investment in the Goldendale Facility to
        finance the construction and completion of the Goldendale Facility and
         any other repairs, improvements or other capital expenditures necessary
to operate and maintain such Facility in accordance with      

32

EX-10.2.4
39th Page of 171
TOC
1st
Previous
Next
↓Bottom
Just 39th
 prudent industry practice, and (ii) any other Investment in the
     Goldendale Facility made with the proceeds of Equity Contributions,
   Perpetual Preferred Stock or Affiliate Subordinated Indebtedness;

(c)      any Investment in Cash Equivalents;

                 (d)      any Investment by the Borrower or any Guarantor in a
Person, if as a result of such Investment:                    

                 (i)      such Person becomes a Wholly Owned
  Subsidiary of the Borrower and a Guarantor; or

                     (ii)     such Person is merged, consolidated or
     amalgamated with or into, or transfers or conveys
                  substantially all of its assets to, or is liquidated into, the
Borrower or a Guarantor;                    

              (e)      any Investment made as a result of the receipt of
         non-cash consideration from an Asset Sale that was made pursuant to and
  in compliance with Section 5.07 (Asset Sales; Application of Net
Proceeds);                                                    

                 (f)      any acquisition of assets or Capital Stock solely in
        exchange for the issuance of Equity Interests (other than Disqualified
Stock) of the Borrower;                                       

                 (g)      any Investments received in compromise or resolution
       of (i) obligations of trade creditors or customers that were incurred
  in the ordinary course of business of the Borrower or any of its
   Subsidiaries, including pursuant to any plan of reorganization or
    similar arrangement upon the bankruptcy or insolvency of any trade
         creditor or customer; or (ii) litigation, arbitration or other disputes
with Persons who are not Affiliates;                          

            (h)      Investments represented by Hedging Obligations;

       (i)      repurchases of the Notes and other Secured
Obligations;                                                  

                  (j)      negotiable instruments held for deposit or collection
in the ordinary course of business; and                       

          (k)      other Investments in any Person other than an
 Affiliate of the Borrower having an aggregate Fair Market Value
        (measured on the date each such Investment was made and without giving
      effect to subsequent changes in value), when taken together with all
         other Investments made pursuant to this clause (k) that are at the time
outstanding, not to exceed $30,000,000.                       

"Permitted Liens" means:                                      

     (a)      Liens in favor of the Collateral Agent Equally and Ratably
securing the First Priority Notes, the First Priority Term Loans, the Revolving 
Loans and all other First Priority Lien Debt, all in an aggregate principal     
amount not exceeding the First Priority Lien Cap, and all related First Priority
Lien Obligations;                                                               

33

EX-10.2.4
40th Page of 171
TOC
1st
Previous
Next
↓Bottom
Just 40th
     (b)      Liens in favor of the Collateral Agent Equally and Ratably
securing the Second Priority Notes, the Second Priority Term Loans and all other
Second Priority Lien Debt, all in an aggregate principal amount not exceeding   
the Second Priority Lien Cap, and all related Second Priority Lien Obligations; 

     (c)      Liens in favor of the Collateral Agent Equally and Ratably
securing the Third Priority Notes and all other Third Priority Lien Debt and all
related Third Priority Lien Obligations;                                        

(d)      Liens in favor of the Borrower or the Guarantors;    

(e)      pledges or deposits made under workers' compensation,
unemployment insurance laws or similar legislation, or good faith deposits in   
connection with bids, tenders, contracts (other than for payment of             
Indebtedness) or operating leases to which such Person is a party;              

   (f)      Liens or deposits to secure the performance of statutory
obligations, surety or appeal bonds, performance bonds or other obligations of a
like nature incurred in the ordinary course of business;                        

         (g)      (i) Liens to secure Expansion Debt that encumber the Expansion
Assets financed with the proceeds of such Expansion Debt and other Expansion    
Assets owned by the Person incurring such Expansion Debt (including any rights  
of such Person under Shared Facilities Arrangements), (ii) Liens to secure      
Expansion Debt that encumber the Capital Stock of CalGen Expansion Company;     
provided, that any such Capital Stock must be part of the Collateral and any    
such Liens must be junior to all Liens securing Secured Obligations in          
accordance with the terms of the Collateral Trust Agreement, including an       
agreement by the holders of such Liens not to exercise any remedies with respect
to such Collateral, and a provision to the effect that the holders of such Liens
will not be entitled to the proceeds of such Collateral upon a sale thereof, in 
each case until the Secured Obligations Termination Date; and (iii) if such     
Expansion Assets are not Excluded Assets and are part of the Collateral, Liens  
to secure Expansion Debt on the other property and assets of such Person;       
provided, that any such Liens must be junior to all Liens securing Secured      
Obligations in accordance with the terms of the Collateral Trust Agreement,     
including an agreement by the holders of such Liens not to exercise any remedies
with respect to such Collateral, and a provision to the effect that the holders 
of such Liens will not be entitled to the proceeds of such Collateral upon a    
sale thereof, in each case until the Secured Obligations Termination Date;      

   (h)      obligations under Shared Facilities Arrangements, to the
extent such obligations constitute Liens, and Liens on Shared Facilities        
securing the Borrower's or the applicable Subsidiary's obligations under Shared 
Facilities Arrangements;                                                        

      (i)      Liens which constitute bankers' liens, rights of set-off or
similar rights and remedies as to deposit accounts or other funds maintained    
with any bank or other financial institution, whether arising by operation of   
law or pursuant to contract;                                                    

(j)      Liens existing on the Closing Date;                  

34

EX-10.2.4
41st Page of 171
TOC
1st
Previous
Next
↓Bottom
Just 41st
         (k)      Liens for taxes, assessments or governmental charges or claims
that are not yet delinquent or that are being contested in good faith by        
appropriate proceedings promptly instituted and diligently concluded, provided, 
that any reserve or other appropriate provision as is required in conformity    
with GAAP has been made therefor;                                               

   (l)      Liens imposed by law, such as carriers', warehousemen's,
landlord's and mechanics' Liens, in each case, incurred in the ordinary course  
of business; or Liens arising out of judgments that do not constitute a Default 
or an Event of Default;                                                         

        (m)      survey exceptions, easements or reservations of, or rights of
others for, licenses, rights-of-way, sewers, electric lines, telegraph and      
telephone lines and other similar purposes, or zoning or other restrictions as  
to the use of real property or Liens incidental to the conduct of the business  
of such Person or to the ownership of its properties that were not incurred in  
connection with Indebtedness and that do not in the aggregate materially        
adversely affect the value of said properties or materially impair their use in 
the operation of the business of such Person;                                   

 (n)      Liens to secure any Permitted Refinancing Indebtedness
permitted to be incurred under this Agreement; provided, however, that:         

                (i)      the new Lien shall be limited to all or part of the
        same property and assets that secured the original Lien (plus repairs,
improvements and additions to such property or assets); and   

            (ii)     the Indebtedness secured by the new Lien is not
     increased to any amount greater than the sum of (A) the outstanding
     principal amount or, if greater, committed amount, of the Permitted
      Refinancing Indebtedness and (B) an amount necessary to pay any fees
 and expenses, including premiums, related to such Indebtedness;

    (o)      Liens not in respect of Indebtedness arising from Uniform
Commercial Code financing statements for informational purposes with respect to 
operating leases incurred in the ordinary course of business and not otherwise  
prohibited by this Agreement;                                                   

 (p)      Liens not in respect of Indebtedness consisting of the
interest of the lessor under any operating lease entered into in the ordinary   
course of business and not otherwise prohibited by this Agreement;              

(q)      Permitted Counterparty Liens;                        

        (r)      to the extent constituting Liens, obligations of the Borrower
or its Subsidiaries under or restrictions imposed by any PPA Recognition        
Agreement;                                                                      

       (s)      Liens on property and assets of the Borrower to secure Third
Party Subordinated Indebtedness; provided, that all such property and assets    
must be part of the Collateral and any such Liens must be junior to all Liens   
securing Secured Obligations in accordance with the terms of the Collateral     
Trust Agreement, including an agreement by the holders of such Liens not to     
exercise any remedies with respect to the Collateral, and a provision to the    
effect that the holders of such Liens will not be entitled to the proceeds of   
any Collateral upon a sale thereof, in each case until the Secured Obligations  
Termination Date;                                                               

35

EX-10.2.4
42nd Page of 171
TOC
1st
Previous
Next
↓Bottom
Just 42nd
    (t)      unperfected security interests to secure (i) intercompany
Indebtedness permitted to be incurred under Section 5.06(b)(v) or (ii) Affiliate
Subordinated Indebtedness permitted to be incurred under Section 5.06(b)(ix);   
and                                                                             

   (u)      Liens incurred in the ordinary course of business of the
Borrower or any Subsidiary of the Borrower with respect to obligations that do  
not exceed $50,000,000 at any one time outstanding.                             

    "Permitted Refinancing Indebtedness" means any Indebtedness of the
Borrower or any of its Subsidiaries issued in exchange for, or the net proceeds 
of which are used to extend, refinance, renew, replace, defease or refund other 
Indebtedness of the Borrower or any of its Subsidiaries (other than intercompany
Indebtedness); provided, that:                                                  

        (a)      the principal amount (or accreted value, if
        applicable) of such Permitted Refinancing Indebtedness does not exceed
the principal amount (or accreted value, if applicable) of the
   Indebtedness extended, refinanced, renewed, replaced, defeased or
        refunded (plus all accrued interest on the Indebtedness and the amount
      of all fees and expenses, including premiums, incurred in connection
therewith);                                                   

                (b)      such Permitted Refinancing Indebtedness has a final
         maturity date later than the final maturity date of, and has a Weighted
        Average Life to Maturity equal to or greater than the Weighted Average
   Life to Maturity of, the Indebtedness being extended, refinanced,
renewed, replaced, defeased or refunded;                      

            (c)      if the Indebtedness being extended, refinanced,
     renewed, replaced, defeased or refunded is subordinated in right of
     payment to the First Priority Term Loan Obligations, such Permitted
         Refinancing Indebtedness has a final maturity date later than the final
         maturity date of, and is subordinated in right of payment to, the First
      Priority Term Loan Obligations on terms at least as favorable to the
        holders of the First Priority Term Loan Obligations as those contained
 in the documentation governing the Indebtedness being extended,
refinanced, renewed, replaced, defeased or refunded; and      

                 (d)      such Indebtedness is incurred either by the Borrower
   or by the Subsidiary who is the obligor on the Indebtedness being
extended, refinanced, renewed, replaced, defeased or refunded.

         "Permitted Tax Payments" means without duplication as to amounts and as
long as the Borrower is a pass-through entity for U.S. federal income tax       
purposes, payments to Calpine in an amount equal to the federal, state, local   
and foreign taxes (including any penalties and interest) that the Borrower would
owe if the Borrower were a corporation for U.S. federal income tax purposes     
filing a consolidated or combined return with its Subsidiaries.                 

"Perpetual Preferred Stock" means, with respect to any Person,
preferred Capital Stock of such Person that is not subject to mandatory         
redemption and is not Voting Stock.                                             

36

EX-10.2.4
43rd Page of 171
TOC
1st
Previous
Next
↓Bottom
Just 43rd
         "Person" means any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, unincorporated organization, limited   
liability company or government or other entity.                                

"PPA" means an agreement (including a tolling agreement, fuel 
conversion services agreement or other similar agreement) entered into by the   
Borrower or any of its Subsidiaries for the sale of capacity or energy (and     
services ancillary or related thereto) from one or more of the Facilities.      

         "PPA Recognition Agreement" means an agreement by the Collateral Agent,
on behalf of the holders of Secured Obligations, (a) to assume the rights and   
obligations of the Borrower or any of its Subsidiaries under the WECC Fixed     
Price Gas Sale and Power Purchase Agreement in the event of a foreclosure under 
any Financing Documents and (b) not to reject the WECC Fixed Price Gas Sale and 
Power Purchase Agreement in a Bankruptcy Case (subject to applicable law and the
discretion of the bankruptcy court) so long as CES is not then in default under 
WECC Fixed Price Gas Sale and Power Purchase Agreement or the Index Based Gas   
Sale and Power Purchase Agreement, provided that such Recognition Agreement is  
substantially in the form attached as an exhibit to the Collateral Trust        
Agreement.                                                                      

        "preferred stock" means, with respect to any Person, any Capital Stock
of such Person, however designated, which entitles the holder thereof to a      
preference with respect to dividends, distributions or liquidation proceeds of  
such Person over the holders of the other Capital Stock issued by such Person.  

       "Prime Rate" means the prime lending rate published from time to time
in the eastern edition of the Wall Street Journal. The Prime Rate is a reference
rate and does not necessarily represent the lowest or best rate actually charged
by the Administrative Agent or any Lender to any customer. The Administrative   
Agent or any Lender may make commercial loans or other loans at rates of        
interest at, above or below the Prime Rate.                                     

        "Principal Office" means, for the Administrative Agent, its "Principal
Office" as set forth on Appendix B, or such other office as the Administrative  
Agent (or any permitted successor or thereof) may from time to time designate in
writing to the Borrower, the Collateral Agent and each Lender.                  

         "Pro Forma" means, with respect to a calculation, that such calculation
is made in accordance with Regulation S-X under the Securities Act and gives    
effect to all relevant modifications to Major Project Documents and other       
contractual arrangements that have been made prior to, or are being made on, the
calculation date and, in the case of a calculation for any period commencing    
prior to the Closing Date, all Major Project Documents and other contractual    
arrangements in effect on the Closing Date shall be deemed to have been in      
effect for the entirety of such period.                                         

        "Pro Rata Share" means, with respect to the Second Priority Term Loans
of any Lender, the percentage set forth after such Lender's name on Appendix A  
(as the same may be updated or adjusted from time to time to reflect any        
assignments made by any Lender hereunder).                                      

    "Projections" is defined in Section 3.19 (Delivery of Financials).

37

EX-10.2.4
44th Page of 171
TOC
1st
Previous
Next
↓Bottom
Just 44th
  "PUHCA" means the Public Utility Holding Company Act of 1935, as
amended.                                                                        

"PURPA" is defined in Section 4.18 (Governmental Regulation). 

    "Purchase Agreement" means the Purchase Agreement, dated March 12,
2004, among the Borrower, CalGen Finance, the Guarantors and Morgan Stanley &   
Co. Incorporated as the initial purchaser.                                      

      "QF" means a "qualifying cogeneration facility" as defined under the
FPA, as amended by PURPA and Subpart B of Part 292 of the FERC's regulations.   

       "Register" is defined in Section 2.04(b)(Evidence of Debt; Register).

"Registration Rights Agreement" means the Registration Rights 
Agreement, dated as of the date hereof, among the Borrower, CalGen Finance, the 
First Priority Indenture Trustee, the Second Priority Indenture Trustee, the    
Third Priority Indenture Trustee, and the other Persons from time to time party 
thereto.                                                                        

    "Regulation D" means Regulation D of the Board of Governors of the
Federal Reserve System, as in effect from time to time.                         

    "Regulation T" means Regulation T of the Board of Governors of the
Federal Reserve System, as in effect from time to time.                         

    "Regulation U" means Regulation U of the Board of Governors of the
Federal Reserve System, as in effect from time to time.                         

    "Regulation X" means Regulation X of the Board of Governors of the
Federal Reserve System, as in effect from time to time.                         

        "Related Fund" means, with respect to any Lender that is an investment
fund, any other investment fund that invests in commercial loans similar to the 
Second Priority Term Loans and that is managed or advised by the same investment
advisor as such Lender or by an Affiliate of such investment advisor.           

  "Repayment Date" is defined in Section 2.11 (Mandatory Repayment
Offers).                                                                        

         "Replacement Lender" is defined in Section 2.17 (Removal or Replacement
of a Lender).                                                                   

        "Requisite Lenders" means one or more Lenders holding more than 50% of
the sum of the aggregate outstanding Second Priority Term Loans (or, at any time
prior to the funding of the Second Priority Term Loans, the Second Priority Term
Loan Commitments). For this purpose only, Second Priority Term Loans registered 
in the name of, or beneficially owned by, the Borrower or any Affiliate of the  
Borrower shall be deemed not to be outstanding.                                 

     "Restricted Investments" means an Investment other than a Permitted
Investment.                                                                     

        "Restricted Payment" is defined in Section 5.04 (Restricted Payments).

38

EX-10.2.4
45th Page of 171
TOC
1st
Previous
Next
↓Bottom
Just 45th
         "Revenue Account" means account number A/C 65572-1 (short title: CALGEN
REV A/C SUB SEC INT of WTC AS CA) in the name of the Borrower maintained at     
Wilmington Trust Company and any successor account or accounts.                 

    "Revolver Administrative Agent" is defined in the Recitals hereto.

"Revolving Loan Agreement" is defined in the Recitals hereto. 

    "Revolving Loan Documents" means the Revolving Loan Agreement, any
letters of credit issued thereunder, the Security Documents which relate to the 
Revolving Loan Obligations and all other agreements related thereto.            

       "Revolving Loan Guarantee" means the Guarantee made by each Guarantor
of the Borrower's obligations under the Revolving Loan Agreement.               

      "Revolving Loan Obligations" means the Revolving Loans and all other
Obligations related thereto under the Revolving Loan Documents.                 

"Revolving Loans" is defined in the Recitals hereto.          

"R.W. Beck" means R.W. Beck, Inc.                             

"S&P" means Standard & Poor's Ratings Group.                  

    "Second Priority Debt Representative" is defined in the Collateral
Trust Agreement.                                                                

"Second Priority Indenture" is defined in the Recitals hereto.

        "Second Priority Indenture Trustee" is defined in the Recitals hereto.

    "Second Priority Lien" means a Lien granted by the Borrower or any
Guarantor under a Security Document to the Collateral Agent upon any assets or  
property of the Borrower or any Guarantor to secure Second Priority Lien        
Obligations.                                                                    

    "Second Priority Lien Cap" means as of any date, (a) the principal
amount of Second Priority Notes, plus (b) the principal amount of all           
Indebtedness outstanding under this Agreement on the Closing Date, plus the     
Indebtedness outstanding under any other Credit Facility, all in an aggregate   
principal amount not to exceed the amount provided for in Section 5.06(b)(i)(B),
less (c) the amount of Third Priority Lien Debt incurred after the Closing Date 
the net proceeds of which are used to repay Second Priority Lien Debt, plus (d) 
the amount of accrued interest, fees and expenses, including premiums, paid in  
connection with the incurrence of any Permitted Refinancing Indebtedness with   
respect to the Indebtedness described in clauses (a) and (b), plus (e) the      
notional amount of Hedging Obligations incurred to hedge or manage interest rate
risk with respect to other Second Priority Lien Debt having an aggregate        
notional amount not to exceed, together with the aggregate notional amount of   
any outstanding Hedging Obligations constituting First Priority Lien Debt,      
$500,000,000. For purposes of this definition of Second Priority Lien Cap, all  
letters of credit will be valued at the face amount thereof, whether or not     
drawn.                                                                          

39

EX-10.2.4
46th Page of 171
TOC
1st
Previous
Next
↓Bottom
Just 46th
 "Second Priority Lien Debt" means, collectively, (a) the Second
Priority Notes, (b) the Indebtedness under this Agreement, (c) Hedging          
Obligations incurred to hedge or manage interest rate risk with respect to other
Second Priority Lien Debt having an aggregate notional amount not to exceed,    
together with the aggregate notional amount of any outstanding Hedging          
Obligations constituting First Priority Lien Debt, $500,000,000, (d)            
Indebtedness under any other Credit Facility that is secured by a Second        
Priority Lien, and (e) any other Indebtedness the net proceeds of which are used
to refund, refinance, replace, defease, discharge or otherwise acquire or retire
any other Second Priority Lien Debt or any First Priority Lien Debt; provided,  
however, in the case of clauses (c), (d) or (e) of this definition, such        
Indebtedness shall constitute Second Priority Lien Debt only if (i) such        
Indebtedness was permitted to be incurred and so secured under each applicable  
Financing Document (or the lenders under such Indebtedness obtained an Officer's
Certificate of the Borrower at the time of incurrence to the effect that such   
Indebtedness was permitted to be incurred and so secured under each applicable  
Financing Document), (ii) on or before the date on which such Indebtedness is   
incurred by the Borrower or the applicable Subsidiary, such Indebtedness is     
designated by the Borrower, in an Officer's Certificate delivered to each Second
Priority Debt Representative and the Collateral Agent, as Second Priority Lien  
Debt for the purposes of the Collateral Trust Agreement and the other Second    
Priority Lien Documents; (iii) such Indebtedness is governed by an agreement    
that includes a Sharing Confirmation, a Lien Priority Confirmation, and an      
agreement by the applicable Second Priority Debt Representative to vote with    
respect to such Indebtedness as described in the Collateral Trust Agreement; and
(iv) all requirements set forth in the Collateral Trust Agreement as to the     
confirmation, grant or perfection of the Collateral Agent's Liens to secure such
Indebtedness or Obligations in respect thereof are satisfied (and the           
satisfaction of such requirements will be conclusively established if the       
Borrower delivers to the Collateral Agent an Officer's Certificate stating that 
such requirements have been satisfied and that such Indebtedness is Second      
Priority Lien Debt).                                                            

   "Second Priority Lien Documents" means this Agreement, the Second
Priority Notes, the Guarantees related thereto, the Second Priority Indenture,  
each agreement relating to any other series of Second Priority Lien Debt and all
other agreements governing, securing or relating to any Second Priority Lien    
Obligations.                                                                    

        "Second Priority Lien Obligations" means the Second Priority Lien Debt
and all other Obligations in respect of Second Priority Lien Debt.              

"Second Priority Notes" is defined in the Recitals hereto.    

        "Second Priority Secured Parties" shall mean the holders of the Second
Priority Lien Obligations (including the holders of the Second Priority Notes,  
the Administrative Agent and the Lenders).                                      

         "Second Priority Term Loan Commitment" means the commitment of a Lender
to make or otherwise fund a Second Priority Term Loan and "Second Priority Term 
Loan Commitments" means such commitments of all Lenders in the aggregate. The   
aggregate amount of the Second Priority Term Loan Commitments as of the Closing 
Date is $100,000,000.                                                           

40

EX-10.2.4
47th Page of 171
TOC
1st
Previous
Next
↓Bottom
Just 47th
      "Second Priority Term Loan Documents" means this Agreement and any
security documents which relate to any of the Second Priority Term Loan         
Obligations and all other agreements related thereto.                           

    "Second Priority Term Loan Guarantees" means the Guarantees by the
Guarantors of the Borrower's and the other Guarantors' obligations with respect 
to Second Priority Term Loan Obligations under this Agreement, as set forth in  
Article XI hereof.                                                              

         "Second Priority Term Loan Note" means a promissory note in the form of
Exhibit F, evidencing a Second Priority Term Loan.                              

        "Second Priority Term Loan Obligations" means the Second Priority Term
Loans and all other Obligations related thereto under the Second Priority Term  
Loan Documents.                                                                 

        "Second Priority Term Loan Secured Obligations Termination Date" means
the date on which all Second Priority Term Loan Obligations (including all      
interest accrued thereon after the commencement of any bankruptcy, insolvency or
liquidation proceeding at the rate, including any applicable post-default rate, 
specified in the Second Priority Term Loan Documents even if such interest is   
not enforceable, allowable or allowed as a claim in such proceeding) have been  
paid in full in cash and all commitments to extend credit hereunder have been   
terminated.                                                                     

      "Second Priority Term Loan Secured Parties" means the Administrative
Agent, the Collateral Agent and the Lenders.                                    

 "Second Priority Term Loans" is defined in the Recitals hereto.

      "Secured Debt" means, collectively, First Priority Lien Debt, Second
Priority Lien Debt and Third Priority Lien Debt.                                

"Secured Obligations" means, collectively, First Priority Lien
Obligations, Second Priority Lien Obligations and Third Priority Lien           
Obligations.                                                                    

    "Secured Obligations Termination Date" means the date on which all
Secured Obligations (including all interest accrued thereon after the           
commencement of any bankruptcy, insolvency or liquidation proceeding at the     
rate, including any applicable post-default rate, specified in the First        
Priority Lien Documents, Second Priority Lien Documents or Third Priority Lien  
Documents, as applicable, even if such interest is not enforceable, allowable or
allowed as a claim in such proceeding) have been paid in full in cash (and/or   
defeased in accordance with the applicable Financing Documents), all commitments
to extend credit under all Financing Documents have terminated or expired and   
all outstanding letters of credit issued pursuant to any Financing Documents    
have been cancelled, terminated or cash collateralized at 102.5% of the         
aggregate undrawn amount.                                                       

        "Secured Parties" means the First Priority Secured Parties, the Second
Priority Secured Parties and the Third Priority Secured Parties.                

"Securities Act" means the Securities Act of 1933, as amended.

41

EX-10.2.4
48th Page of 171
TOC
1st
Previous
Next
↓Bottom
Just 48th
   "Security Documents" means the Collateral Trust Agreement and all
security agreements, pledge agreements, collateral assignments, mortgages,      
collateral agency agreements, control agreements, deeds of trust or other grants
or transfers for security executed and delivered by Holdings, the Borrower or   
any Guarantor creating (or purporting to create) a Lien upon Collateral in favor
of the Collateral Agent with respect to the Second Priority Term Loan           
Obligations.                                                                    

"SEC" means the Securities and Exchange Commission.           

    "SERC" means the Southeastern Electric Reliability Council and any
successor organization.                                                         

      "Shared Facilities" means equipment, facilities, pipelines, permits,
real estate rights, entitlements or other property that are shared or jointly   
used, owned or operated by the Borrower or any of its Subsidiaries and any owner
of Expansion Assets.                                                            

         "Shared Facilities Arrangement" means any arrangement that provides for
the sharing, joint operation or use, common ownership, leasing or contingent use
of Shared Facilities between the Borrower or any of its Subsidiaries and any    
owner of Expansion Assets or Toll Party (as defined below), and/or their        
respective lenders, including (a) agreements for the sharing or joint use or    
operation of Shared Facilities, (b) ownership of undivided interests in Shared  
Facilities as tenants in common or other similar forms of joint ownership, (c)  
leasing of Shared Facilities by the Borrower or any of its Subsidiaries to an   
owner of Expansion Assets, (d) ownership of Shared Facilities by a single       
purpose entity formed solely to own the Shared Facilities and owned by the      
Borrower or any of its Subsidiaries or jointly owned by the Borrower or any of  
its Subsidiaries and the owner of the Expansion Assets, (e) tolling agreements  
between the Borrower or any of its Subsidiaries and any other Person (the "Toll 
Party") with respect to a Facility's steam turbine, (f) granting of conditional 
or unconditional real estate rights for the construction, installation or use of
Shared Facilities, (g) Liens on the Shared Facilities or interests therein to   
secure any such arrangement; provided, that the Borrower shall deliver to the   
Collateral Agent an Officer's Certificate to the effect that, and, with respect 
to items (c) and (d) below, a nationally-recognized independent engineer will   
deliver a report concluding that (subject to customary assumptions and          
qualifications):                                                                

             (a)      the ownership, operation, leasing or use of such
       Shared Facilities by the owner of Expansion Assets (including the use
       of the steam turbine by the Toll Party) cannot unreasonably interfere
    with or otherwise materially adversely affect the operation of the
Facility;                                                     

                 (b)      the owner of the Facility (or another entity on such
        owner's behalf) continues to operate and maintain the Facility and the
Shared Facilities;                                            

              (c)      the costs of operating and maintaining the Shared
         Facilities are shared by the owner of the Facility and the owner of the
    Expansion Assets or the Toll Party, as applicable, on an equitable
basis;                                                        

42

EX-10.2.4
49th Page of 171
TOC
1st
Previous
Next
↓Bottom
Just 49th
               (d)      the Shared Facilities and the entitlements related
 thereto are sufficient to fully serve both the Facility and the
      Expansion Assets or the Toll Party, as applicable, or, to the extent
the Shared Facilities or the entitlements related thereto are 
        insufficient to fully serve both the Facility and the Expansion Assets
        or the Toll Party, as applicable, the Facility will have priority with
   respect to such Shared Facilities or entitlements, so long as the
      Facility is operated within the requirements, operating restrictions
 and other limitations associated with such Shared Facilities or
entitlements;                                                 

                  (e)      the holder of the Expansion Assets or the Toll Party,
     as applicable, will not have any rights with respect to the sale or
    other disposition of, or exercise of remedies with respect to, the
         Facility, so long as the Shared Facilities remain subject to the Shared
Facilities Arrangements;                                      

                  (f)      each party waives the defense that an adequate remedy
         exists at law and affords the other party (and its lenders or agents on
behalf of such lenders) the right to specifically enforce the 
agreement; and                                                

                 (g)      the owner of the Expansion Assets or the Toll Party,
     as applicable, cannot prevent a dismantling of the Facility and the
        receipt by the holders of the Secured Debt of the proceeds of the sale
     thereof, so long as (i) such owner or Toll Party, as applicable, is
        given an option to purchase the Shared Facilities at their Fair Market
Value, as determined by appraisal, prior to dismantling of the
    Facility, (ii) such owner or Toll Party, as applicable, is given a
      right of first refusal to acquire the Shared Facilities in the event
     they are offered for sale in connection with the dismantling of the
         Facility, and (iii) the owner of the Facility cooperates with the owner
of the Expansion Assets or the Toll Party, as applicable, in  
       accommodating the continued use and operation of the Expansion Assets
     and the Shared Facilities to the maximum extent reasonably possible
      notwithstanding the dismantling of the Facility, including providing
   reasonable periods for and cooperating in the modification of the
Shared Facilities.                                            

       "Sharing Confirmation" means, as the context requires, First Priority
Debt Sharing Confirmation, Second Priority Debt Sharing Confirmation or Third   
Priority Debt Sharing Confirmation, in each case as defined in the Collateral   
Trust Agreement.                                                                

"Significant Subsidiary" means any Subsidiary that would be a 
"significant subsidiary" as defined in Article 1, Rule 1-02 of Regulation S-X,  
promulgated pursuant to the Securities Act, as such Regulation is in effect on  
the date hereof.                                                                

"Sole Lead Arranger" means MSSF.                              

         "Stated Maturity" means, with respect to any installment of interest or
principal on any Indebtedness, the date on which the payment of interest or     
principal was scheduled to be paid in the documentation governing such          
Indebtedness as of the Closing Date, and will not include any contingent        
obligations to repay, redeem or repurchase any such interest or principal prior 
to the date originally scheduled for the payment thereof.                       

"Subordinated Indebtedness" means any Affiliate Subordinated  
Indebtedness, Working Capital Facility Indebtedness or Third Party Subordinated 
Indebtedness.                                                                   

43

EX-10.2.4
50th Page of 171
TOC
1st
Previous
Next
↓Bottom
Just 50th
"Subsidiary" means, with respect to any specified Person,     

                  (a)      any corporation, association or other business entity
       of which more than 50% of the total voting power of shares of Capital
         Stock entitled (without regard to the occurrence of any contingency and
        after giving effect to any voting agreement or stockholders' agreement
     that effectively transfers voting power) to vote in the election of
    directors, managers or trustees of the corporation, association or
       other business entity is at the time owned or controlled, directly or
        indirectly, by that Person or one or more of the other Subsidiaries of
that Person (or a combination thereof); and                   

                (b)      any partnership (i) the sole general partner or the
     managing general partner of which is such Person or a Subsidiary of
        such Person or (ii) the only general partners of which are that Person
or one or more Subsidiaries of that Person (or any combination
thereof).                                                     

   "Synthetic Lease Obligations" means all monetary obligations of a
Person under (a) a so-called synthetic, off-balance sheet or tax retention lease
or (b) an agreement for the use or possession of any property (whether real,    
personal or mixed) creating obligations which do not appear on the balance sheet
of such Person, but which, upon the insolvency or bankruptcy of such Person,    
would be characterized as Indebtedness of such Person (without regard to        
accounting treatment).                                                          

        "Tax" means any present or future tax, levy, impost, charge, deduction
or withholding of any nature and whatever called, by whomsoever, on whomsoever  
and wherever imposed, levied, collected, withheld or assessed by a taxing       
authority other than a "Tax on the overall net income" of any Person. A "Tax on 
the overall net income" of a Person shall be construed as a reference to a tax  
(including U.S. backup withholding taxes) imposed by the jurisdiction in which  
that Person is organized or in which that Person's applicable principal office  
(and/or, in the case of a Lender, its lending office) is located or in which    
that Person (and/or, in the case of a Lender, its lending office) is deemed to  
be doing business on all or part of the net income, profits or gains (whether   
worldwide, or only insofar as such income, profits or gains are considered to   
arise in or to relate to a particular jurisdiction, or otherwise) of that Person
(and/or, in the case of a Lender, its applicable lending office).               

        "Terminated Lender" is defined in Section 2.17 (Removal or Replacement
of a Lender).                                                                   

"Term Loan Agreements" is defined in the Recitals hereto.     

"Term Loans" is defined in the Recitals hereto.               

         "Third Party Project Documents" means the agreements listed on Schedule
A.                                                                              

      "Third Party Subordinated Indebtedness" means Indebtedness loaned to
the Borrower by a Person other than an Affiliate of the Borrower; provided, that
such Indebtedness (a) is contractually subordinated in right of payment to the  
First Priority Term Loans and all other Secured Obligations on the terms        
described in Exhibit A, including an agreement by the holders of such           
Indebtedness not to exercise any remedies until the Secured Obligations         
Termination Date, (b) does not provide for mandatory redemption or other        
redemption thereof until at least                                               

44

EX-10.2.4
51st Page of 171
TOC
1st
Previous
Next
↓Bottom
Just 51st
six months after final Stated Maturity of the First Priority Term Loans, (c)    
provides for payment of interest thereon in the form of cash or additional Third
Party Subordinated Indebtedness having a principal amount equal to the amount of
interest due (i.e., "pay-in-kind"), and (d) is otherwise in the form set forth  
in Exhibit A.                                                                   

         "Third Priority Debt Representative" is defined in the Collateral Trust
Agreement.                                                                      

      "Third Priority Fixed Rate Notes" is defined in the Recitals hereto.

         "Third Priority Floating Rate Notes" is defined in the Recitals hereto.

"Third Priority Indenture" is defined in the Recitals hereto. 

       "Third Priority Indenture Trustee" is defined in the Recitals hereto.

        "Third Priority Lien Debt" means, collectively, (a) the Third Priority
Floating Rate Notes and the Third Priority Fixed Rate Notes; (b) any other      
Indebtedness the net proceeds of which are used to refund, refinance, replace,  
defease, discharge or otherwise acquire or retire First Priority Lien Debt,     
Second Priority Lien Debt or other Third Priority Lien Debt; and (c) Hedging    
Obligations incurred to hedge or manage interest rate risk with respect to Third
Priority Lien Debt having a notional amount not to exceed the aggregate         
principal amount of outstanding Third Priority Lien Debt; provided, that, in the
case of any Indebtedness referred to in clause (b) or (c) of this definition:   

                  (i)      such Indebtedness was permitted to be incurred and so
        secured under each applicable Financing Document (or the lenders under
        such Indebtedness obtained an Officer's Certificate of the Borrower at
 the time of incurrence to the effect that such Indebtedness was
         permitted to be incurred and so secured under each applicable Financing
Document);                                                    

                (ii)     on or before the date on which such Indebtedness is
incurred by the Borrower or the applicable Subsidiary, such   
         Indebtedness is designated by the Borrower, in an Officer's Certificate
         delivered to each Third Priority Debt Representative and the Collateral
       Agent, as Third Priority Lien Debt for the purposes of the Collateral
Trust Agreement and the other Third Priority Lien Documents;  

               (iii)    such Indebtedness is governed by an agreement that
      includes a Sharing Confirmation, a Lien Priority Confirmation and an
       agreement by the holder of such Indebtedness and the applicable Third
        Priority Debt Representative to vote with respect to such Indebtedness
as described in the Collateral Trust Agreement; and           

               (iv)     all requirements set forth in the Collateral Trust
         Agreement as to the confirmation, grant or perfection of the Collateral
     Agent's Liens to secure such Indebtedness or Obligations in respect
       thereof are satisfied (and the satisfaction of such requirements will
        be conclusively established if the Borrower delivers to the Collateral
         Agent an Officer's Certificate stating that such requirements have been
    satisfied and that such Indebtedness is Third Priority Lien Debt).

45

EX-10.2.4
52nd Page of 171
TOC
1st
Previous
Next
↓Bottom
Just 52nd
        "Third Priority Lien Documents" means the Third Priority Floating Rate
Notes and the Third Priority Fixed Rate Notes, the Guarantees related thereto,  
the Third Priority Indenture, each agreement governing any other series of Third
Priority Lien Debt and all other agreements governing, securing or relating to  
any Third Priority Lien Obligations.                                            

      "Third Priority Lien Obligations" means the Third Priority Lien Debt
and all other Obligations in respect of Third Priority Lien Debt.               

      "Third Priority Secured Parties" shall mean the holders of the Third
Priority Lien Obligations (including the holders of the Third Priority Fixed    
Rate Notes and the holders of the Third Priority Floating Rate Notes).          

"Title Company" means Stewart Title Guaranty Company.         

"TPUC" is defined in Section 4.18(d).                         

        "Type of Loan" means, with respect to any Second Priority Term Loan, a
Base Rate Loan or a LIBOR Rate Loan.                                            

"U.S." means the United States of America.                    

       "UCC" means the Uniform Commercial Code (or any similar or equivalent
legislation) as in effect in any applicable jurisdiction.                       

        "Voting Stock" of any Person as of any date means the Capital Stock of
such Person that is at the time entitled to vote in the election of the Board of
Directors of such Person.                                                       

   "WECC" means the Western Electricity Coordinating Council and any
successor organization.                                                         

     "WECC Fixed Price Gas Sale and Power Purchase Agreement" means that
certain WECC Fixed Price Gas Sale and Power Purchase Agreement, dated as of the 
date hereof, among the Borrower, certain Facility Owners and CES.               

"Weighted Average Life to Maturity" means, when applied to any
Indebtedness at any date, the number of years obtained by dividing:             

                (a)      the sum of the products obtained by multiplying (a)
     the amount of each then remaining installment, sinking fund, serial
        maturity or other required payments of principal, including payment at
      final maturity, in respect of the Indebtedness, by (b) the number of
        years (calculated to the nearest one-twelfth) that will elapse between
such date and the making of such payment; by                  

          (b)      the then outstanding principal amount of such
Indebtedness.                                                 

         "Wholly Owned Subsidiary" of any specified Person means a Subsidiary of
such Person all of the outstanding Capital Stock or other ownership interests of
which (other than directors'                                                    

46

EX-10.2.4
53rd Page of 171
TOC
1st
Previous
Next
↓Bottom
Just 53rd
qualifying shares) will at the time be owned by such Person or by one or more   
Wholly Owned Subsidiaries of such Person.                                       

         "Working Capital Facility" means that certain Working Capital Facility,
dated as of the date hereof, among the Borrower, Holdings and Calpine.          

        "Working Capital Facility Indebtedness" means Indebtedness incurred by
the Borrower under the Working Capital Facility; provided, that such            
Indebtedness (a) is contractually subordinated in right of payment and in all   
other respects to the Second Priority Term Loans and all other Secured          
Obligations on the terms described in Exhibit A including an agreement by the   
holders of such Indebtedness not to exercise any remedies until the Secured     
Obligations Termination Date, (b) does not provide for mandatory redemption     
thereof until at least six months after the Maturity Date, (c) provides for     
payment of interest thereon in the form of cash or by capitalizing the interest 
to principal, and (d) is otherwise in the form set forth in Exhibit A.          

SECTION 1.02. Rules of Construction.                                            

Unless the context otherwise requires:                        

   (a)      An accounting term not otherwise defined has the meaning
assigned to it in accordance with GAAP.                                         

     (b)      Any of the terms used or defined herein may be used in the
singular or the plural, depending on the reference.                             

        (c)      Except as expressly provided in any Second Priority Term Loan
Document, any reference to any agreement or instrument shall be deemed to       
include a reference to such agreement or instrument as assigned, amended,       
amended and restated, supplemented, otherwise modified from time to time or     
replaced in accordance with the terms of this Agreement.                        

       (d)      The use in this Agreement or any of the Second Priority Term
Loan Documents of the word "include" or "including," when following any general 
statement, term or matter, shall not be construed to limit such statement, term 
or matter to the specific items or matters set forth immediately following such 
word or to similar items or matters, whether or not nonlimiting language (such  
as "without limitation" or "but not limited to" or words of similar import) is  
used with reference thereto, but rather shall be deemed to refer to all other   
items or matters that fall within the broadest possible scope of such general   
statement, term or matter. The word "will" shall be construed to have the same  
meaning and effect as the word "shall."                                         

         (e)      References to "Articles", "Sections" and "clauses" shall be to
Articles, Sections and clauses, respectively, of this Agreement unless otherwise
specifically provided.                                                          

       (f)      References to "Exhibits", "Appendices" and "Schedules" shall
be to Exhibits, Appendices and Schedules, respectively, to this Agreement unless
otherwise specifically provided.                                                

47

EX-10.2.4
54th Page of 171
TOC
1st
Previous
Next
↓Bottom
Just 54th
         (g)      The use in this Agreement of the words "herein," "hereof," and
"hereunder," and words of similar import, shall be construed to refer to this   
Agreement in its entirety and not to any particular provision hereof.           

        (h)      This Agreement, the other Second Priority Term Loan Documents
and any documents or instruments delivered pursuant hereto or thereto shall be  
construed without regard to the identity of the party who drafted the various   
provisions of the same. Each and every provision of this Agreement, the other   
Second Priority Term Loan Documents and instruments and documents entered into  
and delivered in connection therewith shall be construed as though the parties  
participated equally in the drafting of the same. Consequently, each of the     
parties acknowledges and agrees that any rule of construction that a document is
to be construed against the drafting party shall not be applicable either to    
this Agreement or the other Second Priority Term Loan Documents and instruments 
and documents entered into and delivered in connection therewith.               

ARTICLE II. 

THE SECOND PRIORITY TERM LOANS

SECTION 2.01. Second Priority Term Loans.                                       

      (a)      Second Priority Term Loan Commitments. Subject to the terms
and conditions hereof, each Lender severally agrees to make, on the Closing     
Date, a Second Priority Term Loan to the Borrower in an amount equal to 98.50%  
of such Lender's Second Priority Term Loan Commitment (it being acknowledged and
agreed that each Lender is funding its Second Priority Term Loan at a discount  
of 1.50% of the principal amount thereof). The Borrower may make only one       
borrowing under the Second Priority Term Loan Commitment, which shall be on the 
Closing Date. Any amount borrowed under this Section and subsequently repaid or 
prepaid may not be reborrowed. All amounts owed hereunder with respect to the   
Second Priority Term Loans shall be paid in full no later than the Maturity     
Date. Each Lender's Second Priority Term Loan Commitment shall terminate        
immediately and without further action upon the funding by such Lender of its   
Second Priority Term Loan Commitment.                                           

(b)      Borrowing Mechanics for Second Priority Term Loans.  

               (i)      On or before the date which is three Business Days
prior to the Closing Date, the Borrower shall deliver to the  
     Administrative Agent a fully executed Funding Notice, which Funding
        Notice shall be in the form of Exhibit E. Promptly upon receipt by the
       Administrative Agent of such Funding Notice, the Administrative Agent
shall notify each Lender of the proposed borrowing.           

                  (ii)     Each Lender shall make each Second Priority Term Loan
      to be made by it hereunder available to the Administrative Agent not
         later than 12:00 noon (New York City time) on the Closing Date, by wire
      transfer of same day funds in Dollars, at the Principal Office. Upon
         satisfaction or waiver of the conditions precedent specified in Article
      III and subject to Section 2.02(b) (Pro Rata Shares; Availability of
       Funds) below, the Administrative Agent shall make the proceeds of the
Second Priority Term Loans                                    

48

EX-10.2.4
55th Page of 171
TOC
1st
Previous
Next
↓Bottom
Just 55th
       available to the Borrower on the Closing Date by causing an amount of
    same day funds in Dollars equal to the proceeds of all such Second
   Priority Term Loans received by the Administrative Agent from the
        Lenders to be credited to one or more accounts as may be designated in
writing to the Administrative Agent by the Borrower.          

SECTION 2.02. Amount of Second Priority Term Loans; Availability of Funds.      

         (a)      Amount of Second Priority Term Loans. All Second Priority Term
Loans shall be made by the Lenders simultaneously in the amount of their        
respective Second Priority Term Loan Commitments, it being understood that no   
Lender shall be responsible for any default by any other Lender in such other   
Lender's obligation to make a Second Priority Term Loan hereunder nor shall any 
Second Priority Term Loan Commitment of any Lender be increased or decreased as 
a result of a default by any other Lender in such other Lender's obligation to  
make a Second Priority Term Loan hereunder.                                     

       (b)      Availability of Funds. Unless the Administrative Agent shall
have been notified by any Lender prior to the Closing Date that such Lender does
not intend to make available to the Administrative Agent the amount of such     
Lender's Second Priority Term Loan, the Administrative Agent may assume that    
such Lender has made and will make such amount available to the Administrative  
Agent on the Closing Date and the Administrative Agent may, in its sole         
discretion, but shall not be obligated to, make available to the Borrower a     
corresponding amount on the Closing Date. If such corresponding amount is not in
fact made available to the Administrative Agent by such Lender, the             
Administrative Agent shall be entitled to recover such corresponding amount on  
demand from such Lender together with interest thereon, for each day from the   
Closing Date until the date such amount is paid to the Administrative Agent, at 
the customary rate set by the Administrative Agent for the correction of errors 
among banks for three Business Days and thereafter at the Base Rate. If such    
Lender does not pay such corresponding amount forthwith upon the Administrative 
Agent's demand therefor, the Administrative Agent shall promptly notify the     
Borrower and the Borrower shall immediately pay such corresponding amount to the
Administrative Agent together with interest thereon, for each day from the      
Closing Date until the date such amount is paid to the Administrative Agent, at 
the rate payable hereunder for Second Priority Term Loans. Nothing in this      
Section 2.02(b) shall be deemed to relieve any Lender from its obligation to    
fulfill its Second Priority Term Loan Commitments hereunder or to prejudice any 
rights that the Borrower may have against any Lender as a result of any default 
by such Lender hereunder.                                                       

SECTION 2.03. Use of Proceeds. The proceeds of the Second Priority Term Loans   
shall be applied (together with the net proceeds from the making of the First   
Priority Term Loans and the issuance of the Notes) by the Borrower to prepay and
retire the Existing Senior Secured Credit Facility and to pay certain fees and  
expenses due under this Agreement and the other Financing Documents in          
connection therewith. No portion of the proceeds of any Second Priority Term    
Loans shall be used in any manner that causes or might cause the funding of the 
Second Priority Term Loans or the application of such proceeds to violate       
Regulation T, Regulation U or Regulation X or any other regulation of the Board 
of Governors of the Federal Reserve System or to violate the Exchange Act.      

SECTION 2.04.  Evidence of Debt; Register; Lenders' Books and Records; Notes.   

49

EX-10.2.4
56th Page of 171
TOC
1st
Previous
Next
↓Bottom
Just 56th
       (a)      Lenders' Evidence of Debt. Each Lender shall maintain on its
internal records an account or accounts evidencing the Indebtedness of the      
Borrower to such Lender, including the amounts of the Second Priority Term Loans
made by it and each repayment and prepayment in respect thereof. Any such       
recordation shall be conclusive and binding on the Borrower, absent manifest    
error; provided, that the failure to make any such recordation, or any error in 
such recordation, shall not affect the Borrower's Obligations in respect of any 
Second Priority Term Loan; and provided further, that in the event of any       
inconsistency between the Register and any Lender's records, the recordations in
the Register shall govern.                                                      

   (b)      Register. The Administrative Agent shall maintain at the
Principal Office a register for the recordation of the names and addresses of   
the Lenders and the Second Priority Term Loans made by each Lender from time to 
time (the "Register"). The Register shall be available for inspection by the    
Borrower or any Lender at any reasonable time and from time to time upon        
reasonable prior notice. The Administrative Agent shall record in the Register  
the Second Priority Term Loans, and each repayment or prepayment in respect of  
the principal amount of the Second Priority Term Loans, and any such recordation
shall be conclusive and binding on the Borrower and each Lender, absent manifest
error; provided, that the failure to make any such recordation, or any error in 
such recordation, shall not affect the Borrower's Obligations in respect of any 
Second Priority Term Loan. The Borrower hereby designates the Administrative    
Agent to serve as the Borrower's agent solely for purposes of maintaining the   
Register as provided in this Section 2.04, and the Borrower hereby agrees that, 
to the extent the Administrative Agent serves in such capacity, the             
Administrative Agent and its officers, directors, employees, agents and         
affiliates shall constitute "Indemnitees" under Section 12.03 (Indemnity).      

         (c)      Second Priority Term Loan Notes. If so requested by any Lender
by written notice to the Borrower (with a copy to the Administrative Agent) at  
any time, the Borrower shall execute and deliver to such Lender (and/or, if     
applicable and if so specified in such notice, to any Person who is an assignee 
of such Lender pursuant to Section 12.06 (Successors and Assigns;               
Participations)) on the Closing Date (or, if such notice is delivered after the 
Closing Date, promptly after the Borrower's receipt of such notice), a Second   
Priority Term Loan Note to evidence such Lender's Second Priority Term Loan.    

SECTION 2.05. Interest.                                                         

         (a)      Except as otherwise set forth herein, the Second Priority Term
Loans shall bear interest on the unpaid principal amount thereof from the date  
made through repayment (whether by acceleration or otherwise) thereof as        
follows:                                                                        

                 (i)      if a Base Rate Loan, at the Base Rate plus 4.75% per
annum; or                                   

                  (ii)     if a LIBOR Rate Loan, at the Adjusted LIBOR Rate plus
5.75% per annum.                            

Notwithstanding anything contained herein to the contrary, during the period    
from the Closing Date through March 31, 2004, the Second Priority Term Loans    
shall bear interest on the unpaid principal amount thereof at 7.00% per annum.  

50

EX-10.2.4
57th Page of 171
TOC
1st
Previous
Next
↓Bottom
Just 57th
        (b)      The Type of Loan, and the Interest Period with respect to any
LIBOR Rate Loan, shall be selected by the Borrower and notified to the          
Administrative Agent and the Lenders pursuant to the applicable Continuation    
Notice. If on any day a Second Priority Term Loan is outstanding with respect to
which a Funding Notice or Continuation Notice has not been delivered to the     
Administrative Agent in accordance with the terms hereof specifying the         
applicable basis for determining the rate of interest, then for that day such   
Second Priority Term Loan shall be a Base Rate Loan. Notwithstanding the        
foregoing, during the period from the Closing Date through March 31, 2004, the  
Second Priority Term Loans shall be deemed to be LIBOR Rate Loans and shall have
the "Interest Period" contemplated by clause (d) of the definition thereof.     

     (c)      In connection with LIBOR Rate Loans there shall be no more
than five Interest Periods outstanding at any time. In the event that the       
Borrower fails to specify the Type of Loan in the applicable Funding Notice or  
Continuation Notice, such Second Priority Term Loan (if outstanding as a LIBOR  
Rate Loan) will be automatically converted into a Base Rate Loan on the last day
of the then-current Interest Period for such Second Priority Term Loan (or if   
outstanding as a Base Rate Loan will remain as, or (if not then outstanding)    
will be made as, a Base Rate Loan). In the event that the Borrower fails to     
specify an Interest Period for any LIBOR Rate Loan in the applicable Funding    
Notice or Continuation Notice, the Borrower shall be deemed to have selected an 
Interest Period of one month. As soon as practicable after 10:00 a.m. (New York 
City time) on each Interest Rate Determination Date, the Administrative Agent   
shall determine (which determination shall, absent manifest error, be final,    
conclusive and binding upon all parties) the interest rate that shall apply to  
the LIBOR Rate Loans for which an interest rate is then being determined for the
applicable Interest Period and, upon the request of the Borrower, shall promptly
give notice thereof (in writing or by telephone confirmed in writing) to the    
Borrower and each Lender.                                                       

         (d)      Interest payable pursuant to Section 2.05(a) shall be computed
(i) in the case of Base Rate Loans on the basis of a 365-day or 366-day year, as
the case may be, and (ii) in the case of LIBOR Rate Loans, on the basis of a    
360-day year, in each case for the actual number of days elapsed in the period  
during which it accrues. In computing interest on any Second Priority Term Loan,
the date of the making of such Second Priority Term Loan or the first day of an 
Interest Period applicable to such Second Priority Term Loan or, with respect to
a Base Rate Loan being converted from a LIBOR Rate Loan, the date of conversion 
of such LIBOR Rate Loan to such Base Rate Loan, as the case may be, shall be    
included, and the date of payment of such Second Priority Term Loan or the      
expiration date of an Interest Period applicable to such Second Priority Term   
Loan or, with respect to a Base Rate Loan being converted to a LIBOR Rate Loan, 
the date of conversion of such Base Rate Loan to such LIBOR Rate Loan, as the   
case may be, shall be excluded; provided, if a Second Priority Term Loan is     
repaid on the same day on which it is made, one day's interest shall be paid on 
that Second Priority Term Loan.                                                 

        (e)      Except as otherwise set forth herein, interest on each Second
Priority Term Loan shall be payable in arrears on and to each Interest Payment  
Date applicable to that Second Priority Term Loan.                              

SECTION 2.06. Continuation Notice.                                              

51

EX-10.2.4
58th Page of 171
TOC
1st
Previous
Next
↓Bottom
Just 58th
      (a)      Subject to Section 2.15 (Increased Costs; Capital Adequacy)
and so long as no Default or Event of Default shall have occurred and then be   
continuing, the Borrower shall have the option:                                 

                 (i)      to convert at any time all or any part of any Second
  Priority Term Loan equal to $5,000,000 and integral multiples of
      $1,000,000 in excess of that amount from one Type of Loan to another
        Type of Loan; provided, a LIBOR Rate Loan may only be converted on the
      expiration of the Interest Period applicable to such LIBOR Rate Loan
  unless the Borrower shall pay all amounts due under Section 2.14
       (Making or Maintaining Second Priority Term Loans) in connection with
any such conversion; or                                       

                  (ii)     upon the expiration of any Interest Period applicable
       to any LIBOR Rate Loan, to continue all or any portion of such Second
  Priority Term Loan equal to $5,000,000 and integral multiples of
$1,000,000 in excess of that amount as a LIBOR Rate Loan.     

  (b)      The Borrower shall deliver a Continuation Notice to the
Administrative Agent no later than 10:00 a.m. (New York City time) at least one 
Business Day in advance of the proposed conversion date (in the case of a       
conversion to a Base Rate Loan) and at least three Business Days in advance of  
the proposed conversion/continuation date (in the case of a conversion to, or a 
continuation of, a LIBOR Rate Loan). Except as otherwise provided herein, a     
Continuation Notice for conversion to, or continuation of, any LIBOR Rate Loans 
shall be irrevocable on and after the related Interest Rate Determination Date, 
and the Borrower shall be bound to effect a conversion or continuation in       
accordance therewith. In the event that the Borrower shall have failed to       
provide a Continuation Notice as required by this Section 2.06(b) to continue   
any LIBOR Rate Loan into a subsequent Interest Period (and shall not otherwise  
have given notice in accordance with this Section 2.06(b) to convert such LIBOR 
Rate Loan into a Base Rate Loan), then such LIBOR Rate Loan shall, at the end of
the applicable Interest Period, automatically be converted into a Base Rate     
Loan.                                                                           

         (c)      Any Continuation Notice shall be executed by an Officer of the
Borrower in a writing delivered to the Administrative Agent. In lieu of         
delivering a written notice, the Borrower may give the Administrative Agent     
telephonic notice by the required time of any continuation; provided each such  
notice shall be promptly confirmed in writing by delivery of the applicable     
Continuation Notice to the Administrative Agent on or before the applicable date
of continuation. Neither the Administrative Agent nor any Lender shall incur any
liability to the Borrower in acting upon any telephonic notice referred to above
that the Administrative Agent believes in good faith to have been given by a    
duly authorized officer or other Person authorized on behalf of the Borrower or 
otherwise acting in good faith                                                  

SECTION 2.07. 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 Second Priority Term 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 at a rate  
that is (a) 2% per annum in excess of the interest rate then otherwise payable  
under this Agreement with respect to                                            

52

EX-10.2.4
59th Page of 171
TOC
1st
Previous
Next
↓Bottom
Just 59th
the applicable Second Priority Term Loans 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 if an Event of Default has occurred and is continuing on  
the expiration date of the Interest Period for any LIBOR Rate Loans, then such  
LIBOR Rate 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 Agreement for Base Rate     
Loans. Payment or acceptance of the increased rates of interest provided for in 
this Section 2.07 is not a permitted alternative to timely payment and shall not
constitute a waiver of any Event of Default or otherwise prejudice or limit any 
rights or remedies of the Administrative Agent, the Collateral Agent or any     
Lender.                                                                         

SECTION 2.08. Fees. The Borrower agrees to pay to each Agent such fees in the   
amounts and at the times separately agreed upon by the Borrower and such Agent  
in writing.                                                                     

SECTION 2.09. Payments. The principal amounts of the Second Priority Term Loans 
(reduced in connection with any voluntary or mandatory prepayments of the Second
Priority Term Loans, in accordance with Sections 2.10 (Voluntary Prepayments)   
and 2.11 (Mandatory Repayment Offers), as applicable) shall be repaid by the    
Borrower in accordance with the repayment schedule set forth on Schedule 2.09,  
with any remaining unpaid principal, interest, fees and costs due and payable in
full on the Maturity Date.                                                      

SECTION 2.10. Voluntary Prepayments.                                            

(a)      Voluntary Prepayments.                               

           (i)      The Borrower may not voluntarily prepay Second
    Priority Term Loans except as provided in clause (b) below. In the
      event of any voluntary prepayment in accordance with clause (b), the
         Borrower may prepay any such Second Priority Term Loans on any Business
       Day in whole or in part, in an aggregate minimum amount of $5,000,000
and integral multiples of $1,000,000 (or the remaining amount 
outstanding) in excess of that amount.                        

(ii)     All such prepayments shall be made:

                          (A)      upon not less than one Business Day's prior
                written, email or telephonic notice in the case of Base Rate
Loans; and                                  

                      (B)      upon not less than three Business Days'
                  prior written, email or telephonic notice in the case of LIBOR
Rate Loans;                                 

       in each case given to the Administrative Agent by 1:00 p.m. (New York
      City time) on the date required and, if given by telephone, promptly
confirmed in writing to the Administrative Agent (and the     
         Administrative Agent will promptly transmit such telephonic or original
        notice, by telefacsimile or telephone to each Lender). Upon the giving
      of any such notice, the principal amount of the Second Priority Term
    Loans specified in such notice shall become due and payable on the
 prepayment date specified therein. Any prepayment of any Second
         Priority Term Loan pursuant to this Section shall be applied in inverse
order of                                                      

53

EX-10.2.4
60th Page of 171
TOC
1st
Previous
Next
↓Bottom
Just 60th
   maturities and otherwise in accordance with Section 2.12 (General
Provisions Regarding Payments).                               

(b)      Second Priority Term Loan Call Protection.           

                  (i)      The Second Priority Term Loans may not be voluntarily
prepaid at any time on or prior to April 1, 2008;             

            (ii)     The Borrower may, at its option, upon notice as
       provided in clause (a) above, prepay at any time all, or from time to
         time any part of, the Second Priority Term Loans, if such prepayment is
        after April 1, 2008 but on or before April 1, 2009, in an amount equal
      to 103.5% of the principal amount so prepaid, plus all other amounts
      owed hereunder in connection with such prepayment, including amounts
        payable under Sections 2.05 (Interest) and 2.14 (Making or Maintaining
Second Priority Term Loans) hereof; and                       

              (iii)    Subject to clause (a) above, Second Priority Term
         Loans may be prepaid at any time without premium or penalty after April
1, 2009.                                                      

SECTION 2.11. Mandatory Repayment Offers.                                       

    (a)      In the event that, pursuant to Section 5.07 (Asset Sales;
Application of Net Proceeds) or Section 5.12 (Offer to Prepay Upon Change of    
Control), the Borrower shall elect to repay or be required to offer to prepay   
Second Priority Term Loans, then the Borrower shall make an offer to each Lender
(a "Mandatory Repayment Offer") in accordance with the following the procedures 
specified below:                                                                

               (i)      The Mandatory Repayment Offer shall be made by the
      Borrower within 30 days following (A) the receipt by the Borrower or
      any of its Subsidiaries of Net Proceeds from an Asset Sale, Casualty
        Event or Condemnation Event or (B) a Change of Control, as applicable,
        and shall remain open until 5:00 p.m. (New York City time) on the date
     specified in such Mandatory Repayment Offer, which date shall be no
   earlier than 30 days and no later than 60 days from the date such
        Mandatory Repayment Offer was made, except to the extent that a longer
period is required by applicable law (the "Offer Period");    

                  (ii)     The Borrower shall make the Mandatory Repayment Offer
       by sending a notice to the Administrative Agent (for delivery to each
  Lender). The notice shall contain all instructions and materials
         necessary to enable the Lenders to accept the Mandatory Repayment Offer
       for all of their Second Priority Term Loans pursuant to the Mandatory
     Repayment Offer. The Mandatory Repayment Offer shall be made to all
    Lenders. The notice, which shall govern the terms of the Mandatory
Repayment Offer, shall state:                                 

                          (A)      that the Mandatory Repayment Offer is being
              made pursuant to this Section 2.11 and Section 5.07 (Asset
                 Sales; Application of Net Proceeds) or Section 5.12 (Offer to
                  Prepay Upon Change of Control), as applicable, and the date on
  which the Mandatory Repayment Offer shall end;

54

EX-10.2.4
61st Page of 171
TOC
1st
Previous
Next
↓Bottom
Just 61st
                           (B)      the total amount the Borrower is offering to
                prepay (the "Offer Amount") and the Repayment Date therefor;

                           (C)      that, unless the Borrower defaults in making
               such payment, any Second Priority Term Loan with respect to
              which a Lender accepts the Mandatory Repayment Offer shall
               cease to accrue interest from and after the Repayment Date;

                     (D)      that a Lender that accepts a Mandatory
              Repayment Offer must accept such Mandatory Repayment Offer
                  with respect to all (but not part) of its Second Priority Term
                 Loans (up to the amount of such Lender's Second Priority Term
   Loans that the Borrower is offering to prepay);

                    (E)      that the Lenders shall be entitled to
               withdraw their acceptance of a Mandatory Repayment Offer if
                the Borrower and the Administrative Agent receive, not later
             than the expiration of the Offer Period, a notice setting
             forth the name of the Lender, the principal amount of the
              Second Priority Term Loans for which the Lender previously
                accepted such Mandatory Repayment Offer and a statement that
              such Lender is rescinding its acceptance of such Mandatory
Repayment Offer; and                        

                         (F)      in the case of a Mandatory Repayment Offer
                 being made pursuant to Section 5.07 (Asset Sales; Application
               of Net Proceeds), that if the aggregate principal amount of
                Second Priority Term Loans for which the Mandatory Repayment
              Offer is accepted by the Lenders exceeds the Offer Amount,
                  then the Administrative Agent shall select the Second Priority
                 Term Loans to be purchased in accordance with Section 2.12(c)
(General Provisions Regarding Payments).    

                (iii)    On or before the fifth day after the termination of
        the Offer Period (the "Repayment Date"), the Borrower shall (A) to the
 extent lawful, pay, in accordance with Section 2.12(c) (General
    Provisions Regarding Payments), the amount of Second Priority Term
         Loans with respect to which the Mandatory Repayment Offer was accepted,
  and (B) deliver to the Administrative Agent (for delivery to the
    Lenders) an Officer's Certificate stating the amount of the Second
       Priority Term Loans to be repaid in accordance with the terms of this
   Section 2.11. The Administrative Agent shall promptly forward the
appropriate amount to each Lender being repaid.               

       (b)      In the event that one or more, but not all, Lenders have not
elected to participate in any Mandatory Repayment Offer made pursuant to Section
5.07 (Asset Sales; Application of Net Proceeds), the Borrower shall, upon the   
end of the Offer Period, immediately commence a second Mandatory Repayment Offer
in accordance with the procedure provided in clause (a) of this Section 2.11,   
provided that such subsequent offer shall only be made to Lenders who elected to
participate in the initial Mandatory Repayment Offer and, provided, further,    
that the Borrower shall not be required to make more than one such subsequent   
offer with respect to each initial Mandatory Repayment Offer.                   

55

EX-10.2.4
62nd Page of 171
TOC
1st
Previous
Next
↓Bottom
Just 62nd
SECTION 2.12. General Provisions Regarding Payments.                            

      (a)      All payments by the Borrower or any Guarantor of principal,
interest, fees and other Second Priority Term Loan Obligations shall be made in 
Dollars in same day funds, without defense, setoff or counterclaim, free of any 
restriction or condition, and delivered to the Administrative Agent not later   
than 1:00 p.m. (New York City time) on the date due at the Administrative       
Agent's Principal Office for the account of the Administrative Agent or the     
Lenders, as the case may be. Funds received by the Administrative Agent after   
that time on such due date shall be deemed to have been paid by the Borrower or 
the applicable Guarantor on the next succeeding Business Day.                   

        (b)      All payments in respect of the principal amount of any Second
Priority Term Loan shall include payment of accrued interest on the principal   
amount being repaid or prepaid, and all such payments (and, in any event, any   
payments in respect of any Second Priority Term Loan on a date when interest is 
due and payable with respect to such Second Priority Term Loan) shall be applied
to the payment of interest before application to principal.                     

     (c)      The Administrative Agent shall promptly distribute to each
Lender, at such address as such Lender shall indicate in writing, such Lender's 
applicable Pro Rata Share of all payments and prepayments of principal and      
interest due hereunder, except that prepayment offers accepted by Lenders       
pursuant to Section 2.11 (Mandatory Repayment Offer), and in respect of the Net 
Proceeds from any Asset Sale, Casualty Event or Condemnation Event, shall be    
allocated to the accepting Lenders ratably in proportion to the principal amount
of Second Priority Term Loans outstanding to each accepting Lender (and not to  
all Lenders based on Pro Rata Shares), together with all other amounts due      
thereon, including all fees payable with respect thereto, to the extent received
by the Administrative Agent.                                                    

       (d)      Whenever any payment to be made hereunder shall be stated to
be due on a day that is not a Business Day, such payment shall be due on the    
next succeeding Business Day and such extension of time shall be included in the
computation of the payment of interest hereunder.                               

     (e)      The Borrower hereby authorizes the Administrative Agent to
charge the Borrower's accounts (if any) with the Administrative Agent in order  
to cause timely payment to be made to the Administrative Agent of all principal,
interest, fees and expenses due hereunder (to the extent there are funds        
available in its accounts for that purpose) upon the occurrence and during the  
continuation of any Event of Default in respect of its payment obligations      
hereunder.                                                                      

   (f)      The Administrative Agent shall deem any payment by or on
behalf of the Borrower hereunder that is not made in same day funds prior to    
1:00 p.m. (New York City time) on the date therefor to be a non-conforming      
payment. Any such payment shall not be deemed to have been received by the      
Administrative Agent until the later of (i) the time such funds become available
funds, and (ii) the applicable next Business Day. The Administrative Agent shall
give prompt telephonic notice to the Borrower and each applicable Lender        
(confirmed in writing) if any payment is non-conforming. Any non-conforming     
payment may constitute or become a Default or Event of Default in accordance    
with the terms of Section 7.01 (Events of Default). Interest shall continue to  
accrue on any principal as to which a non-conforming payment is made until such 
funds become available funds (but in no event less than the period from the date
of                                                                              

56

EX-10.2.4
63rd Page of 171
TOC
1st
Previous
Next
↓Bottom
Just 63rd
such payment to the next succeeding applicable Business Day) at the rate        
determined pursuant to Section 2.07 (Default Interest) from the date such amount
was due and payable until the date such amount is paid in full.                 

SECTION 2.13. Ratable Sharing. The Lenders hereby agree among themselves that,  
except in the case of prepayments pursuant to Section 2.11 (Mandatory Repayment 
Offers), if any of them shall, whether by voluntary payment (other than a       
voluntary prepayment of Second Priority Term Loans made and applied in          
accordance with the terms hereof), through the exercise of any right of set-off 
or banker's lien, by counterclaim or cross action or by the enforcement of any  
right under the Second Priority Term Loan Documents or otherwise, or as adequate
protection of a deposit treated as cash collateral under the Bankruptcy Law,    
receive payment or reduction of a proportion of the aggregate amount of         
principal, interest, fees and other amounts then due and owing to such Lender   
hereunder or under the other Second Priority Term Loan Documents (collectively, 
the "Aggregate Amounts Due" to such Lender) which is greater than the proportion
received by any other Lender in respect of the Aggregate Amounts Due to such    
other Lender, then the Lender receiving such proportionately greater payment    
shall (a) notify the Administrative Agent and each other Lender of the receipt  
of such payment and (b) apply a portion of such payment to purchase             
participations (which it shall be deemed to have purchased from each Lender that
is deemed to be the seller of a participation simultaneously upon the receipt by
such seller of its portion of such payment) in the Aggregate Amounts Due to the 
other Lenders, so that all such recoveries of Aggregate Amounts Due shall be    
shared by all Lenders in proportion to the Aggregate Amounts Due to each of     
them, respectively; provided, if all or part of such proportionately greater    
payment received by such purchasing Lender is thereafter recovered from such    
Lender upon the bankruptcy or reorganization of the Borrower or otherwise, the  
foregoing purchases of participations shall be rescinded and the purchase prices
paid for such participations shall be returned to such purchasing Lender(s)     
ratably to the extent of such recovery, but without interest. The Borrower      
expressly consents to the foregoing arrangement and agrees that any holder of a 
participation so purchased may exercise any and all rights of banker's lien,    
set-off or counterclaim with respect to any and all monies owing by the Borrower
to that holder with respect thereto as fully as if that holder were owed the    
amount of the participation held by that holder.                                

SECTION 2.14. Making or Maintaining Second Priority Term Loans.                 

        (a)      Inability to Determine Applicable Interest Rate. In the event
that the Administrative Agent shall have determined (which determination shall  
be final and conclusive and binding upon all parties hereto absent manifest     
error), on any Interest Rate Determination Date with respect to any Second      
Priority Term Loans, that by reason of circumstances affecting the London       
interbank market adequate and fair means do not exist for ascertaining the      
interest rate applicable to such Second Priority Term Loans on the basis        
provided for in the definition of Adjusted LIBOR Rate, the Administrative Agent 
shall on such date give notice (by telefacsimile or by telephone confirmed in   
writing) to the Borrower and each Lender of such determination, whereupon (i) no
Second Priority Term Loans may be made or maintained with an interest rate based
on the Adjusted LIBOR Rate, and instead will be made and maintained with an     
interest rate equal to the Base Rate plus 4.75% per annum, until such time as   
the Administrative Agent notifies the Borrower and Lenders that the             
circumstances giving rise to such notice no longer exist, and (ii) any Funding  
Notice or Continuation Notice given by the Borrower with respect to             

57

EX-10.2.4
64th Page of 171
TOC
1st
Previous
Next
↓Bottom
Just 64th
the Second Priority Term Loans in respect of which such determination was made  
shall be deemed to be rescinded by the Borrower.                                

     (b)      Illegality or Impracticability of using the Adjusted LIBOR
Rate. In the event that on any date any Lender shall have determined (which     
determination shall be final and conclusive and binding upon all parties hereto 
but shall be made only after consultation with the Borrower and the             
Administrative Agent) that the making, maintaining or continuation of its Second
Priority Term Loans with an interest rate based on the Adjusted LIBOR Rate (i)  
has become unlawful as a result of compliance by such Lender in good faith with 
any Legal Requirement or would conflict with any treaty, governmental rule,     
regulation, guideline or order not having the force of law even though the      
failure to comply therewith would not be unlawful, or (ii) has become           
impracticable, as a result of contingencies occurring after the date hereof     
which materially and adversely affect the London interbank market or the        
position of such Lender in that market, then, and in any such event, such Lender
shall be an "Affected Lender" and on that day it shall give notice (by          
telefacsimile or by telephone confirmed in writing) to the Borrower and the     
Administrative Agent of such determination (which notice the Administrative     
Agent shall promptly transmit to each other Lender). Thereafter (A) the         
obligation of the Affected Lender to make or maintain Second Priority Term Loans
with an interest rate based on the Adjusted LIBOR Rate shall be suspended until 
such notice shall be withdrawn by the Affected Lender, (B) to the extent such   
determination by the Affected Lender relates to a Second Priority Term Loan then
being requested by the Borrower pursuant to a Funding Notice or a Continuation  
Notice, the Affected Lender shall make such Second Priority Term Loan as (or    
continue such Second Priority Term Loan as) a Second Priority Term Loan with an 
interest rate equal to the Base Rate plus 4.75% annum, (C) the Affected Lender's
obligation to maintain its outstanding Second Priority Term Loans with an       
interest rate based on the Adjusted LIBOR Rate (the "Affected Loans") shall be  
terminated at the earlier to occur of the expiration of the Interest Period then
in effect with respect to the Affected Loans or when required by law, and (D)   
the Affected Loans shall automatically convert into Second Priority Term Loans  
with an interest rate equal to the Base Rate plus 4.75% per annum on the date of
such termination. Except as provided in the immediately preceding sentence,     
nothing in this Section 2.14(b) shall affect the obligation of any Lender other 
than an Affected Lender to make or maintain Second Priority Term Loans with an  
interest rate based on the Adjusted LIBOR Rate in accordance with the terms     
hereof.                                                                         

    (c)      Compensation for Breakage or Non-Commencement of Interest
Periods. The Borrower shall compensate each Lender, upon written request by such
Lender (which request shall set forth the basis for requesting such amounts),   
for all reasonable losses, expenses and liabilities (including any interest paid
by such Lender to lenders of funds borrowed by it to make or carry its Second   
Priority Term Loans and any loss, expense or liability sustained by such Lender 
in connection with the liquidation or re-employment of such funds but excluding 
loss of anticipated profits (such anticipated profits being the 5.75% spread    
over the Adjusted LIBOR Rate) which such Lender may sustain within an Interest  
Period: (i) if any prepayment or other principal payment of any of its Second   
Priority Term Loans occurs on a date prior to the last day of an Interest Period
applicable to that Second Priority Term Loan (including pursuant to Section 2.10
(Voluntary Prepayments), 2.11 (Mandatory Repayment Offers), 5.07 (Asset Sales;  
Application of Net Proceeds) and 5.12 (Offer to Prepay Upon Change of Control); 
or (ii) if any                                                                  

58

EX-10.2.4
65th Page of 171
TOC
1st
Previous
Next
↓Bottom
Just 65th
prepayment of any of its Second Priority Term Loans is not made on any date     
specified in a notice of prepayment given by the Borrower.                      

      (d)      Booking of Second Priority Term Loans. Any Lender may make,
carry or transfer Second Priority Term Loans at, to, or for the account of any  
of its branch offices or the office of an Affiliate of such Lender.             

        (e)      Assumptions Concerning Funding of Second Priority Term Loans.
Calculation of all amounts payable to a Lender under this Section 2.14 and under
Section 2.15 (Increased Costs; Capital Adequacy) shall be made as though such   
Lender had actually funded each of its relevant Second Priority Term Loans      
through the purchase of a LIBOR deposit bearing interest at the rate obtained   
pursuant to clause (b) of the definition of Adjusted LIBOR Rate in an amount    
equal to the amount of such Second Priority Term Loan and having a maturity     
comparable to the relevant Interest Period and through the transfer of such     
LIBOR deposit from an offshore office of such Lender to a domestic office of    
such Lender in the United States of America; provided, however, each Lender may 
fund each of its Second Priority Term Loans in any manner it sees fit and the   
foregoing assumptions shall be utilized only for the purposes of calculating    
amounts payable under this Section 2.14 and under Section 2.15 (Increased Costs;
Capital Adequacy).                                                              

SECTION 2.15. Increased Costs; Capital Adequacy.                                

     (a)      Compensation For Increased Costs and Taxes. Subject to the
provisions of Section 2.16 (Taxes; Withholding, etc.) (which shall be           
controlling with respect to the matters covered thereby), in the event that any 
Lender shall determine (which determination shall, absent manifest error, be    
final and conclusive and binding upon all parties hereto) that any Legal        
Requirement, or any change therein or in the interpretation, administration or  
application thereof (including the introduction of any new Legal Requirement),  
or any determination of a court or governmental authority, in each case that    
becomes effective after the date hereof, or compliance by such Lender with any  
guideline, request or directive issued or made after the date hereof by any     
central bank or other governmental or quasi-governmental authority (whether or  
not having the force of law):                                                   

              (i)      imposes, modifies or holds applicable any reserve
    (including any marginal, emergency, supplemental, special or other
       reserve), special deposit, compulsory loan, FDIC insurance or similar
         requirement against assets held by, or deposits or other liabilities in
 or for the account of, or advances or loans by, or other credit
       extended by, or any other acquisition of funds by, any office of such
        Lender (other than any such reserve or other requirements with respect
        to any Second Priority Term Loans that are reflected in the definition
of Adjusted LIBOR Rate); or                                   

                 (ii)     imposes any other condition (other than with respect
         to a Tax matter) on or affecting such Lender (or its applicable lending
      office) or its obligations hereunder or the London interbank market;

and the result of any of the foregoing is to increase the cost to such Lender of
agreeing to make, making or maintaining Second Priority Term Loans hereunder or 
to reduce any amount received or receivable by such Lender (or its applicable   
lending office) with respect thereto; then, in any such                         

59

EX-10.2.4
66th Page of 171
TOC
1st
Previous
Next
↓Bottom
Just 66th
case, the Borrower shall promptly pay to such Lender, upon receipt of the       
statement referred to in the next sentence, such additional amount or amounts   
(in the form of an increased rate of, or a different method of calculating,     
interest or otherwise as such Lender in its sole discretion shall determine) as 
may be necessary to compensate such Lender for any such increased cost or       
reduction in amounts received or receivable hereunder. Such Lender shall deliver
to the Borrower (with a copy to the Administrative Agent) a written statement,  
setting forth in reasonable detail the basis for calculating the additional     
amounts owed to such Lender under this Section 2.15(a), which statement shall be
conclusive and binding upon all parties hereto absent manifest error.           

    (b)      Capital Adequacy Adjustment. In the event that any Lender
shall have determined that the adoption, effectiveness, phase-in or             
applicability after the Closing Date of any Legal Requirement (or any provision 
thereof) regarding capital adequacy, or any change therein or in the            
interpretation or administration thereof by any governmental authority, central 
bank or comparable agency charged with the interpretation or administration     
thereof, or compliance by any Lender (or its applicable lending office) with any
guideline, request or directive regarding capital adequacy (whether or not      
having the force of law) of any such Governmental Authority, central bank or    
comparable agency, has or would have the effect of reducing the rate of return  
on the capital of such Lender or any corporation controlling such Lender as a   
consequence of, or with reference to, such Lender's Second Priority Term Loans, 
or participations therein or other obligations hereunder with respect to the    
Second Priority Term Loans to a level below that which such Lender or such      
controlling corporation could have achieved but for such adoption,              
effectiveness, phase-in, applicability, change or compliance (taking into       
consideration the policies of such Lender or such controlling corporation with  
regard to capital adequacy), then from time to time, within five Business Days  
after receipt by the Borrower from such Lender of the statement referred to in  
the next sentence, the Borrower shall pay to such Lender such additional amount 
or amounts as shall compensate such Lender or such controlling corporation on an
after-tax basis for such reduction. Such Lender shall deliver to the Borrower   
(with a copy to the Administrative Agent) a written statement, setting forth in 
reasonable detail the basis for calculating the additional amounts owed to such 
Lender under this Section 2.15(b), which statement shall be conclusive and      
binding upon all parties hereto absent manifest error.                          

SECTION 2.16. Taxes; Withholding, etc.                                          

         (a)      Payments to Be Free and Clear. Except as otherwise provided in
this Section 2.16, all sums payable by or on behalf of any Obligor hereunder and
under the other Second Priority Term Loan Documents shall (except to the extent 
required by any applicable Legal Requirement) be paid free and clear of, and    
without any deduction or withholding on account of, any Tax imposed, levied,    
collected, withheld or assessed by or within the U.S. or any political          
subdivision in or of the U.S. or any other jurisdiction from or to which a      
payment is made by or on behalf of any Obligor.                                 

      (b)      Withholding of Taxes. If any Obligor or any other Person is
required by law to make any deduction or withholding on account of any such Tax 
from any sum paid or payable by or on behalf of any Obligor to the any Agent or 
any Lender under any of the Second Priority Term Loan Documents:                

60

EX-10.2.4
67th Page of 171
TOC
1st
Previous
Next
↓Bottom
Just 67th
                  (i)      the Borrower shall notify the Administrative Agent of
       any such requirement or any change in any such requirement as soon as
the Borrower becomes aware of it;                             

                (ii)     the Borrower shall pay any such Tax before the date
    on which penalties attach thereto, such payment to be made (if the
        liability to pay is imposed on any Obligor) for its own account or (if
         that liability is imposed on such Agent or such Lender, as the case may
be) on behalf of and in the name of such Agent or such Lender;

                (iii)    the sum payable by such Obligor in respect of which
     the relevant deduction, withholding or payment is required shall be
       increased to the extent necessary to ensure that, after the making of
       all deductions, withholding or payments for or with respect to Taxes,
         such Agent or such Lender, as the case may be, receives on the due date
       a net sum equal to what it would have received had no such deduction,
withholding or payment been required or made; and             

                 (iv)     within 30 days after paying any sum from which it is
     required by law to make any deduction or withholding, and within 30
       days after the due date of payment of any tax which it is required by
clause (ii) above to pay, the Borrower shall deliver to the   
  Administrative Agent evidence satisfactory to the other affected
         parties of such deduction, withholding or payment and of the remittance
thereof to the relevant taxing or other authority;            

provided that no such additional amount shall be required to be paid to any     
Lender under clause (iii) above except to the extent that any change after the  
date hereof (in the case of each Lender listed on the signature pages hereof on 
the Closing Date) or after the effective date of the Assignment Agreement       
pursuant to which such Lender became a Lender (in the case of each other Lender)
in any such requirement for a deduction, withholding or payment as is mentioned 
therein shall result in either the imposition of deduction, withholding or      
payment or an increase in the rate of such deduction, withholding or payment    
from that in effect at the date hereof or at the date of such Assignment        
Agreement, as the case may be, in respect of payments to such Lender.           

     (c)      Other Taxes. The Borrower shall pay any Other Taxes to the
relevant taxing or other authority in accordance with applicable Legal          
Requirements, and shall comply with the requirements of Section 2.16(b)(iv) with
respect to such payments.                                                       

  (d)      Indemnification. Subject to the requirements of Section
2.16(e), the Borrower shall indemnify each Agent and each Lender for the full   
amount of Taxes (to the extent the Borrower would be required to pay additional 
amounts with respect to such Taxes pursuant to Section 2.16(b)) or Other Taxes  
arising in connection with payments made under any of the Second Priority Term  
Loan Documents (including any Taxes or Other Taxes imposed by any jurisdiction  
on amounts payable under this Section 2.16) paid by such Agent or Lender and any
penalties, additions to tax, interest and expenses arising from or with respect 
to such Taxes or Other Taxes, whether or not such Taxes or Other Taxes were     
correctly or legally asserted. Payment under this indemnification shall be made 
within 10 days from the date any Agent or any Lender makes written demand       
therefor.                                                                       

61

EX-10.2.4
68th Page of 171
TOC
1st
Previous
Next
↓Bottom
Just 68th
       (e)      Evidence of Exemption From U.S. Withholding Tax. Each Lender
that is not a United States Person (as such term is defined in Section          
7701(a)(30) of the Code) for U.S. federal income tax purposes (a "Non-U.S.      
Lender") shall deliver to the Administrative Agent for transmission to the      
Borrower, on or prior to the Closing Date (in the case of each Lender listed on 
the signature pages hereof on the Closing Date) or on or prior to the date of   
the Assignment Agreement pursuant to which it becomes a Lender (in the case of  
each other Lender), and at such other times as may be necessary in the          
determination of the Borrower or the Administrative Agent (each in the          
reasonable exercise of its discretion):                                         

                 (i)      two original copies of Internal Revenue Service Form
        W-8BEN or W-8ECI (or any successor forms), properly completed and duly
      executed by such Lender, and such other documentation required under
     the Code and reasonably requested by the Borrower to establish that
         such Lender is not subject to deduction or withholding of United States
   federal income tax with respect to any payments to such Lender of
     principal, interest, fees or other amounts payable under any of the
        Second Priority Term Loan Documents or is subject to such deduction or
withholding at a reduced rate; or                             

           (ii)     if such Lender is not a "bank" or other Person
      described in Section 881(c)(3) of the Code and is claiming exemption
         from U.S. federal withholding tax under Section 871(h) or 881(c) of the
         Code with respect to payments of "portfolio interest", a Certificate Re
       Non-Bank Status together with two original copies of Internal Revenue
       Service Form W-8 (or any successor form), properly completed and duly
      executed by such Lender, and such other documentation required under
     the Code and reasonably requested by the Borrower to establish that
         such Lender is not subject to deduction or withholding of United States
   federal income tax with respect to any payments to such Lender of
        interest payable under any of the Second Priority Term Loan Documents.

Each Lender required to deliver any forms, certificates or other evidence with  
respect to United States federal income tax withholding matters pursuant to this
Section 2.16(e) hereby agrees, from time to time after the initial delivery by  
such Lender of such forms, certificates or other evidence, whenever a lapse in  
time or change in circumstances renders such forms, certificates or other       
evidence obsolete or inaccurate in any material respect, that such Lender shall 
promptly deliver to the Administrative Agent for transmission to the Borrower   
two new original copies of Internal Revenue Service Form W-8BEN or W-8ECI , or a
Certificate re Non-Bank Status and two original copies of Internal Revenue      
Service Form W-8, as the case may be, properly completed and duly executed by   
such Lender, and such other documentation required under the Code and reasonably
requested by the Borrower to confirm or establish that such Lender is not       
subject to deduction or withholding of United States federal income tax with    
respect to payments to such Lender under the Second Priority Term Loan Documents
or is subject to such deduction or withholding at a reduced rate, or notify the 
Administrative Agent and the Borrower of its inability to deliver any such      
forms, certificates or other evidence. The Borrower shall not be required to pay
any additional amount to any Non-U.S. Lender under Section 2.16(b)(iii) or to   
indemnify the Non-U.S. Lender under Section 2.16(d) if such Lender shall have   
failed (1) to deliver the forms, certificates or other evidence referred to in  
the second sentence of this                                                     

62

EX-10.2.4
69th Page of 171
TOC
1st
Previous
Next
↓Bottom
Just 69th
Section 2.16(e), or (2) to notify the Administrative Agent and the Borrower of  
its inability to deliver any such forms, certificates or other evidence, as the 
case may be; provided, if such Lender shall have satisfied the requirements of  
the first sentence of this Section 2.16(e) on the Closing Date or on the date of
the Assignment Agreement pursuant to which it became a Lender, as applicable,   
nothing in this last sentence of this Section 2.16(e) shall relieve the Borrower
of its obligation to pay any additional amounts pursuant to Section 2.16(b) or  
to indemnify the Non-U.S. Lender under Section 2.16(d) in the event that, as a  
result of any change in any applicable Legal Requirement, or any change in the  
interpretation, administration or application thereof, such Lender is no longer 
properly entitled to deliver forms, certificates or other evidence at a         
subsequent date establishing the fact that such Lender is not subject to        
withholding as described herein. For the avoidance of doubt, to the extent the  
form provided by a Lender at the time such Lender first becomes a party to this 
Agreement indicates a U.S. withholding tax rate in excess of zero, withholding  
tax at such rate shall be considered excluded from Taxes.                       

SECTION 2.17. Removal or Replacement of a Lender. Anything contained herein to  
the contrary notwithstanding, in the event that:                                

        (a)      (i) any Lender (an "Increased-Cost Lender") shall give notice
to the Borrower that such Lender is an Affected Lender or that such Lender is   
entitled to receive payments under Section 2.14 (Making or Maintaining Second   
Priority Term Loans), 2.15 (Increased Costs; Capital Adequacy) or 2.16 (Taxes;  
Withholding, etc), (ii) the circumstances which have caused such Lender to be an
Increased-Cost Lender or which entitle such Lender to receive such payments     
shall remain in effect, and (iii) such Lender shall fail to withdraw such notice
within five Business Days after the Borrower's request for such withdrawal; or  

   (b)      in connection with any proposed amendment, modification,
termination, waiver or consent with respect to any of the provisions hereof as  
contemplated by Section 12.05(b) (Amendments and Waivers), the consent of       
Requisite Lenders shall have been obtained but the consent of one or more of    
such other Lenders (each a "Non-Consenting Lender") whose consent is required   
shall not have been obtained;                                                   

then, with respect to each such Increased-Cost Lender or Non-Consenting Lender  
(the "Terminated Lender"), the Borrower may, by giving written notice to the    
Administrative Agent and any Terminated Lender of its election to do so, elect  
to cause such Terminated Lender (and such Terminated Lender hereby irrevocably  
agrees) to assign its outstanding Second Priority Term Loans in full to one or  
more Eligible Assignees (each a "Replacement Lender") in accordance with the    
provisions of Section 12.06 (Successors and Assigns; Participations); provided, 

            (i)      on the date of such assignment, the Replacement
       Lender shall pay to such Terminated Lender an amount equal to the sum
      of (A) an amount equal to the principal of, and all accrued interest
  on, all outstanding Second Priority Term Loans of the Terminated
         Lender, and (B) an amount equal to all accrued, but theretofore unpaid,
       fees owing to such Terminated Lender pursuant to Section 2.08 (Fees);

               (ii)     on the date of such assignment, the Borrower shall
       pay any amounts payable to such Terminated Lender pursuant to Section
  2.14(c) (Making or Maintaining Second Priority Term Loans), 2.15
         (Increased Costs; Capital Adequacy) or 2.16 (Taxes; Withholding, etc.);
        provided that no premium on such amounts shall be required to be paid;
and                                                           

63

EX-10.2.4
70th Page of 171
TOC
1st
Previous
Next
↓Bottom
Just 70th
     (iii)    in the event such Terminated Lender is a
      Non-Consenting Lender, each Replacement Lender shall consent, at the
  time of such assignment, to each matter in respect of which such
Terminated Lender was a Non-Consenting Lender.                

Upon the prepayment of all amounts owing to any Terminated Lender, such         
Terminated Lender shall no longer constitute a "Lender" under any of the Second 
Priority Term Loan Documents; provided, any rights of such Terminated Lender to 
indemnification hereunder shall survive as to such Terminated Lender.           

ARTICLE III.

CONDITIONS PRECEDENT

         The obligation of any Lender to make a Second Priority Term Loan on the
Closing Date is subject to the satisfaction, or waiver in accordance with       
Section 12.05 (Amendments and Waivers), of the following conditions precedent on
or before the Closing Date:                                                     

SECTION 3.01. Resolutions. The Administrative Agent shall have received a copy  
of one or more resolutions or other authorizations of Holdings, the Borrower and
each Guarantor authorizing, as applicable and among other things, the granting  
of the Liens under the Security Documents and the execution, delivery and       
performance of this Agreement and the other Financing Documents, in each case   
certified by an Officer of each such Person as being (a) in full force and      
effect as of the Closing Date and (b) true, correct and complete copies of all  
of the resolutions or other authorizations of such Person relating to the       
transactions contemplated by this Agreement and the other Financing Documents as
of the Closing Date.                                                            

SECTION 3.02. Incumbency. The Administrative Agent shall have received a        
certificate from each of Holdings, the Borrower and each Guarantor, signed by   
the appropriate authorized officer of such Person and dated as of the Closing   
Date, as to the incumbency of the natural persons authorized to execute and     
deliver the Second Priority Term Loan Documents to which such Person is a party.

SECTION 3.03. Formation Documents. The Administrative Agent shall have received 
(a) a copy of the certificate of formation, articles of incorporation or other  
comparable constituent documents of Holdings, the Borrower and each Subsidiary  
of the Borrower, in each case certified by the Secretary of State of the state  
of such Person's formation or incorporation (as applicable) and (b) a copy of   
the limited liability company operating agreement, bylaws or other comparable   
constituent documents of such Person, in each case certified by an Officer of   
such Person as being true, correct and complete as of the Closing Date.         

SECTION 3.04. Good Standing Certificates. The Administrative Agent shall have   
received certificates issued by the Secretary of State of the state in which    
each of Holdings, the Borrower, and each Subsidiary of the Borrower is formed or
organized (as applicable), (a) dated no more than five days prior to the Closing
Date and (b) certifying that such Person is in good standing and is qualified to
do business in, and has paid all franchise taxes or similar taxes due to the    
applicable state.                                                               

64

EX-10.2.4
71st Page of 171
TOC
1st
Previous
Next
↓Bottom
Just 71st
SECTION 3.05. Financial Officer's Certificate. The chief financial officer of   
the Borrower shall have furnished a certificate, dated the Closing Date, in form
and substance satisfactory to the Administrative Agent, stating to the effect   
that:                                                                           

                  (a)      The present fair saleable value of the assets of each
        of the Borrower and each Subsidiary of the Borrower (other than CalGen
       Finance) exceeds the amount required to pay the probable liability on
 its existing debts, respectively (whether matured or unmatured,
     liquidated or unliquidated, absolute, fixed or contingent), as they
         become absolute and matured, and as a result of the consummation of the
         transactions contemplated herein and in the Bank Book, will continue to
exceed such amount;                                           

            (b)      Each of the Borrower and each Subsidiary of the
        Borrower (other than CalGen Finance) does not, and, as a result of the
      consummation of the transactions contemplated in this Agreement, the
other Financing Documents and the Bank Book, will not, have   
        unreasonably small capital for it to carry on its business as proposed
to be conducted;                                              

           (c)      Neither the Borrower nor any Subsidiary of the
         Borrower (other than CalGen Finance) is incurring obligations or making
         transfers under any evidence of indebtedness with the intent to hinder,
         delay or defraud any entity to which it is or will become indebted; and

                  (d)      Nothing has come to the Borrower's attention to cause
         it to believe that: (i) R.W. Beck is not qualified to pass on questions
      relating to the technical, environmental and economic aspects of the
projects operated by the CalGen Companies as such projects are
   described in the Bank Book; (ii) the assumptions included in R.W.
      Beck's report dated March 15, 2004, entitled "Independent Engineer's
Report, Calpine Generating Company, LLC Facilities" (the "Beck
     Report"), are not reasonable; (iii) the information provided by the
      CalGen Companies to R.W. Beck in connection with the Beck Report was
  not prepared in good faith by the CalGen Companies; and (iv) the
         factual information or the conclusions contained in the Beck Report are
inaccurate in any material adverse respect.                   

SECTION 3.06. Security.                                                         

               (a)      Release. The Collateral Agent shall have received:

                          (i)      certified copies of Uniform Commercial Code
                  Requests for Information or Copies (Form UCC-11), or a similar
        search report certified by a party acceptable to the
             Administrative Agent, dated a date reasonably near to the
                  Closing Date, listing all effective Financing Statements which
                name Holdings, the Borrower or any Subsidiary thereof (under
          its present names or any previous name) as the debtor,
              together with copies of such Financing Statements (none of
          which shall cover any Collateral, other than Financing
                 Statements that evidence (A) Liens granted in connection with
            the Existing Senior Secured Credit Facility or (B) Liens
         permitted to exist hereunder after the Closing Date);

65

EX-10.2.4
72nd Page of 171
TOC
1st
Previous
Next
↓Bottom
Just 72nd
                         (ii)     appropriately completed copies, which have
                 been duly authorized for filing by the appropriate Person, of
       each UCC Financing Statement Amendment (Form UCC-3)
                 termination statement, if any, necessary to release all Liens
             of any Person in any Collateral previously granted by the
         Borrower or any of its Subsidiaries to the extent not
                 permitted under the Second Priority Term Loan Documents after
               the Closing Date (including (A) Liens granted in connection
                  with the Existing Senior Secured Credit Facility and (B) other
              existing Liens which are not permitted hereunder after the
Closing Date);                              

                          (iii)    such releases, reconveyances, satisfactions
                or other instruments as it may reasonably request to confirm
          the release, satisfaction and discharge in full of all
             mortgages and deeds of trust at any time delivered by the
                 Borrower or any of its Subsidiaries to secure any Obligations
              in respect of the Existing Senior Secured Credit Facility,
                duly executed, delivered and acknowledged in recordable form
               by the grantee named therein or its of record successors or
assigns; and                                

                         (iv)     a letter or letters (in form and substance
                  reasonably satisfactory to the Administrative Agent) addressed
                  to the Collateral Agent, the First Priority Indenture Trustee,
             the Second Priority Indenture Trustee, the Third Priority
          Indenture Trustee, the Administrative Agent, the First
            Priority Term Loan Administrative Agent and the Revolver
               Administrative Agent executed and delivered by the Existing
                Credit Administrative Agent, stating the amount (the "Payout
                Amount") required to pay in full in cash at the Closing Date
          all outstanding Obligations under or in respect of the
Existing Senior Secured Credit Facility.    

               (b)      Security. The Collateral Agent shall have received
(with a copy to the Administrative Agent):                    

                         (i)      appropriately completed copies, which have
                 been duly authorized for filing by the appropriate Person, of
           Uniform Commercial Code Financing Statements or fixture
         filings naming Holdings, the Borrower, or each of the
             Guarantors (as applicable) as a debtor and the Collateral
               Agent as the secured party, or other similar instruments or
               documents to be filed under the UCC of all jurisdictions as
         may be necessary or, in the reasonable opinion of the
                  Administrative Agent and its counsel, desirable to perfect the
               security interests of the Second Priority Term Loan Secured
Parties pursuant to the Security Documents; 

                         (ii)     (A) certificates (which certificates shall
                  be accompanied by irrevocable undated stock powers or transfer
                documents, duly endorsed in blank and otherwise satisfactory
      in form and substance to the Administrative Agent)
          representing all Capital Stock pledged pursuant to the
            Security Documents and (B) all promissory notes or other
              instruments (duly endorsed, where appropriate, in a manner
        reasonably satisfactory to the Administrative Agent)
evidencing any Collateral; and              

66

EX-10.2.4
73rd Page of 171
TOC
1st
Previous
Next
↓Bottom
Just 73rd
                          (iii)    such other documents and instruments as the
               Administrative Agent or the Collateral Agent may reasonably
                request in order to grant and perfect the security interests
contemplated by the Security Documents      

          (c)      Filing. All Uniform Commercial Code Financing
        Statements (Forms UCC-1) or other similar Financing Statements and UCC
   Financing Statement Amendments (Forms UCC-3) required pursuant to
      clauses (a) and (b) above (collectively, the "Financing Statements")
        shall have been filed or recorded or delivered to the Collateral Agent
for filing or recording.                                      

SECTION 3.07. Consummation of Notes Offering, First Priority Term Loan          
Agreement, Revolving Loan Agreement and Second Priority Term Loan Documents.    

     (a)      The Borrower and CalGen Finance shall have consummated the
offering of the Notes, and such Notes shall have been issued and sold prior to, 
or shall be issued and sold simultaneously with, the Closing Date on            
substantially the terms described in the Bank Book and other terms reasonably   
satisfactory to the Administrative Agent.                                       

  (b)      The Borrower and each Guarantor shall have executed and
delivered the First Priority Term Loan Agreement and the Revolving Loan         
Agreement and each such agreement shall be in full force and effect prior to, or
shall become in full force and effect simultaneously with, the Closing Date, on 
substantially the terms described in the Bank Book and other terms reasonably   
satisfactory to the Administrative Agent.                                       

         (c)      Holdings, the Borrower and each Guarantor shall have delivered
to the Lenders, each of the Second Priority Term Loan Documents to be entered   
into as of the Closing Date, each duly executed and delivered by the party or   
parties thereto and, unless otherwise noted, dated the Closing Date.            

       (d)      The Borrower shall have received cash proceeds from the sale
of the Notes (net of underwriting discounts and commissions) in an amount       
sufficient, when added to the cash proceeds from the borrowings hereunder and   
under the First Priority Term Loan Agreement (in each case, net of applicable   
expenses and fees), to pay in full in cash the Payout Amount and all other fees,
costs and expenses payable by the Borrower in connection with the closing of the
transactions contemplated herein and in the Bank Book and shall have authorized 
disbursement of such cash proceeds directly to pay the Payout Amounts and such  
fees, costs and expenses pursuant to a disbursement authorization letter (in    
form and substance reasonably satisfactory to the Administrative Agent) executed
and delivered by the Borrower.                                                  

SECTION 3.08. Ratings. The Second Priority Term Loans shall have received a     
rating by S&P.                                                                  

SECTION 3.09. No Material Adverse Change. There shall not have occurred (a)     
since December 31, 2003, any change, or any development or event involving a    
prospective change, in the condition (financial or other), business, properties 
or results of operations of the Borrower and its Subsidiaries, taken as a whole,
which, in the judgment of the Administrative Agent, is material and adverse and 
makes it impractical or inadvisable to proceed with making of the Second        
Priority Term Loans; (b) since March 12, 2004, any suspension or material       
limitation of                                                                   

67

EX-10.2.4
74th Page of 171
TOC
1st
Previous
Next
↓Bottom
Just 74th
trading in securities generally on the New York Stock Exchange, or any setting  
of minimum prices for trading on such exchange, or any suspension of trading of 
any securities of Calpine on any exchange or in the over-the-counter market; (c)
since March 12, 2004, a general moratorium on commercial banking activities     
declared by either Federal or New York State authorities or a material          
disruption in commercial banking or securities settlement or clearance services 
in the United States which, in the judgment of the Administrative Agent, makes  
it impracticable or inadvisable to proceed with the making of the Second        
Priority Term Loans; or (d) since March 12, 2004, any outbreak or escalation of 
major hostilities in which the United States is involved, any declaration of war
by Congress or any other substantial national or international calamity or      
emergency if, in the judgment of the Administrative Agent, the effect of any    
such outbreak, escalation, declaration, calamity or emergency makes it          
impractical or inadvisable to proceed with the making of the Second Priority    
Term Loans.                                                                     

SECTION 3.10. Third Party Approvals. All consents, exemptions, authorizations,  
or other actions by, or notices to, or filings with, governmental authorities   
and other Persons in respect of all applicable Legal Requirements, necessary or 
desirable in connection with the execution, delivery or performance by each of  
Holdings, the Borrower and each Guarantor of the Second Priority Term Loan      
Documents to which it is a party (including all federal, state and local        
regulatory filings, consents and approvals necessary or desirable in connection 
therewith) shall have been obtained and be in full force and effect, and the    
Administrative Agent shall have been furnished with appropriate evidence        
thereof, and all waiting periods related thereto shall have lapsed or expired   
without extension or the imposition of any conditions or restrictions.          

SECTION 3.11. Opinions. The Administrative Agent shall have received one or more
opinions addressed to the Administrative Agent and each of the Lenders from time
to time party to this Agreement, in form and substance reasonably satisfactory  
to the Administrative Agent and its counsel, dated as of the Closing Date and in
the form of Exhibit G.                                                          

SECTION 3.12. Officer's Certificates. The Administrative Agent shall have       
received a certificate, dated as of the Closing Date, of the president or any   
vice president and a principal financial or accounting officer of the Borrower  
and each of the Guarantors, in which such officer, to the best of his or her    
knowledge after reasonable investigation, shall state that (a) the              
representations and warranties of such CalGen Company in this Agreement and the 
other Second Priority Term Loan Documents are true and correct in all material  
respects; (b) such CalGen Company has complied with all agreements and satisfied
all conditions on its part to be performed or satisfied hereunder at or prior to
the Closing Date; and (c) subsequent to December 31, 2003, there has been no    
material adverse change, nor any development or event involving a prospective   
material adverse change, in the condition (financial or other), business,       
properties or results of operations of such CalGen Company or its respective    
subsidiaries taken as a whole except as set forth in or contemplated by the Bank
Book or otherwise disclosed in writing to the Administrative Agent prior to the 
Closing Date.                                                                   

SECTION 3.13. Title Policies.                                                   

      (a)      Mortgages. The Collateral Agent shall have received (with a
copy to the Administrative Agent) a fully executed and notarized mortgage or    
deed of trust from each Guarantor (each a "Closing Date Mortgage") encumbering  
all of such Guarantor's Closing Date                                            

68

EX-10.2.4
75th Page of 171
TOC
1st
Previous
Next
↓Bottom
Just 75th
Mortgaged Property as security for the payment and performance of the Secured   
Obligations. Each Closing Date Mortgage shall be in proper form for recording in
all applicable jurisdictions where the property encumbered thereby is located.  

    (b)      Title Insurance Policies. The Collateral Agent shall have
received CLTA mortgagee policies of title insurance or unconditional commitments
therefor (the "Closing Date Mortgage Policies") issued by the Title Company with
respect to the Closing Date Mortgaged Properties, providing coverage in an      
amount equal to $50,000,000 per Closing Date Mortgaged Property and assuring the
Collateral Agent that the applicable Closing Date Mortgages create valid and    
enforceable perfected mortgage Liens on the respective Closing Date Mortgaged   
Properties encumbered thereby. The Closing Date Mortgage Policies shall (i)     
include endorsements providing mechanics' lien coverage and such other coverages
as are reasonably requested by the Administrative Agent, and (ii) provide for   
such affirmative insurance, gap coverage and reinsurance as the Administrative  
Agent may reasonably request, all of the foregoing in form and substance        
reasonably satisfactory to the Administrative Agent.                            

SECTION 3.14. Evidence of Insurance. The Collateral Agent shall have received a 
certificate from the Borrower's insurance broker or other evidence satisfactory 
to it that all insurance required to be maintained pursuant to this Agreement is
in full force and effect and that Collateral Agent on behalf of the Secured     
Parties has been named as additional insured and/or loss payee thereunder to the
extent required under this Agreement.                                           

SECTION 3.15. Other Financing Documents. The Administrative Agent shall have    
received true, correct and complete copies of each Financing Document (other    
than the Second Priority Term Loan Documents) and each shall be in full force   
and effect as of the Closing Date, as certified to the Administrative Agent by  
an Officer of the Borrower as of the Closing Date                               

SECTION 3.16. No Default. No Default or Event of Default shall have occurred and
be continuing (or would occur or would be continuing immediately after giving   
effect to the making of the Second Priority Term Loans).                        

SECTION 3.17. Fees. The Borrower shall have paid all fees and reasonable        
out-of-pocket costs and expenses (including reasonable legal fees and expenses  
of counsel) and other compensation contemplated hereby payable to the Agents and
the Lenders.                                                                    

SECTION 3.18. Funding Notice. The Administrative Agent shall have received a    
fully executed and delivered Funding Notice from the Borrower at least three    
Business Days prior to the Closing Date.                                        

SECTION 3.19. Delivery of Financials. The Administrative Agent and each Lender, 
at least four Business Days prior to the Closing Date, shall have received      
copies of (a) the consolidated financial statements for the Borrower and its    
Subsidiaries (covering the fiscal year ended December 31, 2003) as audited by   
PricewaterhouseCoopers LLP, and such consolidated financial statements shall be 
reasonably satisfactory to the Administrative Agent, (b) the unaudited pro forma
consolidated balance sheet of the Borrower and its Subsidiaries as of the       
Closing Date giving effect to (i) the consummation of the transactions          
contemplated hereby, (ii) the issuance of the Notes, the making of the loans    
under the First Priority Term Loan Agreement                                    

69

EX-10.2.4
76th Page of 171
TOC
1st
Previous
Next
↓Bottom
Just 76th
and the use of proceeds thereof, and (iii) the payment of fees and expenses in  
connection with the foregoing, and (c) the forecasted operating results of the  
Borrower and its Subsidiaries (the "Projections"), giving effect to the         
consummation of the transactions contemplated by this Agreement, the making of  
the loans under the First Priority Term Loan Agreement and the issuance of the  
Notes, covering the period from the Closing Date until December 31, 2010 and in 
form and substance substantial similar to the draft Projections provided to the 
Lenders on March 16, 2004. The Administrative Agent is entitled, but not        
obligated to, request and receive, prior to the making of any Second Priority   
Term Loan, additional information reasonably satisfactory to the Administrative 
Agent confirming the satisfaction of any of the foregoing if, in the good faith 
judgment of the Administrative Agent, such request is warranted under the       
circumstances.                                                                  

SECTION 3.20. Site Assessment Reports. The Administrative Agent shall have      
received (a) a copy of one or more environmental site assessment reports from   
each of the Environmental Consultants relating to the Closing Date Facilities   
(in the form provided to counsel to the Administrative Agent prior to the       
Closing Date) and (b) a reliance letter from each of the Environmental          
Consultants, dated within three Business Days of the Closing Date, permitting   
the Lenders to rely on such environmental site assessment reports as if         
addressed to them (in form and substance reasonably satisfactory to the         
Administrative Agent).                                                          

SECTION 3.21. Major Project Documents. The Borrower and each applicable         
Guarantor shall have executed and delivered the Major Project Documents to which
it is a party and each such Major Project Document shall be in full force and   
effect prior to, or shall become in full force and effect simultaneously with,  
the Closing Date, on substantially the terms described in the Bank Book and     
other terms reasonably satisfactory to the Administrative Agent.                

ARTICLE IV. 

REPRESENTATIONS AND WARRANTIES

Each of the Borrower and each Guarantor makes the following   
representations and warranties to and in favor of the Sole Lead Arranger, the   
Administrative Agent and the Lenders as of the Closing Date.                    

SECTION 4.01. Organization.                                                     

       (a)      The Borrower has been duly formed and is an existing limited
liability company in good standing under the laws of the State of Delaware, with
power and authority under such laws to own or lease its properties and conduct  
its business as described in the Bank Book; and the Borrower is duly qualified  
to do business as a foreign limited liability company, and is in good standing, 
in all other jurisdictions in which its ownership or leasing of property or the 
conduct of its business requires such qualification.                            

   (b)      Each Subsidiary of the Borrower either (i) has been duly
incorporated and is an existing corporation in good standing under the laws of  
the jurisdiction of its incorporation, with the corporate power and authority to
own or lease its properties and conduct its business; or                        

70

EX-10.2.4
77th Page of 171
TOC
1st
Previous
Next
↓Bottom
Just 77th
(ii) is a general partnership, limited partnership or a limited liability       
company, has been duly formed and is validly existing as a general partnership, 
limited partnership or limited liability company, as the case may be, is in good
standing under the laws of the jurisdiction of its formation, and has full      
partnership or limited liability company power and authority, as the case may   
be, to own or lease its properties and conduct its business.                    

  (c)      Each Subsidiary of the Borrower is duly qualified to do
business as a foreign corporation, general or limited partnership or limited    
liability company, as the case may be, and is in good standing, in all other    
jurisdictions in which its ownership or leasing of property or the conduct of   
its business requires such qualification.                                       

  (d)      All of the issued and outstanding Capital Stock in each
Subsidiary of the Borrower has been duly authorized and validly issued and is   
fully paid and nonassessable, and the Capital Stock of each Subsidiary owned by 
the Borrower, directly or through Subsidiaries, is owned free from liens,       
encumbrances and defects except for those to be terminated at the Closing Date  
with respect to the Existing Senior Secured Credit Facility and Permitted Liens.

     (e)      The capital structure of Holdings and the Borrower and its
Subsidiaries is accurately set forth on Schedule 4.01.                          

SECTION 4.02. Financing Documents and Major Project Documents. Each of the      
Financing Documents, Major Project Documents and Third Party Project Documents  
to which the Borrower or any of its Subsidiaries is a party has been duly       
authorized by such CalGen Company. Each of the Financing Documents, Major       
Project Documents and Third Party Project Documents has been validly executed   
and delivered by such CalGen Company and constitutes a valid and legally binding
obligation of such CalGen Company, enforceable against such CalGen Company in   
accordance with its terms, subject to bankruptcy, insolvency, fraudulent        
transfer, reorganization, moratorium and similar laws of general applicability  
relating to or affecting creditors' rights and to general equity principles.    

SECTION 4.03. Collateral.                                                       

   (a)      The Security Documents grant and create, in favor of the
Collateral Agent (for the benefit of the Secured Parties as security for the    
Secured Obligations), a valid security interest in the personal property        
Collateral defined in each of such instruments to the extent contemplated       
thereby.                                                                        

       (b)      Each Mortgage grants and creates, in favor of the Collateral
Agent (for the benefit of the Secured Parties as security for the Secured       
Obligations), a valid mortgage lien and/or security interest in the Collateral  
defined in each of such Mortgage to the extent contemplated thereby.            

(c)      All pledged Collateral is represented by certificated
securities and all such certificated securities and all promissory notes and    
other instruments evidencing or representing any Collateral have been delivered 
to the Collateral Agent in pledge for the benefit of the Secured Parties as     
security for all of the Secured Obligations, duly endorsed by an effective      
endorsement.                                                                    

71

EX-10.2.4
78th Page of 171
TOC
1st
Previous
Next
↓Bottom
Just 78th
SECTION 4.04. Governmental Approvals. No consent, approval, authorization, or   
order of, or filing with, any Governmental Authority is required for the        
consummation of the transactions contemplated by this Agreement, the other      
Financing Documents, the Major Project Documents or the Third Party Project     
Documents or otherwise in connection with the transactions contemplated by any  
such documents or the grant and perfection of the security interests in the     
Collateral pursuant to the Security Documents, except (a) such consents,        
approvals, authorizations and orders as have already been obtained, (b) filings 
required pursuant to Section 3.06 (Security) to perfect the Collateral Agent's  
security interests granted pursuant to the Security Documents, (c) such         
consents, approvals, authorizations and orders as may be required under state   
securities or blue sky laws and (d) such other consents approvals,              
authorizations and orders as would not, in the aggregate, have a Material       
Adverse Effect.                                                                 

SECTION 4.05. Compliance with Law. The execution, delivery and performance of   
this Agreement, the other Financing Documents, the Major Project Documents and  
the Third Party Project Documents by the Borrower and its Subsidiaries party    
thereto, as applicable; the making of the Second Priority Term Loans hereunder; 
the grant and perfection of the security interests in the Collateral pursuant to
the Security Documents; compliance with the terms and provisions of each of the 
foregoing by the CalGen Companies, as applicable; and the consummation by such  
CalGen Companies of the transactions contemplated herein and therein, in each   
case, will not result in a breach or violation of any of the terms and          
provisions of, or conflict with or constitute a default under, or result in the 
imposition or creation of (or the obligation to create or impose) a Lien (other 
than in favor of the Collateral Agent for the benefit of the Secured Parties)   
under, any Legal Requirement applicable to any such CalGen Company, or any      
agreement or instrument to which any of the CalGen Companies is a party or by   
which any of the CalGen Companies is bound or to which any of the properties of 
any of the CalGen Companies is subject, except to the extent that the foregoing 
would not, in the aggregate, have a Material Adverse Effect.                    

SECTION 4.06. Ownership of Property; Liens. Except as disclosed in the Closing  
Date Mortgage Policies, each of the Borrower and each Guarantor has good and    
marketable title to all real properties owned by it, and good title to all other
properties and assets owned by it, in each case except for Permitted Liens, free
from Liens that would materially affect the value thereof or materially         
interfere with the use made or to be made thereof by it; and, except for        
Permitted Liens or as disclosed in the Closing Date Mortgage Policies, each of  
the Borrower and each Guarantor holds any leased real or personal property under
valid and enforceable leases with no exceptions to title that would materially  
interfere with the use made or to be made thereof by it. No Financing Statements
in respect of any property or assets of any of the Borrower or any Guarantor is 
on file in favor of any Person other than those in respect of Permitted Liens   
and those to be terminated at the Closing Date with respect to the Existing     
Senior Secured Credit Facility.                                                 

SECTION 4.07. Governmental Authorizations; Permits. Each of the Borrower and its
Subsidiaries possesses adequate certificates, authorities or permits issued by  
appropriate governmental agencies or bodies necessary to conduct the business   
now operated by it and has not received any notice of proceedings relating to   
the revocation or modification of any such certificate, authority or permit     
that, if determined adversely to such CalGen Company, would individually or in  
the aggregate have a Material Adverse Effect.                                   

72

EX-10.2.4
79th Page of 171
TOC
1st
Previous
Next
↓Bottom
Just 79th
SECTION 4.08. Labor Disputes. No labor dispute with the employees of any of the 
Borrower or its Subsidiaries exists or, to the knowledge of the Borrower or any 
Guarantor, is imminent that might have a Material Adverse Effect.               

SECTION 4.09. Intellectual Property Rights. Each of the Borrower and its        
Subsidiaries owns, possesses or can acquire on reasonable terms, adequate       
trademarks, trade names and other rights to inventions, know-how, patents,      
copyrights, confidential information and other intellectual property            
(collectively, "intellectual property rights") necessary to conduct the business
now operated by it, or presently employed by it, and has not received any notice
of infringement of or conflict with asserted rights of others with respect to   
any intellectual property rights that, if determined adversely to such CalGen   
Company, would individually or in the aggregate have a Material Adverse Effect. 

SECTION 4.10. Hazardous Substances. None of the Borrower and its Subsidiaries is
in violation of any Legal Requirement relating to the use, disposal or release  
of hazardous or toxic substances or relating to the protection or restoration of
the environment or human exposure to hazardous or toxic substances              
(collectively, "Environmental Laws"), owns or operates any real property        
contaminated with any substance that is subject to any Environmental Laws, is   
liable for any off-site disposal or contamination pursuant to any Environmental 
Laws, or is subject to any claim relating to any Environmental Laws, which      
violation, contamination, liability or claim would individually or in the       
aggregate have a Material Adverse Effect; and the Borrower is not aware of any  
pending investigation which might lead to such a claim.                         

SECTION 4.11. Litigation. Except as set forth on Schedule 4.11, there are no    
pending actions, suits or proceedings against the Borrower or any of its        
Subsidiaries or any of their respective properties that, if determined adversely
to such CalGen Company, would individually or in the aggregate have a Material  
Adverse Effect, or would materially and adversely affect the ability of such    
CalGen Company to perform its or their obligations under, or contemplated by,   
this Agreement, the other Financing Documents, the Major Project Documents or   
the Third Party Project Documents, in each case to which such CalGen Company is 
a party, or which are otherwise material in the context of the transactions     
contemplated by the Financing Documents.                                        

SECTION 4.12. Financial Information. The financial information delivered        
pursuant to clauses (a) and (b) of Section 3.19 (Delivery of Financials)        
presents fairly the financial position of the Borrower and its Subsidiaries on a
combined or consolidated basis, as the case may be, as of the dates shown       
therein and their results of operations and cash flows for the periods shown    
therein, and, except as otherwise disclosed in the Bank Book, together with the 
other documents, certificates and other writings delivered to the Administrative
Agent and the Lenders by or on behalf of the Borrower or any Guarantor          
specifically for use in connection with the transactions contemplated hereby,   
such financial statements have been prepared in conformity with GAAP applied on 
a consistent basis. None of the Borrower or any of its Subsidiaries has any     
material liabilities, direct or contingent, which are required to be shown on   
such financial statements under GAAP, except as has been disclosed in such      
financial statements.                                                           

SECTION 4.13. Disclosure; Projections.                                          

73

EX-10.2.4
80th Page of 171
TOC
1st
Previous
Next
↓Bottom
Just 80th
       (a)      The Borrower has delivered to each Lender a copy of the Bank
Book. The Bank Book, together with the other documents, certificates and other  
writings delivered to the Administrative Agent and the Lenders by or on behalf  
of the Borrower or any Guarantor specifically for use in connection with the    
transactions contemplated hereby, fairly describes, in all material respects,   
the general nature of the business of the Borrower and its Subsidiaries, the    
transactions contemplated by the Financing Documents and the principal assets of
the Borrower and its Subsidiaries. None of this Agreement, the Bank Book, the   
documents, certificates or other writings delivered to or the Administrative    
Agent or any Lender by or on behalf of the Borrower or any Guarantor in         
connection with the transactions contemplated hereby, taken as a whole, contain 
any untrue statement of a material fact or omit to state any material fact      
necessary in order to make the statements contained herein or therein not       
misleading in light of the circumstances under which they were made (other than 
any information that was corrected or updated in writing by the Borrower to the 
Administrative Agent and the Lenders prior to the Closing Date).                

(b)      The Projections are based on good faith estimates and
assumptions believed by management of the Borrower to be reasonable as of the   
date of the Projections, and there are no statements or conclusions in any of   
the Projections which are based upon or include information known to the        
Borrower to be misleading in any material respect or which fail to take into    
account material information regarding the matters reported therein. The        
Borrower believes that the Projections are reasonable on the Closing Date, it   
being acknowledged and agreed by the Administrative Agent and the Lenders,      
however, that projections as to future events are not to be viewed as facts and 
that the actual results during the period or periods covered by the Projections 
may differ from the projected results and such differences may be material.     

      (c)      Except as expressly set forth in this Section 4.13, neither
the Borrower nor any Guarantor makes any representation with respect to any     
information, projections, forecasts, statements of opinion, expectations or     
beliefs of any party contained in the Bank Book or delivered in connection with 
the transactions contemplated under this Agreement.                             

SECTION 4.14. Adverse Change. Except as has been disclosed in the Bank Book,    
together with the other documents, certificates and other writings delivered to 
the Administrative Agent and the Lenders by or on behalf of the Borrower or any 
Guarantor specifically for use in connection with the transactions contemplated 
hereby, since December 31, 2003 there has been no material adverse change, nor  
any development or event involving a prospective material adverse change, in the
condition (financial or other), business, properties or results of operations of
the Borrower and its Subsidiaries taken as a whole, and, except as has been     
disclosed in writing to the Administrative Agent, no long-term indebtedness has 
been incurred (other than long-term indebtedness that is expressly contemplated 
by the Bank Book), and no dividend or distribution of any kind has been         
declared, paid or made by Borrower on any class of its equity interests.        

SECTION 4.15. Taxes. Each of the Borrower, each Subsidiary of the Borrower and  
Holdings has timely filed (or caused to be filed timely) all federal, material  
state and material local tax returns and reports that are required to be filed  
by it. All material taxes, assessments, utility charges, fees and other         
governmental charges imposed on it have been timely paid (other than those taxes
that it is contesting in good faith and by appropriate proceedings). All such   
tax                                                                             

74

EX-10.2.4
81st Page of 171
TOC
1st
Previous
Next
↓Bottom
Just 81st
returns are complete and accurate in all material respects. Except for Permitted
Liens, no material tax Lien has been filed, and to the knowledge of the Borrower
and each Guarantor, no claim is being asserted, with respect to any such taxes, 
assessments, charges or fees. To the extent any taxes, assessments, charges and 
fees are being contested, the Borrower or the applicable Guarantor has          
established reserves that are adequate for the payment thereof in conformity    
with GAAP.                                                                      

SECTION 4.16. Investment Company Act. None of the Borrower or any of its        
Subsidiaries is an open-end investment company, unit investment trust or        
face-amount certificate company that is or is required to be registered under   
Section 8 of the United States Investment Company Act of 1940, as amended (the  
"Investment Company Act"); none of the Borrower or any of its Subsidiaries is   
or, after giving effect to the transactions contemplated by this Agreement, the 
other Second Priority Term Loan Documents and the Major Project Documents, will 
be an "investment company" as defined in the Investment Company Act of 1940.    

SECTION 4.17. ERISA. Either (a) there are no ERISA Plans or Multiemployer Plans 
for the Borrower or any ERISA Affiliate thereof or (b)(i) each of the Borrower  
and each ERISA Affiliate thereof has fulfilled its obligations (if any) under   
the minimum funding standards of ERISA and the Code for each ERISA Plan, (ii)   
each such Plan is in compliance in all material respects with the currently     
applicable provisions of ERISA and the Code and (iii) neither the Borrower nor  
any ERISA Affiliate thereof has incurred any liability to the PBGC or an ERISA  
Plan or Multiemployer Plan under Title IV of ERISA (other than liability for    
premiums due in the ordinary course). None of the assets of the Borrower or any 
ERISA Affiliate thereof, constitute assets of an employee benefit plan within   
the meaning of 29 C.F.R. Section 2510.3-101. Neither the Borrower nor any       
Subsidiary thereof maintains, or has at any point of its existence maintained,  
any employee-benefit plans that were subject to ERISA.                          

SECTION 4.18. Governmental Regulation.                                          

         (a)      None of the Borrower or any "subsidiary company," as that term
is defined in PUHCA, of the Borrower is, or after giving effect to the borrowing
of any Second Priority Term Loans will be, subject to regulation (i) as a       
"holding company," a "subsidiary company" of a holding company or a             
"public-utility company," as those terms are defined in PUHCA; (ii) under the   
Federal Power Act, as amended (the "FPA"), other than (A) as an "exempt         
wholesale generator" ("EWG") as that term is defined in PUHCA, that is subject  
to regulation as a "public utility" under the FPA, other than as described in   
the Bank Book, together with the other documents, certificates and other        
writings delivered to the Administrative Agent and the Lenders by or on behalf  
of the Borrower or any Guarantor specifically for use in connection with the    
transactions contemplated hereby, or (B) as a QF under the Public Utility       
Regulatory Policies Act of 1978, as amended ("PURPA"), as contemplated by 18    
C.F.R. Section 292.601(c); or (iii) under any state law or regulation with      
respect to rates or the financial or organizational regulation of electric      
utilities, other than, with respect to Subsidiaries of the Borrower that are    
QFs, as contemplated by 18 C.F.R. Section 292.602(c).                           

      (b)      Other than as described in the Bank Book, each of the power
generation projects in which the Borrower's Subsidiaries listed on Schedule     
4.18(b) have an interest meets the requirements under PURPA and the regulations 
of the Federal Energy Regulatory Commission                                     

75

EX-10.2.4
82nd Page of 171
TOC
1st
Previous
Next
↓Bottom
Just 82nd
(the "FERC") promulgated thereunder, as amended from time to time, necessary to 
be a "qualifying cogeneration facility" and/or a "qualifying small power        
generation production facility".                                                

         (c)      Each of the Borrower's Subsidiaries listed on Schedule 4.18(c)
(i) own and/or operate Eligible Facilities within the meaning of Section 32 of  
PUHCA, and each such Subsidiary has received a determination from the FERC, not 
subject to any pending challenge or appeal, that it is an EWG, within the       
meaning of Section 32 of PUHCA; and (ii) other than as described in the Bank    
Book, together with the other documents, certificates and other writings        
delivered to the Administrative Agent and the Lenders by or on behalf of the    
Borrower or any Guarantor specifically for use in connection with the           
transactions contemplated hereby, has validly issued orders from the FERC, not  
subject to any pending challenge, investigation, or proceeding (other than the  
FERC's generic proceeding initiated in Docket No. EL01-118-000), (A) authorizing
such Subsidiary to engage in wholesale sales of electricity, ancillary services 
and, to the extent permitted under its market-based rate tariff, other services 
at market-based rates, and (B) granting such waivers and blanket authorizations 
as are customarily granted to entities with market-based rate authority; with   
respect to each such Subsidiary, the FERC has not imposed any rate caps or      
mitigation measures other than rate caps and mitigation measures generally      
applicable to similarly situated marketers or generators selling electricity,   
ancillary services or other services at wholesale in the geographic market where
such Subsidiary conducts its business.                                          

        (d)      Each of the Borrower's Subsidiaries that are participating in
the Texas wholesale electric market has registered with the Texas Public        
Utilities Commission ("TPUC"), and the TPUC has not imposed on the Borrower any 
specific rate cap or mitigation measures.                                       

      (e)      Other than as described in the Bank Book, together with the
other documents, certificates and other writings delivered to the Administrative
Agent and the Lenders by or on behalf of the Borrower or any Guarantor          
specifically for use in connection with the transactions contemplated hereby,   
there are no pending complaints filed with the FERC seeking abrogation or       
modification of a contract for the sale of power by the Borrower or any of its  
Subsidiaries.                                                                   

SECTION 4.19. Margin Stock, Etc. None of the transactions contemplated by this  
Agreement or the other Second Priority Term Loan Documents (including the use of
the proceeds received as a result of such transactions) will violate or result  
in a violation of Section 7 of the Exchange Act, or any regulation promulgated  
thereunder, including Regulations T, U, and X of the Board of Governors of the  
Federal Reserve System.                                                         

SECTION 4.20. No Violations or Defaults. Neither the Borrower nor any Subsidiary
of the Borrower is in violation of its organizational documents or in default in
the performance or observance of any material obligation, covenant or condition 
contained in any indenture, mortgage, deed of trust, loan agreement, lease or   
other material agreement or instrument to which it is a party or by which it or 
any of its properties may be bound.                                             

SECTION 4.21. Solvency. The present fair saleable value of the assets of each of
the Borrower and each Subsidiary of the Borrower exceeds the amount required to 
pay the probable liability on its existing debts, respectively (whether matured 
or unmatured, liquidated or                                                     

76

EX-10.2.4
83rd Page of 171
TOC
1st
Previous
Next
↓Bottom
Just 83rd
unliquidated, absolute, fixed or contingent), as they become absolute and       
matured, and as a result of the consummation of the transactions contemplated   
herein and in the Bank Book, will continue to exceed such amount.               

SECTION 4.22. Capitalization. Each of the Borrower and each Subsidiary of the   
Borrower does not, and, as a result of the consummation of the transactions     
contemplated in this Agreement, the other Second Priority Term Loan Documents   
and the Bank Book, will not, have unreasonably small capital for it to carry on 
its business as proposed to be conducted.                                       

SECTION 4.23. Other Indebtedness. Neither the Borrower nor any Subsidiary of the
Borrower is incurring obligations or making transfers under any evidence of     
indebtedness with the intent to hinder, delay or defraud any entity to which it 
is or will become indebted.                                                     

ARTICLE V.

 COVENANTS

SECTION 5.01. Reports.                                                          

      (a)      Whether or not required by the rules and regulations of the
SEC, so long as any Second Priority Term Loan Obligations are outstanding, the  
Borrower shall furnish to the Administrative Agent (for delivery to each        
Lender), within the time periods specified in the SEC's rules and regulations:  

           (i)      all quarterly and annual reports that would be
 required to be filed with the SEC on Forms 10-Q and 10-K if the
Borrower were required to file such reports; and              

             (ii)     all current reports that would be required to be
      filed with the SEC on Form 8-K if the Borrower were required to file
such reports.                                                 

         (b)      All such reports shall be prepared in all material respects in
accordance with all of the rules and regulations applicable to such reports.    
Each annual report on Form 10-K shall include a report on the Borrower's        
consolidated financial statements by the Borrower's certified independent       
accountants.                                                                    

SECTION 5.02. Compliance Certificate.                                           

      (a)      The Borrower shall deliver to the Administrative Agent (for
delivery to each Lender), within 90 days after the end of each fiscal year, an  
Officer's Certificate stating that a review of the activities of the Borrower   
and its Subsidiaries during the preceding fiscal year, as applicable, has been  
made under the supervision of the signing Officer with a view to determining    
whether the Borrower has kept, observed, performed and fulfilled its obligations
under this Agreement, and further stating, as to the Officer signing such       
certificate, that to the best of his or her knowledge the Borrower has kept,    
observed, performed and fulfilled each and every covenant contained in this     
Agreement and is not in default in the performance or observance of any of the  
terms, provisions and conditions of this Agreement (or, if a Default or Event of
Default has occurred, describing all such Defaults or Events of Default of which
he or she may have knowledge and what action the Borrower is taking or proposes 
to take with respect                                                            

77

EX-10.2.4
84th Page of 171
TOC
1st
Previous
Next
↓Bottom
Just 84th
thereto) and that to the best of his or her knowledge no event has occurred and 
remains in existence by reason of which payments on account of the principal of 
or interest, if any, on the Second Priority Term Loans borrowed under this      
Agreement is prohibited or if such event has occurred, a description of the     
event and what action the Borrower is taking or proposes to take with respect   
thereto. Such certificate shall include information (i) demonstrating compliance
by the Borrower with Section 5.18 (Coverage Ratio; Kilowatt Test) and (ii)      
calculating Excess Cash Flow for such fiscal quarter or such fiscal year.       

         (b)      So long as not contrary to the then-current recommendations of
the American Institute of Certified Public Accountants, the year-end financial  
statements delivered pursuant to Section 5.01(a) (Reports) above shall be       
accompanied by a written statement of the Borrower's independent public         
accountants (who shall be a firm of established national reputation) that in    
making the examination necessary for certification of such financial statements,
nothing has come to their attention that would lead them to believe that the    
Borrower has violated any provisions of Article V or Article VI hereof or, if   
any such violation has occurred, specifying the nature and period of existence  
thereof, it being understood that such accountants shall not be liable directly 
or indirectly to any Person for any failure to obtain knowledge of any such     
violation.                                                                      

      (c)      So long as any of the Second Priority Term Loan Obligations
are outstanding, the Borrower shall deliver to the Administrative Agent,        
forthwith upon any Officer becoming aware of any Default or Event of Default, an
Officer's Certificate specifying such Default or Event of Default and what      
action the Borrower is taking or proposes to take with respect thereto.         

SECTION 5.03. Stay, Extension and Usury Laws. Each of the Borrower and each     
Guarantor covenants (to the extent that it may lawfully do so) that it shall not
at any time insist upon, plead, or in any manner whatsoever claim or take the   
benefit or advantage of, any stay, extension or usury law wherever enacted, now 
or at any time hereafter in force, that may affect the covenants or the         
performance of this Agreement; and each of the Borrower and each Guarantor (to  
the extent that it may lawfully do so) hereby expressly waives all benefit or   
advantage of any such law, and covenants that it shall not, by resort to any    
such law, hinder, delay or impede the execution of any power herein granted to  
the Administrative Agent, but shall suffer and permit the execution of every    
such power as though no such law has been enacted.                              

SECTION 5.04. Restricted Payments.                                              

  (a)      The Borrower shall not, and shall not permit any of its
Subsidiaries to, directly or indirectly:                                        

              (i)      (A) declare or pay any dividend or make any other
       payment or distribution on account of the Borrower's Equity Interests
       (including any payment in connection with any merger or consolidation
     involving the Borrower) or to the direct or indirect holders of the
  Borrower's Equity Interests in their capacity as such, including
       Permitted Tax Payments (other than dividends or distributions payable
        in Equity Interests (other than Disqualified Stock) of the Borrower or
       dividends or distributions payable to the Borrower or a Guarantor) or
(B) pay any Major Maintenance Expenses;                       

78

EX-10.2.4
85th Page of 171
TOC
1st
Previous
Next
↓Bottom
Just 85th
                (ii)     purchase, redeem or otherwise acquire or retire for
 value (including in connection with any merger or consolidation
involving the Borrower) any Equity Interests of the Borrower; 

                 (iii)    make any payment on or with respect to, or purchase,
redeem, defease or otherwise acquire or retire for value any  
        Subordinated Indebtedness or any other Indebtedness of the Borrower or
   any of its Subsidiaries that is contractually subordinated to the
         Secured Obligations (excluding any intercompany Indebtedness between or
among the Borrower and any of the Guarantors);                

(iv)     make any Restricted Investment;    

(all such payments and other actions set forth in these clauses (i) through (iv)
above being collectively referred to as "Restricted Payments"), unless:         

                          (A)      such Restricted Payment is made from Excess
Cash Flow generated since the Closing Date; 

                          (B)      no Default or Event of Default has occurred
             and is continuing or would occur as a consequence of such
                  Restricted Payment (other than any Default or Event of Default
              that is cured as a result of such Restricted Payment); and

                        (C)      at the time of making any such Restricted
             Payment that is not a payment on or with respect to, or a
            purchase, redemption, defeasance or other acquisition or
           retirement for value of, Subordinated Indebtedness, all
                  amounts then due under all Subordinated Indebtedness have been
paid in full; or                            

           (v)      use the proceeds of any Indebtedness under any
        revolving Credit Facility which is First Priority Lien Debt to prepay,
         repay or redeem the principal of any Second Priority Lien Debt or Third
Priority Lien Debt.                                           

SECTION 5.05. Dividend and Other Payment Restrictions Affecting Subsidiaries.   

  (a)      The Borrower shall not, and shall not permit any of its
Subsidiaries to, directly or indirectly, create or permit to exist or become    
effective any consensual encumbrance or restriction on the ability of any       
Subsidiary to:                                                                  

                 (i)      pay dividends or make any other distributions on its
   Capital Stock to the Borrower or any of its Subsidiaries, or with
        respect to any other interest or participation in, or measured by, its
     profits, or pay any indebtedness owed to the Borrower or any of its
Subsidiaries;                                                 

                 (ii)     make loans or advances to the Borrower or any of its
Subsidiaries; or                                              

            (iii)    transfer any of its properties or assets to the
Borrower or any of its Subsidiaries.                          

79

EX-10.2.4
86th Page of 171
TOC
1st
Previous
Next
↓Bottom
Just 86th
        However, the preceding restrictions shall not apply to encumbrances or
restrictions existing under or by reason of:                                    

(A)      this Agreement;  

                          (B)      the First Priority Term Loan Agreement, the
                  Revolving Loan Agreement, the Indentures and the Notes and any
                 amendments, modifications, restatements, renewals, increases,
                supplements, refundings, replacements or refinancings of the
          First Priority Term Loan Agreement, the Revolving Loan
               Agreement, the Indentures and the Notes; provided, that the
                 amendments, modifications, restatements, renewals, increases,
                 supplements, refundings, replacements or refinancings are not
                  materially more restrictive, taken as a whole, with respect to
           such dividend and other payment restrictions than those
            contained in the First Priority Term Loan Agreement, the
                 Revolving Loan Agreement, the Indentures and the Notes on the
Closing Date;                               

                 (C)      any applicable Legal Requirements;

                     (D)      customary non-assignment provisions in
              contracts, agreements, leases, permits or licenses entered
         into or issued in the ordinary course of business and
consistent with past practices;             

                      (E)      purchase money obligations for property
                 acquired in the ordinary course of business and Capital Lease
                  Obligations that impose restrictions on the property purchased
                 or leased of the nature described in clauses (i) and (iii) of
the preceding paragraph;                    

                  (F)      any agreement for the sale or other
               disposition of a Subsidiary that restricts distributions by
          that Subsidiary pending the sale or other disposition;

                  (G)      Permitted Refinancing Indebtedness;
               provided, that the restrictions contained in the agreements
             governing such Permitted Refinancing Indebtedness are not
             materially more restrictive, taken as a whole, than those
                contained in the agreements governing the Indebtedness being
refinanced;                                 

                    (H)      Liens securing Indebtedness otherwise
                 permitted to be incurred under the provisions of Section 5.06
                 (Incurrence of Indebtedness and Issuance of Preferred Equity)
               hereof that limit the right of the debtor to dispose of the
              assets subject to such Liens or to use the proceeds of any
such disposition;                           

                     (I)      provisions limiting or prohibiting the
              disposition or distribution of assets or property in joint
             venture agreements, asset sale agreements, sale-leaseback
                  agreements, stock sale agreements and other similar agreements
             entered into with the approval of the Borrower's Board of
                 Directors, which limitation or prohibition is applicable only
          to the assets that are the subject of such agreements;

80

EX-10.2.4
87th Page of 171
TOC
1st
Previous
Next
↓Bottom
Just 87th
                   (J)      provisions restricting cash or other
                 deposits or net worth imposed by customers or suppliers under
                  contracts entered into in the ordinary course of business; and

                        (K)      provisions restricting or encumbering the
                sale or other disposition of Expansion Assets or the payment
                  of dividends, distributions or similar payments made from cash
                flow derived exclusively from Expansion Assets, in each case
                 pursuant to the terms of any Expansion Debt incurred pursuant
                 to clause (iv) of the definition of Permitted Debt; provided,
            that such encumbrance or restriction will not materially
       adversely affect the Borrower's ability to meet its
                 obligations under this Agreement, and, in the written opinion
                of the president, chief operating officer or chief financial
                officer of the Borrower, is required in order to obtain such
                Expansion Debt and is customary for financings of such type.

SECTION 5.06. Incurrence of Indebtedness and Issuance of Preferred Equity.      

  (a)      The Borrower shall not, and shall not permit any of its
Subsidiaries to, directly or indirectly, create, incur, issue, assume, guarantee
or otherwise become directly or indirectly liable, contingently or otherwise    
with respect to (collectively, "incur"), any Indebtedness (including Acquired   
Debt), and the Borrower shall not issue any Disqualified Stock and shall not    
permit any of its Subsidiaries to issue any shares of preferred equity.         

      (b)      Section 5.06(a) shall not prohibit the incurrence of any of
the following items (collectively, "Permitted Debt"):                           

                  (i)      (A) the incurrence by the Borrower (and the guarantee
         by its Subsidiaries) of Indebtedness and letters of credit under Credit
         Facilities in an aggregate principal amount at any one time outstanding
         under this clause (i)(A) (with letters of credit being deemed to have a
  principal amount equal to the maximum potential liability of the
      Borrower and its Subsidiaries thereunder) not to exceed $800,000,000
        less the aggregate amount of all Net Proceeds of Asset Sales, Casualty
     Events or Condemnation Events applied by the Borrower or any of its
    Subsidiaries since the Closing Date to repay any term Indebtedness
     under any such Credit Facilities or to repay, or cash collateralize
    letters of credit under, any revolving Indebtedness under any such
   Credit Facilities and effect a corresponding commitment reduction
       thereunder, and (B) the incurrence by the Borrower (and the guarantee
         by its Subsidiaries) of Indebtedness and letters of credit under Credit
    Facilities in an aggregate principal amount outstanding under this
        clause (i)(B) (with letters of credit being deemed to have a principal
         amount equal to the maximum potential liability of the Borrower and its
        Subsidiaries thereunder) not to exceed $100,000,000 less the aggregate
amount of all Net Proceeds of Asset Sales, Casualty Events and
        Condemnation Events applied by the Borrower or any of its Subsidiaries
      since the Closing Date to repay any term Indebtedness under any such
      Credit Facility or to repay, or cash collateralize letters of credit
      under, any revolving Indebtedness under any such Credit Facility and
effect a corresponding commitment reduction thereunder;       

81

EX-10.2.4
88th Page of 171
TOC
1st
Previous
Next
↓Bottom
Just 88th
               (ii)     the incurrence by the Borrower, CalGen Finance and
      the Guarantors of Indebtedness represented by the Notes, the related
        Note Guarantees and the other Note Obligations incurred on the Closing
    Date, and the exchange notes and the related Note Guarantees to be
issued pursuant to the Registration Rights Agreement;         

         (iii)    the incurrence by the Borrower or any of its
Subsidiaries of Expansion Debt; provided, that:               

                          (A)      any Expansion Debt incurred by the Excluded
                Subsidiary is recourse only to the Expansion Assets financed
                with such Expansion Debt and to other Expansion Assets owned
           by the Excluded Subsidiary (including any rights of the
              Excluded Subsidiary under Shared Facilities Arrangements);

                         (B)      if the Fixed Charge Coverage Ratio for the
                Borrower's most recently ended four full fiscal quarters for
                 which internal financial statements are available immediately
              preceding the date on which the Expansion Debt is incurred
                  would have been at least 2.0 to 1.0, determined on a Pro Forma
           basis as if the Expansion Debt had been incurred at the
                beginning of such period and the proceeds therefrom had been
                applied as intended to be applied (but without giving effect
                to the completion of any construction projects unless actual
              completion has been achieved), at least 25% of the cost of
                  such Expansion Assets is financed with Equity Contributions or
          the proceeds of Perpetual Preferred Stock or Affiliate
Subordinated Indebtedness;                  

                         (C)      if the Fixed Charge Coverage Ratio for the
                Borrower's most recently ended four full fiscal quarters for
                 which internal financial statements are available immediately
              preceding the date on which the Expansion Debt is incurred
             would have been less than 2.0 to 1.0, determined on a Pro
                 Forma basis as if the Expansion Debt had been incurred at the
                beginning of such period and the proceeds therefrom had been
                applied as intended to be applied (but without giving effect
                to the completion of any construction projects unless actual
completion has been achieved);              

                                 (1)      at least 40% of the cost of such
              Expansion Assets is financed with Equity
                          Contributions or the proceeds of Perpetual Preferred
                       Stock or Affiliate Subordinated Indebtedness; and

                            (2)      after giving effect to such
                       incurrence, the amount of Expansion Debt incurred
                      pursuant to this clause (iii), together with the
                       aggregate amount of all other Expansion Debt then
                      outstanding, including all Permitted Refinancing
                        Indebtedness incurred to renew, refund, refinance,
                      replace, defease or discharge any Expansion Debt
                      incurred pursuant to this clause (iii), does not
exceed $250,000,000;      

         (iv)     the incurrence by the Borrower or any of its
        Subsidiaries of Permitted Refinancing Indebtedness in exchange for, or
     the net proceeds of which are used to refund, refinance or replace,
Indebtedness (other than intercompany Indebtedness) that      

82

EX-10.2.4
89th Page of 171
TOC
1st
Previous
Next
↓Bottom
Just 89th
    was permitted by this Agreement to be incurred under clauses (ii),
(iii), (iv) or (x) of this Section 5.06(b);                   

               (v)      the incurrence by the Borrower or any Guarantor of
 intercompany Indebtedness between or among the Borrower and any
    Guarantors that is subordinated in right of payment to all Secured
   Obligations on the terms set forth on Exhibit A hereto and is not
 secured other than by unperfected security interests; provided,
 however, that (A) any subsequent issuance or transfer of Equity
        Interests that results in any such Indebtedness being held by a Person
  other than the Borrower or a Guarantor and (B) any sale or other
      transfer of any such Indebtedness to a Person that is not either the
        Borrower or a Guarantor will be deemed, in each case, to constitute an
       incurrence of such Indebtedness by the Borrower or such Guarantor, as
 the case may be, that was not permitted by this clause (v); and
    provided, further, that any such intercompany Indebtedness must be
included in the Collateral.                                   

         (vi)     the incurrence by the Borrower or any of its
        Subsidiaries of Hedging Obligations, in connection with Permitted Debt
or otherwise, in the ordinary course of business and not for  
        speculative purposes; provided, that (A) such Hedging Obligations will
    have tenors that expire on or prior to the maturity date (or other
         expiration) of the underlying Obligation being hedged, and (B) any such
         Hedging Obligations hedging or managing interest rate risk with respect
    to a particular series of Notes or loans under this Agreement, the
         First Priority Term Loan Agreement or the Revolving Loan Agreement will
   have tenors that expire on or prior to the Stated Maturity of the
applicable Notes or loans;                                    

         (vii)    the incurrence by the Borrower or any of its
  Subsidiaries of Indebtedness in respect of workers' compensation
claims, self-insurance obligations, bankers' acceptances, and 
  performance and surety bonds in the ordinary course of business;

         (viii)   the incurrence by the Borrower or any of its
     Subsidiaries of Indebtedness arising from the honoring by a bank or
     other financial institution of a check, draft or similar instrument
 inadvertently drawn against insufficient funds, so long as such
Indebtedness is covered within five Business Days;            

            (ix)     the incurrence by the Borrower of (a) Affiliate
   Subordinated Indebtedness in an aggregate principal amount not to
         exceed $250,000,000 at any one time outstanding and (b) Working Capital
      Facility Indebtedness in an aggregate principal amount not to exceed
$750,000,000 at any one time outstanding; and                 

          (x)      the incurrence by the Borrower of Third Party
Subordinated Indebtedness; provided, that:                    

                  (A)      the Net Proceeds of the Third Party
Subordinated Indebtedness are applied:      

                                    (1)      to acquire all or substantially all
                     of the assets of, or any Equity Interests in, a
                     business that constitutes a Permitted Business,
                     provided, that in the case of an acquisition of
    Equity Interests, the business

83

EX-10.2.4
90th Page of 171
TOC
1st
Previous
Next
↓Bottom
Just 90th
                      is or becomes a Subsidiary of the Borrower and a
                   Guarantor concurrently with such acquisition;

                               (2)      to make a capital expenditure;

                                 (3)      to acquire other assets that are
                          not classified as current assets under GAAP and that
                    are used or useful in a Permitted Business; or

                                  (4)      any combination of the foregoing;
and                       

                      (B)      the Fixed Charge Coverage Ratio for the
                Borrower's most recently ended four full fiscal quarters for
                 which internal financial statements are available immediately
            preceding the date on which the Third Party Subordinated
                 Indebtedness is incurred would have been at least 2.0 to 1.0,
         determined on a Pro Forma basis as if the Third Party
                Subordinated Indebtedness had been incurred at the beginning
                 of such period and the proceeds therefrom had been applied as
            intended to be applied (but without giving effect to the
         completion of any construction projects unless actual
completion has been achieved).              

 (c)      The Borrower shall not incur, and shall not permit any
Subsidiary to incur, any Indebtedness (including Permitted Debt) that is        
contractually subordinated in right of payment to any other Indebtedness of the 
Borrower or such Subsidiary unless such Indebtedness is also contractually      
subordinated in right of payment to the Second Priority Term Loans, the         
applicable Second Priority Term Loan Guarantees and the other Second Priority   
Term Loan Obligations on substantially identical terms or on terms that are more
favorable to the Lenders hereunder; provided, however, that no Indebtedness will
be deemed to be contractually subordinated in right of payment to any other     
Indebtedness of the Borrower or any of its Subsidiaries solely by virtue of     
being unsecured or by virtue of being secured on a junior basis.                

         (d)      For purposes of determining compliance with this Section 5.06,
in the event that an item of proposed Indebtedness meets the criteria of more   
than one of the categories of Permitted Debt described in clauses (i) through   
(x) of Section 5.06(b), the Borrower will be permitted to classify such item of 
Indebtedness on the date of its incurrence, or later reclassify all or a portion
of such item of Indebtedness, in any manner that complies with this Section     
5.06. The accrual of interest, the accretion or amortization of original issue  
discount, the payment of interest on any Indebtedness in the form of additional 
Indebtedness with the same terms, and the payment of dividends on Disqualified  
Stock in the form of additional shares of the same class of Disqualified Stock  
will not be deemed to be an incurrence of Indebtedness or an issuance of        
Disqualified Stock for purposes of this Section 5.06. Notwithstanding any other 
provision of this Section 5.06, the maximum amount of Indebtedness that the     
Borrower or any Subsidiary may incur pursuant to this Section 5.06 shall not be 
deemed to be exceeded solely as a result of fluctuations in exchange rates or   
currency values.                                                                

SECTION 5.07. Asset Sales; Application of Net Proceeds.                         

        (a)      Asset Sales. The Borrower shall not, and shall not permit any
of its Subsidiaries to, consummate an Asset Sale unless:                        

84

EX-10.2.4
91st Page of 171
TOC
1st
Previous
Next
↓Bottom
Just 91st
                  (i)      except with respect to an Asset Sale made pursuant to
         the Existing Purchase Option, the Borrower (or any of its Subsidiaries,
     as the case may be) receives consideration at the time of the Asset
      Sale at least equal to the Fair Market Value of the assets or Equity
Interests issued or sold or otherwise disposed of;            

              (ii)     at least 90% of the consideration received in the
       Asset Sale by the Borrower or such Subsidiary is in the form of cash.
       For purposes of this provision, each of the following shall be deemed
to be cash:                                                   

                          (A)      any liabilities, as shown on the Borrower's
                  most recent consolidated balance sheet, of the Borrower or any
              of its Subsidiaries (other than contingent liabilities and
                  liabilities that are by their terms subordinated to the Second
         Priority Term Loans and the Second Priority Term Loan
              Guarantees) that are assumed by the transferee of any such
                assets pursuant to a customary novation or similar agreement
              that releases the Borrower or such Subsidiary from further
liability;                                  

                         (B)      any securities, notes or other obligations
             received by the Borrower or any such Subsidiary from such
                transferee that are promptly, subject to ordinary settlement
              periods, converted by the Borrower or such Subsidiary into
                cash, to the extent of the cash received in that conversion;
and                                         

                   (C)      in connection with the exercise by a
                purchaser of an Existing Purchase Option, any amount owed by
              the Borrower or the applicable Subsidiary to the purchaser
                under the agreement containing such Existing Purchase Option
                that is set off by the purchaser against the purchase price;

                 (iii)    if the assets disposed of in such Asset Sale include
         any component of a Facility that is necessary for the operation of such
         Facility, the Asset Sale involves the disposition of such Facility as a
whole; and                                                    

                 (iv)     if the Asset Sale involves the sale of a Facility or
        all or substantially all the assets of a Facility, (A) such Asset Sale
     is to a Person other than an Affiliate of the Borrower, and (B) all
      necessary and appropriate amendments are made to those Major Project
        Documents applicable to such Facility to remove such Facility from the
scope of such Major Project Documents.                        

       (b)      Application of Net Proceeds. The Borrower (or the applicable
Subsidiary, as the case may be) shall apply the Net Proceeds from each Asset    
Sale, Casualty Event or Condemnation Event, as follows:                         

              (i)      to the Lenders under this Agreement and all other
        holders of the First Priority Lien Obligations (to the extent required
   under the applicable First Priority Lien Documents), to purchase,
      prepay or redeem the maximum principal amount of such First Priority
         Lien Obligations that may be purchased, prepaid or redeemed out of such
         Net Proceeds (taking into account any mandatory purchase, prepayment or
        redemption of First Priority Lien Obligations required under any First
Priority Lien Document);                                      

85

EX-10.2.4
92nd Page of 171
TOC
1st
Previous
Next
↓Bottom
Just 92nd
                  (ii)     if any such Net Proceeds remain after the offer (and,
       if applicable, reoffer) to holders of First Priority Lien Obligations
         (and any mandatory purchase, prepayment or redemption of First Priority
       Lien Obligations) in accordance with clause (i) above, to all holders
       of the Second Priority Lien Obligations (to the extent required under
        the applicable Second Priority Lien Documents), to purchase, prepay or
  redeem the maximum principal amount of such Second Priority Lien
    Obligations that may be purchased, prepaid or redeemed out of such
     remaining Net Proceeds (taking into account any mandatory purchase,
       prepayment or redemption of Second Priority Lien Obligations required
under any Second Priority Lien Document); and                 

                  (iii)    if any such Net Proceeds remain after the offer (and,
        if applicable, reoffer) to holders of Second Priority Lien Obligations
 (and any mandatory purchase, prepayment or redemption of Second
    Priority Lien Obligations) in accordance with clauses (i) and (ii)
      above, to all holders of the Third Priority Lien Obligations (to the
         extent required under the applicable Third Priority Lien Documents), to
       purchase, prepay or redeem the maximum principal amount of such Third
      Priority Lien Obligations that may be purchased, prepaid or redeemed
       out of such remaining Net Proceeds (taking into account any mandatory
       purchase, prepayment or redemption of Third Priority Lien Obligations
required under any Third Priority Lien Document).             

     (c)      Mandatory Repayment Offer. The Borrower is required to and
shall effectuate each repayment of the Second Priority Term Loans by commencing 
a Mandatory Repayment Offer as described in Section 2.11 (Mandatory Repayment   
Offers).                                                                        

     (d)      Excess Proceeds; Pro Rata Basis. In the event that any Net
Proceeds from an Asset Sale, Casualty Event or Condemnation Event remain after  
the Borrower has made a Mandatory Repayment Offer (and, if applicable, reoffer) 
in accordance with Section 2.11 (Mandatory Repayment Offers) and such Net       
Proceeds have otherwise been applied in accordance with clause (b) above, then  
the Borrower may use such remaining Net Proceeds for any purpose not otherwise  
prohibited by the Financing Documents, including the making of Restricted       
Payments. If the aggregate principal amount of all Secured Obligations having   
the same priority that are to be prepaid under clause (b) above exceeds the     
amount of Net Proceeds available therefor, then the Borrower will select the    
Secured Obligations to be purchased, pro rata based on the aggregate principal  
amount of all of such Secured Obligations to be prepaid.                        

SECTION 5.08. Transactions with Affiliates.                                     

  (a)      The Borrower shall not, and shall not permit any of its
Subsidiaries to, make any payment to, or sell, lease, transfer or otherwise     
dispose of any of its properties or assets to, or purchase any property or      
assets from, or enter into or make or amend any transaction, contract,          
agreement, understanding, loan, advance or guarantee with, or for the benefit   
of, any Affiliate of the Borrower (each, an "Affiliate Transaction"), unless:   

                 (i)      the Affiliate Transaction, taken as a whole with all
    other related Affiliate Transactions, is on terms that are no less
        favorable to the Borrower and its Subsidiaries, taken as a whole, than
        those that would have been obtained in a comparable transaction by the
Borrower or such Subsidiary with an unrelated Person; and     

86

EX-10.2.4
93rd Page of 171
TOC
1st
Previous
Next
↓Bottom
Just 93rd
              (ii)     the Borrower delivers to the Administrative Agent
        (other than with respect to a Shared Facilities Arrangement between or
among only the Borrower and/or any of its Subsidiaries):      

                           (A)      with respect to any Affiliate Transaction or
                series of related Affiliate Transactions involving aggregate
                 consideration in excess of $10,000,000 but less than or equal
              to $25,000,000, a resolution of the Board of Directors set
          forth in an Officer's Certificate certifying that such
                  Affiliate Transaction complies with this Section 5.08 and that
                 such Affiliate Transaction has been approved by a majority of
the Board of Directors; and                 

                           (B)      with respect to any Affiliate Transaction or
                series of related Affiliate Transactions involving aggregate
                 consideration in excess of $25,000,000, a positive opinion as
                 to the Fair Market Value of such Affiliate Transaction issued
             by an accounting, appraisal or investment banking firm of
national standing.                          

  (b)      The following items shall not be deemed to be Affiliate
Transactions and, therefore, shall not be subject to the provisions of Section  
5.08(a):                                                                        

             (i)      any employment agreement, employee benefit plan,
officer and director indemnification agreement or any similar 
        arrangement entered into by the Borrower or any of its Subsidiaries in
the ordinary course of business;                              

                  (ii)     transactions between or among the Borrower and/or any
of the Guarantors (other than Shared Facilities Arrangements);

               (iii)    transactions with a Person that is an Affiliate of
        the Borrower (but not a Subsidiary of the Borrower) solely because the
         Borrower owns, directly or through a Subsidiary, an Equity Interest in,
or controls, such Person;                                     

                 (iv)     payment of reasonable directors' fees to Persons who
are not otherwise Affiliates of the Borrower;                 

         (v)      any issuance of Equity Interests (other than
    Disqualified Stock) of the Borrower to Affiliates of the Borrower;
     provided that such Equity Interests are included in the Collateral;

        (vi)     Restricted Payments that do not violate the
       provisions of this Agreement as described in Section 5.04 (Restricted
Payments);                                                    

                  (vii)    loans or advances to employees in the ordinary course
       of business not to exceed $1,000,000 in the aggregate at any one time
outstanding;                                                  

(viii)   Permitted Tax Payments;            

                 (ix)     transactions under or pursuant to written agreements
 with Affiliates of the Borrower in place as of the date of this
Agreement or any amendment or modification                    

87

EX-10.2.4
94th Page of 171
TOC
1st
Previous
Next
↓Bottom
Just 94th
  thereto, so long as any such amendment or modification meets the
requirements of clause (x) or (xi) of this Section 5.08(b);   

                  (x)      any amendments or modifications of, or waivers under,
        any written agreement described under clause (ix) of this 5.08(b) that
   is not a Major Project Document; provided that no such amendment,
      modification or waiver alters any such agreement in a manner than is
materially adverse to the interests of the Lenders;           

                  (xi)     any amendments or modifications of, or waivers under,
    any Major Project Document, which are permitted by Section 5.10(b)
      (Business Activities) and are on terms that are no less favorable to
the Borrower or its relevant Subsidiary (as certified to the  
         Administrative Agent in an Officer's Certificate) than those that would
        have been obtained in a comparable transaction by the Borrower or such
Subsidiary with an unrelated Person; and                      

      (xii)    any agreement to do any of the foregoing.

SECTION 5.09. Liens. The Borrower shall not, and shall not permit any of its    
Subsidiaries to, directly or indirectly, create, incur, assume or suffer to     
exist any Lien of any kind on any asset now owned or hereafter acquired, except 
Permitted Liens.                                                                

SECTION 5.10. Business Activities.                                              

  (a)      The Borrower shall not, and shall not permit any of its
Subsidiaries to, engage in any business other than Permitted Businesses, except 
to such extent as would not be material to the Borrower and its Subsidiaries    
taken as a whole.                                                               

   (b)      The Borrower shall, and shall cause its Subsidiaries to,
perform all their obligations under the Major Project Documents, and the        
Borrower shall not, and shall not permit any of its Subsidiaries to, terminate, 
amend or otherwise modify, or consent to any termination, amendment or          
modification of, or grant any waiver under, any Major Project Document, unless  
any failure to so perform or any such termination, amendment, modification or   
waiver would not, when taken together with all other such failures to perform,  
terminations, amendments, modifications and waivers since the Closing Date, be  
Materially Adverse, as evidenced by a certificate of the chief financial officer
of the Borrower; provided, however, that the provisions of this paragraph will  
not apply to any amendment, modification or termination of any Major Project    
Document required under this Agreement in connection with an Asset Sale.        

   (c)      The Borrower shall, and shall cause its Subsidiaries to,
obtain and maintain all permits and approvals necessary for the construction and
operation of the Facilities, including applicable exemptions from PUHCA, unless 
the failure to do so would not reasonably be expected to have a Material Adverse
Effect.                                                                         

  (d)      The Borrower shall not, and shall not permit any of its
Subsidiaries to, use or dispose of any hazardous materials or allow any         
hazardous materials to be brought onto or stored or used on or transported to or
released from the Facilities, other than in accordance with prudent industry    
practices and in compliance with all applicable Environmental Laws, except to   
the                                                                             

88

EX-10.2.4
95th Page of 171
TOC
1st
Previous
Next
↓Bottom
Just 95th
extent such non-compliance, individually or in the aggregate, would not         
reasonably be expected to have a Material Adverse Effect.                       

SECTION 5.11. Payments for Consent. The Borrower shall not, and shall not permit
any of its Subsidiaries to, directly or indirectly, pay or cause to be paid any 
consideration to or for the benefit of any holder of any Second Priority Term   
Loan or as an inducement to any consent, waiver or amendment of any of the terms
or provisions of any Second Priority Term Loan Document unless such             
consideration is offered to be paid and is paid to all Lenders that consent,    
waive or agree to amend in the time frame set forth in the solicitation         
documents relating to such consent, waiver or agreement.                        

SECTION 5.12. Offer to Prepay Upon Change of Control.                           

   (a)      If a Change of Control occurs, the Borrower shall make a
Mandatory Repayment Offer on the terms set forth herein and in Section 2.11     
(Mandatory Repayment Offers). In such Mandatory Repayment Offer, the Borrower   
shall offer to prepay each Lender's Second Priority Term Loans in an amount     
equal to (i) with respect to any such Mandatory Prepayment Offer made on or     
before April 1, 2009, 101% of the aggregate principal amount of Second Priority 
Term Loans then outstanding, (ii) with respect to any such Mandatory Prepayment 
Offer made after April 1, 2009, 100% of the aggregate principal amount of Second
Priority Term Loans then outstanding, plus, in each case, accrued and unpaid    
interest thereon, to but excluding the date of repayment, plus, in each case,   
any other amount then required to be paid hereunder.                            

  (b)      The provisions of this Section 5.12 and of Section 2.11
(Mandatory Repayment Offers) that require the Borrower to make a Mandatory      
Repayment Offer following a Change of Control shall be applicable whether or not
any other provisions of this Agreement are applicable; provided that, the       
Borrower shall not be required to make a Mandatory Repayment Offer upon a Change
of Control if a third party makes the Mandatory Repayment Offer in the manner,  
at the times and otherwise in compliance with the requirements set forth in this
Agreement applicable to a Mandatory Repayment Offer required upon a Change of   
Control and repays all Second Priority Term Loans (and the other amounts        
required to be paid pursuant to clause (a) above).                              

SECTION 5.13. Restrictions on Activities of CalGen Finance. The Borrower shall  
not permit CalGen Finance to hold any material assets, become liable for any    
material obligations or engage in any significant business activities; provided 
that, notwithstanding anything to the contrary contained herein, CalGen Finance 
may be a co-obligor or guarantor with respect to Indebtedness if the Borrower is
an obligor on such Indebtedness and the net proceeds of such Indebtedness are   
received by the Borrower, CalGen Finance or one or more of the Borrower's other 
Subsidiaries.                                                                   

SECTION 5.14. Additional Subsidiaries. If the Borrower or any of its            
Subsidiaries acquires or creates another Subsidiary after the Closing Date, then
(a) that newly acquired or created Subsidiary will (i) become a Guarantor       
hereunder, (ii) if such Subsidiary's assets and property consist solely of its  
ownership interests in any Guarantor, become a Holding Company hereunder and    
(iii) deliver or cause to be delivered an opinion of counsel reasonably         
satisfactory to the Administrative Agent within 30 days of the date on which it 
was acquired or created, and (b) all real and personal property of that         
Subsidiary will become part of the Collateral within 30                         

89

EX-10.2.4
96th Page of 171
TOC
1st
Previous
Next
↓Bottom
Just 96th
days of the date on which that Subsidiary was acquired or created pursuant to   
documentation (including security documents, financing statements, opinions and 
other documents) reasonably satisfactory to the Administrative Agent and the    
Collateral Agent.                                                               

SECTION 5.15. Limitation on Issuances and Sales of Equity Interests in          
Subsidiaries.                                                                   

  (a)      The Borrower shall not, and shall not permit any of its
Subsidiaries to, transfer, convey, sell, lease or otherwise dispose of any      
Equity Interests in any Subsidiary of the Borrower to any Person (other than the
Borrower or a Guarantor), unless:                                               

            (i)      such transfer, conveyance, sale, lease or other
    disposition is of all the Equity Interests in such Subsidiary; and

             (ii)     the Net Proceeds from such transfer, conveyance,
 sale, lease or other disposition are applied in accordance with
        Sections 2.11 (Mandatory Offers) and 5.07 (Asset Sales; Application of
Net Proceeds).                                                

         (b)      The Borrower shall not permit any of its Subsidiaries to issue
any Equity Interests (other than, if necessary, shares of its Capital Stock     
constituting directors' qualifying shares) to any Person other than to the      
Borrower or a Guarantor.                                                        

SECTION 5.16. Deposit of Revenues. The Borrower shall, and shall cause its      
Subsidiaries to, deposit all revenues received by the Borrower and its          
Subsidiaries, within 10 Business Days of receipt thereof, in the Revenue        
Account.                                                                        

SECTION 5.17. Maintenance of Insurance. The Borrower shall, and shall cause its 
Subsidiaries to, maintain with financially sound and reputable insurance        
companies, insurance on their property, including the Collateral, in at least   
such amounts, with such deductibles and against at least such risks as is       
customary for companies of the same or similar size engaged in the same or      
similar businesses as those of the Borrower and its Subsidiaries and furnish to 
the Administrative Agent, upon written request, full information as to such     
Persons' property and liability insurance carriers. The Borrower shall, and     
shall cause its Subsidiaries to, cause all their insurance policies to name the 
Lenders, as a class, as additional insureds with waiver of subrogation and shall
cause all its, and its Subsidiaries', property and casualty policies to name the
Collateral Agent as loss payee (together with other lien holders as their       
interests may appear), with the right to receive 30 days notice of any          
cancellation of or material change in such insurance policies.                  

SECTION 5.18. Coverage Ratio; Kilowatt Test.                                    

      (a)      Consolidated Interest Coverage Ratio. As of the last day of
each fiscal quarter of the Borrower, the Borrower shall cause the Consolidated  
Interest Coverage Ratio of the Borrower and its Subsidiaries to be equal to or  
greater than 1.05:1.0.                                                          

       (b)      Consolidated First and Second Priority Lien Debt to Kilowatt
Test. As of the last day of each fiscal quarter of the Borrower, the Borrower   
shall cause the ratio of (a) the aggregate outstanding principal amount of First
Priority Term Loans, First Priority Notes, Revolving Loans, Second Priority Term
Loans and Second Priority Notes, to (b) the combined Estimated                  

90

EX-10.2.4
97th Page of 171
TOC
1st
Previous
Next
↓Bottom
Just 97th
Peak Capacity of all the Facilities (including all Facilities in operation and  
under construction) owned by the Borrower and its Subsidiaries (expressed in    
kilowatts) to be equal to or less than $235 per kilowatt.                       

SECTION 5.19. Further Assurances; Ratings. The Borrower and each Guarantor shall
perform such reasonable acts as may be necessary to carry out the intent of this
Agreement and the other Second Priority Term Loan Documents promptly after      
written request by the Administrative Agent. The Borrower shall, as promptly as 
practical after the date hereof, perform all reasonable acts as may be necessary
to cause Moody's to issue a credit rating in respect of the Second Priority Term
Loans.                                                                          

SECTION 5.20. Suspension of Certain Covenants. In the event that, from time to  
time, after giving effect to the suspension of covenants and the event of       
default provided for in this Section 5.20, the Third Priority Fixed Rate Notes  
and the Third Priority Floating Rate Notes are rated Baa3 or better by Moody's  
and BBB- or better by S&P, then the covenants contained in Section 5.04         
(Restricted Payments), Section 5.05 (Dividend and Other Payment Restrictions    
Affecting Subsidiaries), Section 5.06 (Incurrence of Indebtedness and Issuance  
of Preferred Equity), Section 5.10 (Business Activities), Section 5.16 (Deposit 
of Revenues) and Section 7.01(i) shall be suspended. In the event that, at any  
time, neither the Third Priority Fixed Rate Notes nor the Third Priority        
Floating Rate Notes are rated Baa3 or better by Moody's and BBB- or better by   
S&P, the covenants and event of default contained in such Sections shall be     
reinstated.                                                                     

ARTICLE VI. 

SUCCESSORS

SECTION 6.01. Merger, Consolidation, or Sale of Assets.                         

(a)      The Borrower shall not, directly or indirectly: (i)  
consolidate or merge with or into another Person (whether or not the Borrower is
the surviving entity); (ii) sell, assign, transfer, convey or otherwise dispose 
of all or substantially all of the properties or assets of the Borrower and its 
Subsidiaries taken as a whole, in one or more related transactions, to another  
Person; or (iii) lease all or substantially all of its properties or assets, in 
one or more related transactions, to any other Person; provided, however, that  
the foregoing shall not apply to:                                               

                  (i)      a merger of the Borrower with an Affiliate solely for
        the purpose of reconstituting the Borrower in another jurisdiction; or

                 (ii)     any sale, transfer, assignment, conveyance, lease or
   other disposition of assets between or among the Borrower and the
Guarantors.                                                   

      (b)      Notwithstanding the foregoing, the Borrower is permitted to
reorganize as a corporation or a limited liability company in accordance with   
the procedures established in this Agreement, provided that the Borrower shall  
have delivered to the Administrative Agent an Opinion of Counsel in the United  
States reasonably acceptable to the Administrative Agent confirming that such   
reorganization is not adverse to the Lenders (it being recognized that such     

91

EX-10.2.4
98th Page of 171
TOC
1st
Previous
Next
↓Bottom
Just 98th
reorganization shall not be deemed adverse to the Lenders solely because (i) of 
the accrual of deferred tax liabilities resulting from such reorganization or   
(ii) the successor or surviving corporation (A) is subject to income tax as a   
corporate entity or (B) is considered to be an "includable corporation" of an   
affiliated group of corporations within the meaning of the Code or any similar  
state or local law).                                                            

SECTION 6.02. Successor Corporation Substituted. Upon any consolidation or      
merger, or any sale, assignment, transfer, lease, conveyance or other           
disposition of all or substantially all of the assets of the Borrower in a      
transaction that is subject to, and that complies with the provisions of,       
Section 6.01 (Merger, Consolidation, or Sale of Assets), the successor          
corporation formed by such consolidation or into or with which the Borrower is  
merged or to which such sale, assignment, transfer, lease, conveyance or other  
disposition is made shall succeed to, and be substituted for (so that from and  
after the date of such consolidation, merger, sale, lease, conveyance or other  
disposition, the provisions of this Agreement referring to the "Borrower" shall 
refer instead to the successor corporation and not to the Borrower), and may    
exercise every right and power of the Borrower under this Agreement with the    
same effect as if such successor Person had been named as the Borrower herein;  
provided, however, that the predecessor Borrower shall not be relieved from the 
obligation to pay the principal of and interest on or other amounts in respect  
of the Second Priority Term Loans.                                              

ARTICLE VII.

 DEFAULTS AND REMEDIES

SECTION 7.01. Events of Default.                                                

Each of the following is an "Event of Default":               

         (a)      default for 30 days in the payment when due of interest on the
Second Priority Term Loans;                                                     

       (b)      default in payment when due of the principal of, or premium,
if any, on the Second Priority Term Loans;                                      

       (c)      failure by the Borrower or any of its Subsidiaries to comply
with Section 5.07 (Asset Sales; Application of Net Proceeds), 5.12 (Offer to    
Prepay Upon Change of Control) or 5.16 (Deposit of Revenues);                   

       (d)      failure by Holdings, the Borrower or any of its Subsidiaries
for 30 days after written notice from the Administrative Agent or the Lenders   
holding at least 50% in outstanding aggregate principal amount of the Second    
Priority Term Loans then outstanding to comply with any of the agreements in    
this Agreement or the other Second Priority Term Loan Documents;                

    (e)      default under any mortgage, indenture or instrument under
which there may be issued or by which there may be secured or evidenced any     
Indebtedness for money borrowed by the Borrower or any of its Subsidiaries (or  
the payment of which is guaranteed by the Borrower or any of its Subsidiaries)  
whether such Indebtedness or guarantee now exists, or is created after the date 
of this Agreement, if that default:                                             

92

EX-10.2.4
99th Page of 171
TOC
1st
Previous
Next
↓Bottom
Just 99th
           (i)      is caused by a failure to pay principal of, or
interest or premium, if any, on such Indebtedness prior to the
     expiration of the grace period provided in such Indebtedness on the
date of such default (a "Payment Default"); or                

             (ii)     results in the acceleration of such Indebtedness
prior to its express maturity,                                

and, in each case, the principal amount of any such Indebtedness, together with 
the principal amount of any other such Indebtedness under which there has been a
Payment Default or the maturity of which has been so accelerated, aggregates    
$25,000,000 or more, and such default shall not have been cured or waived or any
such acceleration rescinded, or such Indebtedness repaid, within 20 days of the 
Borrower or the applicable Subsidiary becoming aware of such default;           

    (f)      failure by the Borrower or any of its Subsidiaries to pay
final judgments aggregating in excess of $25,000,000 (excluding those covered by
insurance), which judgments are not paid, discharged or stayed for a period of  
60 days;                                                                        

  (g)      the repudiation by Holdings, the Borrower or any of its
Subsidiaries of any of its obligations under the Security Documents or the      
unenforceability of the Security Documents against Holdings, the Borrower or any
of its Subsidiaries for any reason; provided that such repudiation or           
unenforceability relates to Collateral having a Fair Market Value of $25,000,000
or more;                                                                        

     (h)      except as permitted by this Agreement, any Second Priority
Term Loan Guarantee shall be held in any judicial proceeding to be unenforceable
or invalid or shall cease for any reason to be in full force and effect or any  
Guarantor, or any Person acting on behalf of any Guarantor, shall deny or       
disaffirm its obligations under its Second Priority Term Loan Guarantee, and    
such condition shall not have been cured within 30 days after written notice    
from the trustee or the holders of at least 50% in aggregate principal amount of
outstanding Second Priority Term Loans;                                         

      (i)      breach by any Person (other than the Borrower or any of its
Subsidiaries) of its obligations under, or termination or failure to be in full 
force and effect of, a Major Project Document (unless such breach, termination  
or failure to be in full force and effect would not, when taken together with   
all other such breaches, terminations or failures since the date of this        
Agreement (other than those that have been cured as contemplated below,         
including by entering into a replacement agreement), be Materially Adverse, as  
evidenced by a certificate of the chief financial officer of the Borrower),     
unless with respect to any Major Project Document such breach is cured, or such 
Major Project Document is replaced with a substantially similar agreement (it   
being understood that (a) an agreement will be considered substantially similar 
if it would not be Materially Adverse and (b) the use of an Affiliate of the    
Borrower as the counterparty under an agreement replacing the Index Hedge will  
not by itself be considered Materially Adverse), within 60 days thereafter (or  
120 days with respect to the Interest Hedge); and                               

93

EX-10.2.4
100th Page of 171
TOC
1st
Previous
Next
↓Bottom
Just 100th
      (j)      the Borrower, any of its Subsidiaries that is a Significant
Subsidiary or any group of Subsidiaries that, taken together would constitute a 
Significant Subsidiary, suffer a Bankruptcy Event.                              

SECTION 7.02. Acceleration. In the case of an Event of Default specified in     
clause (j) of Section 7.01 (Events of Default), with respect to the Borrower or 
any of its Subsidiaries, the outstanding Second Priority Term Loans shall become
due and payable immediately without further action or notice. If any other Event
of Default occurs and is continuing, the Administrative Agent or the Requisite  
Lenders may declare all the Second Priority Term Loans to be due and payable    
immediately. Upon any such declaration, the Second Priority Term Loans shall    
become due and payable immediately.                                             

SECTION 7.03. Other Remedies.                                                   

    (a)      Subject to the Collateral Trust Agreement, if an Event of
Default occurs and is continuing, the Administrative Agent may pursue any       
available remedy to collect the payment of principal, premium, if any, and      
interest on the Second Priority Term Loan Obligations or to enforce the         
performance of this Agreement and any other Second Priority Term Loan Document. 

        (b)      The Administrative Agent may maintain a proceeding even if it
does not possess any of the Second Priority Term Loan Obligations. A delay or   
omission by the Administrative Agent or any Lender in exercising any right or   
remedy accruing upon an Event of Default shall not impair the right or remedy or
constitute a waiver of or acquiescence in the Event of Default. All remedies are
cumulative to the extent permitted by law.                                      

SECTION 7.04. Waiver of Past Defaults; Rescission. The Requisite Lenders by     
notice to the Administrative Agent may on behalf of the Lenders waive an        
existing Default or Event of Default and its consequences hereunder. Upon any   
such waiver, such Default shall cease to exist, and any Event of Default arising
therefrom shall be deemed to have been cured for every purpose of this          
Agreement; but no such waiver shall extend to any subsequent or other Default or
Event of Default or impair any right consequent thereon. The Requisite Lenders, 
by written notice to the Administrative Agent, may on behalf of all of the      
Lenders rescind an acceleration and its consequences if the rescission would not
conflict with any judgment or decree and if all existing Events of Default      
(except nonpayment of principal, interest or premium that has become due solely 
because of the acceleration) have been cured or waived.                         

SECTION 7.05. Control by Majority. The Requisite Lenders may direct the time,   
method and place of conducting any proceeding for exercising any remedy         
available to the Administrative Agent or exercising any trust or power conferred
on it. However, the Administrative Agent may refuse to follow any direction that
conflicts with law, this Agreement, the other Second Priority Term Loan         
Documents, that the Administrative Agent determines may be unduly prejudicial to
the rights of other Lenders, that may involve the Administrative Agent in       
personal liability, or that is inconsistent with the Collateral Trust Agreement.

SECTION 7.06. Collection Suit by Administrative Agent. If an Event of Default   
specified in Section 7.01(a) or (b) (Events of Default) occurs and is           
continuing, the Administrative Agent is authorized to recover judgment in its   
own name and as trustee of an express trust against the                         

94

EX-10.2.4
101st Page of 171
TOC
1st
Previous
Next
↓Bottom
Just 101st
Borrower for the whole amount of principal of, premium, if any, and interest    
remaining unpaid on the Second Priority Term Loans and interest on overdue      
principal and, to the extent lawful, interest and such further amount as shall  
be sufficient to cover the costs and expenses of collection, including the      
reasonable compensation, expenses, disbursements and advances of the            
Administrative Agent, its agents and counsel.                                   

SECTION 7.07. Priorities.                                                       

        Subject to the Collateral Trust Agreement, if the Administrative Agent
collects any money pursuant to this Article VII, it shall pay out the money in  
the following order:                                                            

               First: to the Administrative Agent and the Lenders on a pro
         rata basis, their respective agents and attorneys for amounts due under
   this Agreement and the other Second Priority Term Loan Documents,
including payment of all compensation, expense and liabilities
        incurred, and all advances made, by the Administrative Agent or any of
the Lenders and the costs and expenses of collection;         

            Second: to the Lenders for amounts due and unpaid on the
       Second Priority Term Loan Obligations for principal, premium, if any,
    and interest, ratably, without preference or priority of any kind,
      according to the amounts due and payable on the Second Priority Term
Loan Obligations for principal, premium, if any and interest, 
respectively; and                                             

         Third: to the Borrower or to such party as a court of
competent jurisdiction shall direct.                          

         The Administrative Agent may fix a record date and payment date for any
payment to the Lenders pursuant to this Section 7.07.                           

 ARTICLE VIII.

AGENTS

SECTION 8.01. Appointment of Agents. The Borrower and the Lenders acknowledge   
and agree that MSSF has acted and shall be credited as sole lead arranger of the
Second Priority Term Loans. The Borrower and the Lenders acknowledge and agree  
that MSSF has acted and shall be credited as sole bookrunner of the Second      
Priority Term Loans and that MSSF is hereby appointed Administrative Agent      
hereunder and under the other Second Priority Term Loan Documents. The Borrower 
and each Lender hereby authorizes the Collateral Agent to act as the Collateral 
Agent with respect to the Second Priority Term Loan Obligations, and each Lender
authorizes the Collateral Agent and the Administrative Agent to enter into and  
perform their respective obligations under the Collateral Trust Agreement. Each 
Lender hereby authorizes the Administrative Agent to act as its agent in        
accordance with the terms hereof and the other Second Priority Term Loan        
Documents. The Administrative Agent hereby agrees to act upon the express       
conditions contained herein and the other Second Priority Term Loan Documents,  
as applicable. The provisions of this Article VIII are solely for the benefit of
the Agents and the Lenders and no Obligor shall have any rights as a third party
beneficiary of any of the provisions thereof. In performing its functions and   
duties hereunder, the Administrative Agent shall act                            

95

EX-10.2.4
102nd Page of 171
TOC
1st
Previous
Next
↓Bottom
Just 102nd
solely as an agent of the Lenders and no Agent does or shall assume or be deemed
to have assumed any obligation towards or relationship of agency or trust with  
or for the Borrower or any of its Subsidiaries. MSSF in its capacity as the sole
lead arranger and bookrunner shall not have any duties, liabilities or          
obligations under the Second Priority Term Loan Documents but shall be entitled 
to all benefits of this Article VIII.                                           

SECTION 8.02. Powers and Duties. Each Lender irrevocably authorizes each Agent  
to take such action on such Lender's behalf and to exercise such powers, rights 
and remedies hereunder and under the other Second Priority Term Loan Documents  
as are specifically delegated or granted to such Agent by the terms hereof and  
thereof, together with such powers, rights and remedies as are reasonably       
incidental thereto. Each Agent shall have only those duties and responsibilities
that are expressly specified herein and in the other Second Priority Term Loan  
Documents. Each Agent may exercise such powers, rights and remedies and perform 
such duties by or through its agents or employees. No Agent shall have, by      
reason hereof or any of the other Second Priority Term Loan Documents, a        
fiduciary relationship in respect of any Lender; and nothing herein or any of   
the other Second Priority Term Loan Documents, expressed or implied, is intended
to or shall be so construed as to impose upon any Agent any obligations in      
respect hereof or any of the other Second Priority Term Loan Documents except as
expressly set forth herein or therein.                                          

SECTION 8.03.     General Immunity.                                             

   (a)      No Responsibility for Certain Matters. No Agent shall be
responsible to any Lender for the execution, effectiveness, genuineness,        
validity, enforceability, collectibility or sufficiency hereof or any other     
Second Priority Term Loan Document or for any representations, warranties,      
recitals or statements made herein or therein or made in any written or oral    
statements or in any financial or other statements, instruments, reports or     
certificates or any other documents furnished or made by any Agent to the       
Lenders or by or on behalf of any Obligor to any Agent or any Lender in         
connection with the Second Priority Term Loan Documents and the transactions    
contemplated thereby or for the financial condition or business affairs of any  
Obligor or any other Person liable for the payment of any Second Priority Term  
Loan Obligations, nor shall any Agent be required to ascertain or inquire as to 
the performance or observance of any of the terms, conditions, provisions,      
covenants or agreements contained in any of the Second Priority Term Loan       
Documents or as to the use of the proceeds of the Second Priority Term Loans or 
as to the existence or possible existence of any Material Adverse Effect, Event 
of Default or Default or to make any disclosures with respect to the foregoing. 
Anything contained herein to the contrary notwithstanding, the Administrative   
Agent shall not have any liability arising from confirmations of the amount of  
outstanding Second Priority Term Loans or the component amounts thereof.        

    (b)      Exculpatory Provisions. No Agent nor any of its officers,
partners, directors, employees or agents shall be liable to the Lenders for any 
action taken or omitted by any Agent under or in connection with any of the     
Second Priority Term Loan Documents except to the extent caused by such Agent's 
bad faith, gross negligence or willful misconduct. Each Agent shall be entitled 
to refrain from any act or the taking of any action (including the failure to   
take an action) in connection herewith or any of the other Second Priority Term 
Loan Documents or from the exercise of any power, discretion or authority vested
in it hereunder or thereunder                                                   

96

EX-10.2.4
103rd Page of 171
TOC
1st
Previous
Next
↓Bottom
Just 103rd
unless and until such Agent shall have received instructions in respect thereof 
from Requisite Lenders (or such other Lenders as may be required to give such   
instructions under Section 12.05 (Amendments and Waivers)) and, upon receipt of 
such instructions from Requisite Lenders (or such other Lenders, as the case may
be), such Agent shall be entitled to act or (where so instructed) refrain from  
acting, or to exercise such power, discretion or authority, in accordance with  
such instructions. Without prejudice to the generality of the foregoing, (i)    
each Agent shall be entitled to rely, and shall be fully protected in relying,  
upon any communication, instrument or document believed by it to be genuine and 
correct and to have been signed or sent by the proper Person or Persons, and    
shall be entitled to rely and shall be protected in relying on opinions and     
judgments of attorneys (who may be attorneys for the Borrower and its           
Subsidiaries), accountants, experts and other professional advisors selected by 
it; and (ii) no Lender shall have any right of action whatsoever against any    
Agent as a result of such Agent acting or (where so instructed) refraining from 
acting hereunder or any of the other Second Priority Term Loan Documents in     
accordance with the instructions of Requisite Lenders (or such other Lenders as 
may be required to give such instructions under Section 12.05 (Amendments and   
Waivers)).                                                                      

SECTION 8.04. Agents Entitled to Act as Lender. The agency hereby created shall 
in no way impair or affect any of the rights and powers of, or impose any duties
or obligations upon, any Agent in its individual capacity as a Lender hereunder.
With respect to its participation in the Second Priority Term Loans, each Agent 
shall have the same rights and powers hereunder as any other Lender and may     
exercise the same as if it were not performing the duties and functions         
delegated to it hereunder, and the term "Lender" shall, unless the context      
clearly otherwise indicates, include each Agent in its individual capacity. Any 
Agent and its Affiliates may accept deposits from, lend money to, own securities
of, and generally engage in any kind of banking, trust, financial advisory or   
other business with the Borrower or any of its Affiliates as if it were not     
performing the duties specified herein, and may accept fees and other           
consideration from the Borrower for services in connection herewith and         
otherwise without having to account for the same to the Lenders.                

SECTION 8.05. Lenders' Representations, Warranties and Acknowledgment.          

       (a)      Each Lender represents and warrants that it has made its own
independent investigation of the financial condition and affairs of the Borrower
and its Subsidiaries in connection with its Second Priority Term Loans hereunder
and that it has made and shall continue to make its own appraisal of the        
creditworthiness of the CalGen Companies. No Agent shall have any duty or       
responsibility, either initially or on a continuing basis, to make any such     
investigation or any such appraisal on behalf of the Lenders or to provide any  
Lender with any credit or other information with respect thereto, whether coming
into its possession before the making of the Second Priority Term Loans or at   
any time or times thereafter, and no Agent shall have any responsibility with   
respect to the accuracy of or the completeness of any information provided to   
the Lenders.                                                                    

(b)      Each Lender, by delivering its signature page to this
Agreement and funding its Second Priority Term Loan on the Closing Date, shall  
be deemed to have acknowledged receipt of, and consented to and approved, each  
Second Priority Term Loan Document and each other                               

97

EX-10.2.4
104th Page of 171
TOC
1st
Previous
Next
↓Bottom
Just 104th
document required to be approved by any Agent, Requisite Lenders or the Lenders,
as applicable on the Closing Date.                                              

SECTION 8.06. Right to Indemnity. Each Lender, in proportion to its Pro Rata    
Share, severally agrees to indemnify each Agent, to the extent that such Agent  
shall not have been reimbursed by any Obligor, for and against any and all      
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses (including counsel fees and disbursements) or disbursements of  
any kind or nature whatsoever which may be imposed on, incurred by or asserted  
against such Agent in exercising its powers, rights and remedies or performing  
its duties hereunder or under the other Second Priority Term Loan Documents or  
otherwise in its capacity as such Agent in any way relating to or arising out of
this Agreement or the other Second Priority Term Loan Documents; provided, no   
Lender shall be liable for any portion of such liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements 
resulting from such Agent's bad faith, gross negligence or willful misconduct.  
If any indemnity furnished to any Agent for any purpose shall, in the opinion of
such Agent, be insufficient or become impaired, such Agent may call for         
additional indemnity and cease, or not commence, to do the acts indemnified     
against until such additional indemnity is furnished; provided, in no event     
shall this sentence require any Lender to indemnify any Agent against any       
liability, obligation, loss, damage, penalty, action, judgment, suit, cost,     
expense or disbursement in excess of such Lender's Pro Rata Share thereof; and  
provided further, this sentence shall not be deemed to require any Lender to    
indemnify any Agent against any liability, obligation, loss, damage, penalty,   
action, judgment, suit, cost, expense or disbursement described in the proviso  
in the immediately preceding sentence.                                          

SECTION 8.07. Successor Administrative Agent. The Administrative Agent may      
resign at any time by giving 30 days' prior written notice thereof to the       
Lenders and the Borrower, and the Administrative Agent may be removed at any    
time with or without cause by an instrument or concurrent instruments in writing
delivered to the Borrower and the Administrative Agent and signed by the        
Requisite Lenders. Upon any such notice of resignation or any such removal, the 
Requisite Lenders shall have the right, upon five Business Days' notice to the  
Borrower, to appoint a successor Administrative Agent; provided, that the       
Borrower shall have the right to approve any such successor Administrative Agent
(such approval not to be unreasonably withheld or delayed) so long as no Default
or Event of Default shall have occurred and be continuing. Upon the acceptance  
of any appointment as Administrative Agent hereunder by a successor             
Administrative Agent, that successor Administrative Agent shall thereupon       
succeed to and become vested with all the rights, powers, privileges and duties 
of the retiring or removed Administrative Agent and the retiring or removed     
Administrative Agent shall promptly transfer to such successor Administrative   
Agent all sums, together with all records and other documents necessary or      
appropriate in connection with the performance of the duties of the successor   
Administrative Agent under the Second Priority Term Loan Documents, whereupon   
such retiring or removed Administrative Agent shall be discharged from its      
duties and obligations hereunder. After any retiring or removed Administrative  
Agent's resignation or removal hereunder as Administrative Agent, the provisions
of this Article VIII shall inure to its benefit as to any actions taken or      
omitted to be taken by it while it was Agent hereunder.                         

SECTION 8.08. Withholding Tax.                                                  

98

EX-10.2.4
105th Page of 171
TOC
1st
Previous
Next
↓Bottom
Just 105th
      (a)      To the extent required by any applicable Legal Requirement,
the Administrative Agent may withhold from any interest payment to any Lender an
amount equivalent to any applicable withholding tax, including any withholding  
tax resulting from any Lenders' failure to deliver the forms or other           
documentation as required by Section 2.16(e) (Taxes; Withholding, etc). Nothing 
in this Section 8.08 shall relieve the Borrower of its obligation with respect  
to Taxes and Other Taxes provided in Section 2.16 (Taxes; Withholding, etc.).   

         (b)      If the Internal Revenue Service or any authority of the United
States or other jurisdiction asserts a claim that the Administrative Agent did  
not properly withhold tax from amounts paid to or for the account of any Lender 
(because the appropriate form was not delivered, was not properly executed, or  
because such Lender failed to notify the Administrative Agent of a change in    
circumstances which rendered the exemption from, or reduction of, withholding   
tax ineffective, or for any other reason), such Lender shall indemnify the      
Administrative Agent fully for all amounts paid, directly or indirectly, by the 
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.                                           

ARTICLE IX. 

 COLLATERAL AND SECURITY

         The Collateral Agent's Liens upon the Collateral shall no longer secure
the Second Priority Term Loan Obligations outstanding under this Agreement, and 
the right of the Lenders to the benefits and proceeds of the Collateral Agent's 
Liens on Collateral shall terminate and be discharged:                          

                 (a)      on the Second Priority Term Loan Secured Obligations
Termination Date; or                                          

                (b)      with the prior written consent of each Lender whose
consent is required under Section 12.05.                      

Nothing in this Article IX shall be deemed to restrict the Collateral Agent's   
rights to release liens on Collateral in accordance with the terms of the       
Collateral Trust Agreement or as otherwise permitted pursuant to the terms of   
this Agreement.                                                                 

ARTICLE X.

 RANKING OF LIENS AND COLLATERAL SHARING

    EACH LENDER AND EACH AGENT HEREBY ACKNOWLEDGES AND AGREES THAT THE
THEIR RESPECTIVE LIEN PRIORITIES, THE DISTRIBUTION OF PROCEEDS OF COLLATERAL,   
THE EXERCISE OF REMEDIES UNDER THE SECOND PRIORITY TERM LOAN DOCUMENTS,         
AMENDMENTS AND WAIVERS TO THE SECOND PRIORITY TERM LOAN DOCUMENTS, AND OTHER    
MATTERS RELATED TO THE COLLATERAL ARE SUBJECT TO AND GOVERNED BY THE COLLATERAL 
TRUST AGREEMENT. Each Lender and each Agent, by delivering its signature page   
hereto, funding                                                                 

99

EX-10.2.4
106th Page of 171
TOC
1st
Previous
Next
↓Bottom
Just 106th
its Second Priority Term Loan on the Closing Date and/or executing an Assignment
Agreement (as the case may be), shall be deemed to have (a) acknowledged receipt
of, consented to and approved the Collateral Trust Agreement and (b) authorized 
the Agents to perform their respective obligations thereunder. Each Lender and  
each Agent further acknowledges that, in certain circumstances related to       
intercreditor and security matters, the Collateral Trust Agreement provides     
that, where lenders and/or noteholders hold the same series of Obligations (such
as the Second Priority Term Loan Obligations and the Obligations under the      
Second Priority Notes), such lenders and noteholders will vote as a single      
class, and the agent or trustee for such lenders or noteholders, as applicable, 
will vote the obligations of such lenders or noteholders, as applicable, as a   
class (and not by percentage of lenders or noteholders voting for or against the
applicable intercreditor or security matter). Accordingly, in such circumstances
under the Collateral Trust Agreement, if the Requisite Lenders hereunder do (or 
do not) consent, approve, waive or otherwise provide direction to the           
Administrative Agent with respect to any request, decision, action, or          
otherwise, then the Administrative Agent shall vote 100% of the Second Priority 
Term Loan Obligations in favor of such consent, approval or waiver (or rejection
thereof), as applicable, all in accordance with the terms of the Collateral     
Trust Agreement.                                                                

 ARTICLE XI.

 SECOND PRIORITY TERM LOAN GUARANTEE

SECTION 11.01. Guarantee.                                                       

    (a)      Subject to the limitations set forth in Section 12.22 (No
Recourse Against the Borrower or the Guarantors) and in Section 11.01(b), the   
Guarantors hereby, jointly and severally, unconditionally and irrevocably,      
guarantee to the Administrative Agent, for the benefit of the Lenders making the
Second Priority Term Loans and their respective successors, endorsees,          
transferees and assigns, the prompt and complete payment and performance by the 
Borrower and each other Guarantor when due (whether at the stated maturity, by  
acceleration or otherwise) of the Second Priority Term Loan Obligations;        

      (b)      Each Guarantor, and by its making of a Second Priority Term
Loan on the Closing Date, each Lender, hereby confirms that it is the intention 
of all such parties that the Second Priority Term Loan Guarantee(s) of such     
Guarantor not constitute a fraudulent transfer or conveyance for purposes of    
Bankruptcy Law, the Uniform Fraudulent Conveyance Act, the Uniform Fraudulent   
Transfer Act or any similar federal or state law to the extent applicable to any
Second Priority Term Loan Guarantee. To effectuate the foregoing intention, the 
Administrative Agent, the Lenders and the Guarantors hereby irrevocably agree   
that the obligations of such Guarantor will be limited to the maximum amount    
that will, after giving effect to such maximum amount and all other contingent  
and fixed liabilities of such Guarantor that are relevant under such laws, and  
after giving effect to any collections from, rights to receive contribution from
or payments made by or on behalf of any other Guarantor in respect of the       
obligations of such other Guarantor under this Article XI, result in the        
obligations of such Guarantor under its Second Priority Term Loan Guarantee not 
constituting a fraudulent transfer or conveyance.                               

100 

EX-10.2.4
107th Page of 171
TOC
1st
Previous
Next
↓Bottom
Just 107th
   (c)      Each Guarantor agrees that the Second Priority Term Loan
Obligations may at any time and from time to time exceed the amount of the      
liability of such Guarantor under this Article XI without impairing the         
guarantee of such Guarantor to the extent provided in this Article XI or        
affecting the rights and remedies of the Administrative Agent or any other      
Secured Party hereunder.                                                        

         (d)      The guarantee provided in this Article XI shall remain in full
force and effect until the Second Priority Term Loan Secured Obligations        
Termination Date.                                                               

 (e)      With respect to each Guarantor, no payment made by the
Borrower, any of the other Guarantors or any other Person, or received or       
collected by the Administrative Agent or any other Secured Party from the       
Borrower, any of the other Guarantors or any other Person, by virtue of any     
action or proceeding or any set-off or appropriation or application at any time 
or from time to time in reduction of or in payment of any Second Priority Term  
Loan Obligations shall be deemed to modify, reduce, release or otherwise affect 
the liability of such Guarantor hereunder, which Guarantor shall,               
notwithstanding any such payment (other than any payment made by such Guarantor 
in respect of the Second Priority Term Loan Obligations or any payment received 
or collected from such Guarantor in respect of the Second Priority Term Loan    
Obligations), remain liable for the Second Priority Term Loan Obligations       
outstanding from time to time hereunder up to the maximum amount of such        
Guarantor's liability hereunder until the Second Priority Term Loan Secured     
Obligations Termination Date.                                                   

SECTION 11.02. Right of Contribution.                                           

 (a)      Each Guarantor hereby agrees that to the extent that a
Guarantor shall have paid more than its proportionate share of any payment made 
hereunder, such Guarantor shall be entitled to seek and receive contribution    
from and against any other Guarantor hereunder which has not paid its           
proportionate share of such payment. Each Guarantor's right of contribution     
shall be subject to the terms and conditions of Section 11.04 (No Subrogation). 

         (b)      The provisions of this Section 11.02 shall in no respect limit
the obligations and liabilities of any Guarantor to the Administrative Agent and
the other Second Priority Term Loan Secured Parties, and each Guarantor shall   
remain liable to the Administrative Agent and the other Second Priority Term    
Loan Secured Parties for the full amount guaranteed by such Guarantor hereunder.

SECTION 11.03. Subordination. Except as otherwise specifically provided in this 
Article XI, (a) all existing and future indebtedness of, or other obligations   
owed by, the Borrower or any of its subsidiaries to any Guarantor is hereby     
subordinated to all Second Priority Term Loan Obligations, and (b) without the  
prior written consent of the Administrative Agent, such subordinated            
indebtedness (including interest thereon) shall not be paid or withdrawn in     
whole or in part, nor shall any Guarantor accept any payment of or on account of
any such indebtedness while the guarantee provided hereunder is in effect. Any  
payment by the Borrower or any subsidiary thereof in violation of this Section  
11.03 shall be received by the relevant Guarantor in trust for the              
Administrative Agent and the Second Priority Term Loan Secured Parties, and such
Guarantor shall cause the same to be paid to the Administrative Agent for the   
benefit of the Second Priority Term Loan Secured Parties immediately upon demand
by the Administrative                                                           

101 

EX-10.2.4
108th Page of 171
TOC
1st
Previous
Next
↓Bottom
Just 108th
Agent on account of the Second Priority Term Loan Obligations. No Guarantor     
shall assign all or any portion of such indebtedness while the guarantee        
provided hereunder remains in effect except upon prior written notice to the    
Administrative Agent and pursuant to an agreement by which the assignee of any  
such indebtedness agrees that the assignment is made subject to the terms of    
this Agreement, and that any attempted assignment of such indebtedness in       
violation of the provisions hereof shall be void. Nothing in this Section 11.03 
shall apply to any repayment of existing or future indebtedness or obligation,  
distribution, withdrawal of capital or any other payment of any kind or nature  
whether in cash, in kind, or otherwise, that is permitted to be made to the     
Guarantor or any of its Affiliates pursuant to and in accordance with the       
Financing Documents.                                                            

SECTION 11.04. No Subrogation. Notwithstanding any payment made by any Guarantor
hereunder or any set-off or application of funds of any Guarantor by the        
Administrative Agent or any other Secured Party, no Guarantor shall be entitled 
to be subrogated to any of the rights of the Administrative Agent or any other  
Secured Party against the Borrower or any other Guarantor or any collateral     
security or guarantee or right of offset held by the Administrative Agent or any
other Secured Party for the payment of the Secured Obligations, nor shall any   
Guarantor seek or be entitled to seek any contribution or reimbursement from the
Borrower or any other Guarantor in respect of payments made by such Guarantor   
hereunder, until the Second Priority Term Loan Secured Obligations Termination  
Date. If any amount shall be paid to any Guarantor on account of such           
subrogation rights at any time when all of the Second Priority Term Loan        
Obligations shall not have been paid in full, such amount shall be held by such 
Guarantor in trust for the Administrative Agent and the other Second Priority   
Term Loan Secured Parties, segregated from other funds of such Guarantor, and   
shall, forthwith upon receipt by such Guarantor, be turned over to the          
Administrative Agent in the exact form received by such Guarantor (duly endorsed
by such Guarantor to the Administrative Agent, if required), to be applied      
against the Second Priority Term Loan Obligations, whether matured or unmatured,
in such order as the Administrative Agent may determine, subject to the terms   
and provisions of the Collateral Trust Agreement.                               

SECTION 11.05. Amendments, etc. with respect to the Second Priority Term Loan   
Obligations. Each Guarantor shall remain obligated hereunder notwithstanding    
that, without any reservation of rights against any Guarantor and without notice
to or further assent by any Guarantor, any demand for payment of any of the     
Second Priority Term Loan Obligations made by the Administrative Agent or any   
other Secured Party may be rescinded by the Administrative Agent or such other  
Secured Party and any of the Second Priority Term Loan Obligations continued,   
and the Second Priority Term Loan Obligations, or the liability of any other    
Person upon or for any part thereof, or any collateral security or guarantee    
therefor or right of offset with respect thereto, may, from time to time, in    
whole or in part, be renewed, extended, amended, modified, accelerated,         
compromised, waived, surrendered or released by the Administrative Agent or any 
other Secured Party, and any of the Second Priority Term Loan Documents may be  
amended, modified, supplemented or terminated, in whole or in part, as the      
requisite parties thereto deem advisable from time to time, and any collateral  
security, guarantee or right of offset at any time held by the Administrative   
Agent or any other Secured Party for the payment of the Second Priority Term    
Loan Obligations may be sold, exchanged, waived, surrendered or released.       
Neither the Administrative Agent nor any other Secured Party shall have any     
obligation to protect, secure, perfect or insure any Lien at any time held by it
as security for the                                                             

102 

EX-10.2.4
109th Page of 171
TOC
1st
Previous
Next
↓Bottom
Just 109th
Second Priority Term Loan Obligations or for the guarantee contained in this    
Article XI or any property subject thereto.                                     

SECTION 11.06. Guarantee Absolute and Unconditional.                            

    (a)      Each Guarantor waives any and all notice of the creation,
renewal, extension or accrual of any of the Second Priority Term Loan           
Obligations and notice of or proof of reliance by the Administrative Agent or   
any Lender upon the guarantee contained in this Article XI or acceptance of the 
guarantee contained in this Article XI. Each Guarantor agrees that the Second   
Priority Term Loan Obligations, and any of them, shall conclusively be deemed to
have been created, contracted or incurred, or renewed, extended, amended or     
waived, in reliance upon the Second Priority Term Loan Guarantees. Each         
Guarantor agrees that all dealings between the Borrower and any of the          
Guarantors, on the one hand, and the Administrative Agent and the Lenders, on   
the other hand, likewise shall be conclusively presumed to have been had or     
consummated in reliance upon the guarantee contained in this Article XI. Each   
Guarantor waives diligence, presentment, protest, demand for payment and notice 
of default or nonpayment to or upon the Borrower or any of the Guarantors with  
respect to the Second Priority Term Loan Obligations.                           

  (b)      The obligations of each Guarantor hereunder are primary
obligations of such Guarantor and are an absolute, unconditional, continuing and
irrevocable guaranty of payment and performance of the Second Priority Term Loan
Obligations and the other obligations of Guarantor hereunder and not of         
collectibility, and are in no way conditioned on or contingent upon any attempt 
to enforce in whole or in part Holdings', the Borrower's or any CalGen Company's
liabilities and obligations to the Secured Parties. Each failure by a Guarantor 
to pay or perform, as the case may be, a Second Priority Term Loan Obligation or
any other obligation hereunder shall give rise to a separate cause of action    
hereunder, and separate suits may be brought hereunder as each cause of action  
arises.                                                                         

         (c)      The Second Priority Term Loan Secured Parties may, at any time
and from time to time (whether or not after revocation or termination of the    
guarantee contained in this Article XI) without the consent of or notice to any 
Guarantor, except such notice as may be required by the Second Priority Term    
Loan Documents or applicable law which cannot be waived, without incurring      
responsibility to any Guarantor, without impairing or releasing the obligations 
of any Guarantor hereunder, upon or without any terms or conditions and in whole
or in part:                                                                     

             (i)      change the manner, place and terms of payment or
  performance of, or renew or alter, any Second Priority Term Loan
       Obligation or any obligations and liabilities (including any of those
  hereunder) incurred directly or indirectly in respect thereof or
       hereof, or in any manner modify, amend or supplement the terms of the
      Second Priority Term Loan Documents or any documents, instruments or
    agreements executed in connection therewith, in each case with the
 consent of Holdings, the Borrower, the CalGen Companies and any
Guarantor (in each case, as and to the extent required by this
      Agreement or the relevant Security Document, as applicable), and the
 agreements and guarantees herein made shall apply to the Second
      Priority Term Loan Obligations or such other obligations as changed,
      extended, renewed, modified, amended, supplemented or altered in any
manner;                                                       

103 

EX-10.2.4
110th Page of 171
TOC
1st
Previous
Next
↓Bottom
Just 110th
           (ii)     exercise or refrain from exercising any rights
against the Borrower, Holdings, any CalGen Company, or others 
    (including any Guarantor) or otherwise act or refrain from acting;

        (iii)    add or release any other guarantor from its
   obligations without affecting or impairing the obligations of any
Guarantor hereunder;                                          

               (iv)     settle or compromise any Second Priority Term Loan
        Obligations or any obligations and liabilities (including any of those
  hereunder) incurred directly or indirectly in respect thereof or
      hereof, and may subordinate the payment or performance of all or any
   part thereof to the payment or performance of any obligations and
liabilities which may be due to the Secured Parties or others;

                (v)      sell, exchange, release, surrender, realize upon or
   otherwise deal with in any manner or in any order any property by
  whomsoever pledged or mortgaged to secure or securing the Second
  Priority Term Loan Obligations or any liabilities or obligations
       (including any of those hereunder) incurred directly or indirectly in
respect thereof or hereof and/or any offset there against;    

           (vi)     apply any sums by whomsoever paid or howsoever
       realized to any obligations and liabilities of Holdings, the Borrower
        or any CalGen Company to the Second Priority Term Loan Secured Parties
      under the Second Priority Term Loan Documents in the manner provided
       therein regardless of what obligations and liabilities remain unpaid,
     except that sums paid by any Guarantor hereunder shall be deemed to
have been paid in respect of the applicable obligation of such
Guarantor hereunder;                                          

           (vii)    consent to or waive any breach of, or any act,
       omission or default under, the Second Priority Term Loan Documents or
otherwise amend, modify or supplement (with the consent of the
        Guarantors, Holdings, the Borrower and the CalGen Companies, as and to
     the extent required by the Second Priority Term Loan Documents) the
         Second Priority Term Loan Documents or any of such other instruments or
agreements; and/or                                            

                 (viii)   act or fail to act in any manner referred to in this
       Agreement which may deprive any Guarantor of its right to subrogation
      against the Borrower or any CalGen Company to recover full indemnity
        for any payments or performances made pursuant to this Agreement or of
its right of contribution against any other party.            

        (d)      No invalidity, irregularity or unenforceability of the Second
Priority Term Loan Obligations or invalidity, irregularity, unenforceability or 
non-perfection of any collateral therefor, shall affect, impair or be a defense 
to the guarantee contained in this Article XI, which is a primary obligation of 
each Guarantor.                                                                 

         (e)      The guarantee provided hereunder is a continuing guarantee and
all obligations to which it applies or may apply under the terms hereof shall be
conclusively presumed to have been created in reliance hereon. In the event     
that, notwithstanding the provisions of Section 11.06(b) above, the guarantee   
provided by any Guarantor hereunder shall be deemed revocable in accordance with
applicable law, then any such revocation shall become effective only upon       
receipt by Administrative Agent of written notice of revocation signed by such  
Guarantor. To                                                                   

104 

EX-10.2.4
111th Page of 171
TOC
1st
Previous
Next
↓Bottom
Just 111th
the extent permitted by applicable law, no revocation or termination hereof     
shall affect, in any manner, rights arising under hereunder with respect to     
Second Priority Term Loan Obligations arising prior to receipt by Administrative
Agent of written notice of such revocation or termination. Any such revocation  
or termination shall be deemed to be an Event of Default.                       

SECTION 11.07. Waiver. Each Guarantor hereby unconditionally and irrevocably    
waives and relinquishes, to the maximum extent permitted by applicable Legal    
Requirements, all rights and remedies accorded to sureties or guarantors and    
agrees not to assert or take advantage of any such rights or remedies,          
including:                                                                      

         (a)      any right to require Administrative Agent or the other Secured
Parties to proceed against the Borrower, any CalGen Company or any other Person 
or to proceed against or exhaust any security held by Administrative Agent or   
any other Secured Party at any time or to pursue any other remedy in            
Administrative Agent's or any other Secured Party's power before proceeding     
against such Guarantor;                                                         

       (b)      any defense that may arise by reason of the incapacity, lack
of power or authority, death, dissolution, merger, termination or disability of 
such Guarantor, the Borrower, any other CalGen Company or any other Person or   
the failure of the Administrative Agent or any other Secured Party to file or   
enforce a claim against the estate (in administration, bankruptcy or any other  
proceeding) of such Guarantor, Holdings, the Borrower, any CalGen Company or any
other Person;                                                                   

         (c)      promptness, diligence, demand, presentment, protest and notice
of any kind, including notice of the existence, creation or incurring of any new
or additional indebtedness or obligation or of any action or non-action on the  
part of Holdings, the Borrower, any CalGen Company, the Administrative Agent,   
the other Secured Parties, any endorser or creditor of the foregoing or on the  
part of any other Person under this or any other instrument in connection with  
any obligation or evidence of indebtedness held by the Administrative Agent or  
the other Secured Parties as collateral or in connection with any Second        
Priority Term Loan Obligation;                                                  

(d)      any defense based upon an election of remedies by the
Administrative Agent or the other Secured Parties, including an election to     
proceed by non-judicial rather than judicial foreclosure, which destroys or     
otherwise impairs the subrogation rights of such Guarantor, the right of such   
Guarantor to proceed against Holdings, the Borrower, any CalGen Company or      
another Person for reimbursement, or both;                                      

        (e)      any defense based on any offset against any amounts which may
be owed by any Person to such Guarantor for any reason whatsoever;              

 (f)      any defense based on any act, failure to act, delay or
omission whatsoever on the part of Holdings, the Borrower, any CalGen Company or
any of the Borrower's Affiliates or the failure by Holdings, the Borrower, any  
CalGen Company or any of the Borrower's Affiliates to do any act or thing or to 
observe or perform any covenant, condition or agreement to be observed or       
performed by it under the Financing Documents;                                  

105 

EX-10.2.4
112th Page of 171
TOC
1st
Previous
Next
↓Bottom
Just 112th
  (g)      any defense based upon any statute or rule of law which
provides that the obligation of a surety must be neither larger in amount nor in
other respects more burdensome than that of the principal;                      

      (h)      any defense setoff or counterclaim which may at any time be
available to or asserted by Holdings, the Borrower, any CalGen Company or any of
the Borrower's Affiliates thereof against the Administrative Agent, the other   
Secured Parties or any other Person under the Financing Documents;              

        (i)      any duty on the part of the Administrative Agent or any other
Secured Party to disclose to such Guarantor any facts any Secured Party may now 
or hereafter know about Holdings, the Borrower, any CalGen Company or the       
Facilities, regardless of whether the Administrative Agent or any other Secured 
Party has reason to believe that any such facts materially increase the risk    
beyond that which such Guarantor intends to assume, or have reason to believe   
that such facts are unknown to such Guarantor, or have a reasonable opportunity 
to communicate such facts to such Guarantor, since such Guarantor acknowledges  
that such Guarantor is fully responsible for being and keeping informed of the  
financial condition of the Borrower and of all circumstances bearing on the risk
of non-payment or non-performance of any Second Priority Term Loan Obligation;  

       (j)      any defense based on any change in the time, manner or place
of any payment or performance under, or in any other term of, this Agreement or 
any other Financing Document, or any other amendment, renewal, extension,       
acceleration, compromise or waiver of or any consent or departure from the terms
of this Agreement or any other Financing Document;                              

        (k)      any right to assert the bankruptcy or insolvency of Holdings,
the Borrower, any CalGen Company or any other Person as a defense hereunder or  
as the basis for rescission hereof and any defense arising because of the       
Administrative Agent's or any other Secured Party's election, in any proceeding 
instituted under the Bankruptcy Law, of the application of Section 1111(b)(2) of
the Bankruptcy Law;                                                             

      (l)      any defense based upon any borrowing or grant of a security
interest under Section 364 of the Bankruptcy Law; and                           

         (m)      any other circumstance (including any statute of limitations),
any act or omission by Holdings, the Borrower, any CalGen Company, or any       
existence of or reliance on any representation by the Administrative Agent,     
Holdings, the Borrower, any CalGen Company or any Secured Party that might      
otherwise constitute a defense available to, or discharge of, any guarantor or  
surety (other than, subject to Section 11.08 (Bankruptcy), the defense of       
payment or performance of the applicable Obligations guaranteed hereunder).     

SECTION 11.08. Bankruptcy.                                                      

        (a)      The obligations of any Guarantor under the guarantee provided
in this Article XI shall not be altered, limited or affected by any proceeding, 
voluntary or involuntary, involving the bankruptcy, reorganization, insolvency, 
receivership, liquidation or arrangement of Holdings, the Borrower, any other   
Guarantor or any Affiliate thereof, or by any defense which Holdings,           

106 

EX-10.2.4
113th Page of 171
TOC
1st
Previous
Next
↓Bottom
Just 113th
the Borrower, any Guarantor or any Affiliate thereof may have by reason of any  
order, decree or decision of any court or administrative body resulting from any
such proceeding.                                                                

(b)      Each Guarantor shall file, in any bankruptcy or other
proceeding in which the filing of claims is required or permitted by law, all   
claims which such Guarantor may have against Holdings, the Borrower or any      
CalGen Company relating to any indebtedness of the Borrower or any CalGen       
Company to such Guarantor, and hereby assigns to the Administrative Agent (for  
the benefit of itself and the Lenders) all rights of such Guarantor thereunder. 
If any Guarantor does not file any such claim, the Administrative Agent, as     
attorney-in-fact for such Guarantor, is hereby authorized to do so in the name  
of such Guarantor or, in the Administrative Agent's discretion, to assign the   
claim to a nominee and to cause proofs of claim to be filed in the name of the  
Administrative Agent's nominee. The foregoing power of attorney is coupled with 
an interest and cannot be revoked. The Administrative Agent or its nominee shall
have the sole right to accept or reject any plan proposed in any such proceeding
and to take any other action which a party filing a claim is entitled to take.  
In all such cases, whether in administration, bankruptcy or otherwise, the      
person authorized to pay such a claim shall pay the same to the Administrative  
Agent to the extent of any Second Priority Term Loan Obligations which then     
remain unpaid or unperformed, and, to the full extent necessary for that        
purpose, each Guarantor hereby assigns to the Administrative Agent all of such  
Guarantor's rights to all such payments or distributions to which such Guarantor
would otherwise be entitled; provided, however, that such Guarantor's           
obligations hereunder shall not be satisfied except to the extent that the      
Administrative Agent receives cash by reason of any such payment or             
distribution. If the Administrative Agent receives anything hereunder other than
cash, the same shall be held as collateral for amounts due under the guarantee  
contained in this Article XI.                                                   

         (c)      Each Guarantor hereby irrevocably waives, to the extent it may
do so under applicable Legal Requirements, any protection to which it may be    
entitled under Sections 365(c)(1), 365(c)(2) and 365(e)(2) of the Bankruptcy Law
or equivalent provisions of the laws or regulations of any other jurisdiction   
with respect to any proceedings, or any successor provision of law of similar   
import, in the event of any Bankruptcy Event with respect to Holdings, the      
Borrower or any CalGen Company. Specifically, in the event that the trustee (or 
similar official) in a Bankruptcy Event with respect to Holdings, the Borrower  
or any CalGen Company or the debtor-in-possession takes any action (including   
the institution of any action, suit or other proceeding for the purpose of      
enforcing the rights of Holdings, the Borrower, or any Guarantor under this     
Agreement or any Security Document), no Guarantor shall assert any defense,     
claim or counterclaim denying liability hereunder on the basis that this        
Agreement or any Security Document is an executory contract or a "financial     
accommodation" that cannot be assumed, assigned or enforced or on any other     
theory directly or indirectly based on Section 365(c)(1), 365(c)(2) or 365(e)(2)
of the Bankruptcy Law, or equivalent provisions of the law or regulations of any
other jurisdiction with respect to any proceedings or any successor provision of
law of similar import. If a Bankruptcy Event with respect to Holdings, the      
Borrower or any CalGen Company shall occur, each Guarantor agrees, after the    
occurrence of such Bankruptcy Event, to reconfirm in writing, to the extent     
permitted by applicable Legal Requirements, its pre-petition waiver of any      
protection to which it may be entitled under Sections 365(c)(1), 365(c)(2) and  
365(e)(2) of the Bankruptcy Law or equivalent provisions of the laws or         
regulations of any other jurisdiction with respect to proceedings and, to give  
effect to such waiver, each Guarantor consents to the assumption and enforcement
of each provision of the guarantee contained in this                            

107 

EX-10.2.4
114th Page of 171
TOC
1st
Previous
Next
↓Bottom
Just 114th
Article XI and any other provision hereof and in any other Second Priority Term 
Loan Document by the debtor-in-possession or Holdings', the Borrower's or any   
CalGen Company's trustee in bankruptcy, as the case may be.                     

SECTION 11.09. Reinstatement. The guarantee contained in this Article XI shall  
continue to be effective, or be reinstated, as the case may be, if at any time  
payment, or any part thereof, of any of the Second Priority Term Loan           
Obligations is rescinded or must otherwise be restored or returned by the       
Administrative Agent or any Lender upon the insolvency, bankruptcy, dissolution,
liquidation or reorganization of Holdings, the Borrower or any Guarantor, or    
upon or as a result of the appointment of a receiver, intervenor or conservator 
of, or trustee or similar officer for, Holdings, the Borrower or any Guarantor  
or any substantial part of its property, or otherwise, all as though such       
payments had not been made.                                                     

SECTION 11.10. Payments. Each Guarantor shall make all payments due hereunder in
accordance with Section 2.12 (General Provisions Regarding Payments).           

ARTICLE XII.

 MISCELLANEOUS

SECTION 12.01. Notices. Unless otherwise specifically provided herein, any      
notice or other communication herein required or permitted to be given to the   
Borrower or any Guarantor or the Administrative Agent shall be sent to such     
Person's address as set forth on Appendix B or in the other relevant Second     
Priority Term Loan Document, and in the case of any Lender, the address as      
indicated on Appendix B or otherwise indicated to the Administrative Agent in   
writing. Each notice hereunder shall be in writing and may be personally served,
telexed or sent by telefacsimile or United States mail or courier service and   
shall be deemed to have been given when delivered in person or by courier       
service and signed for against receipt thereof, upon receipt of telefacsimile or
telex, or three Business Days after depositing it in the United States mail with
postage prepaid and properly addressed; provided, no notice to the              
Administrative Agent shall be effective until received by the Administrative    
Agent. Documents, notices or reports required to be delivered to the Lenders    
pursuant to Sections 2.11 (Mandatory Repayment Offers), 5.01(a) (Reports), 5.02 
(Compliance Certificate) and 5.12 (Offer to Prepay Upon Change of Control) may  
be delivered electronically and posted electronically on IntraLinks/IntraAgency 
or other relevant website to which the Lenders have access (whether a           
commercial, third-party website or whether sponsored by Administrative Agent),  
if any; provided that (i) the Administrative Agent shall deliver paper copies of
such reports to any Lender upon written request therefor; and (ii) the          
Administrative Agent shall notify (which may be by facsimile or electronic mail)
each Lender of the posting of any such reports and provide to each Lender by    
email electronic versions (i.e., soft copies) of such reports.                  

SECTION 12.02. Expenses.                                                        

    The Borrower agrees to pay promptly, without duplication among the
separate clauses of this Section 12.02 and without duplication of amounts paid  
under the Purchase Agreement or the Revolving Loan Agreement or any other       
Financing Document:                                                             

108 

EX-10.2.4
115th Page of 171
TOC
1st
Previous
Next
↓Bottom
Just 115th
      (a)      all the costs incurred after the Closing Date of furnishing
all opinions by counsel for the Borrower and the other Obligors;                

        (b)      the reasonable fees, expenses and disbursements of counsel to
the Sole Lead Arranger in connection with the administration of the Second      
Priority Term Loan Documents and the negotiation, preparation and execution of  
any consents, amendments, waivers or other modifications thereto and any other  
documents or matters requested by the Borrower;                                 

       (c)      all the actual costs and reasonable expenses of creating and
perfecting Liens in favor of Collateral Agent, for the benefit of the Secured   
Parties pursuant hereto, including filing and recording fees, expenses and      
taxes, stamp or documentary taxes, search fees, title insurance premiums and    
reasonable fees, expenses and disbursements of counsel to each Agent and of     
counsel providing any opinions that any Agent or Requisite Lenders may request  
in respect of the Collateral or the Liens created pursuant to the Security      
Documents;                                                                      

 (d)      all the actual costs and reasonable fees, expenses and
disbursements of any auditors, accountants, consultants or appraisers if        
reasonably required in connection with the administration or enforcement of this
Agreement;                                                                      

      (e)      all the actual costs and reasonable expenses (including the
reasonable fees, expenses and disbursements of any appraisers, consultants,     
advisors and agents employed or retained by Collateral Agent and its counsel)   
reasonably required in connection with the custody or preservation of any of the
Collateral; and                                                                 

        (f)      after the occurrence of a Default or an Event of Default, all
costs and expenses, including attorneys' fees and costs of settlement, incurred 
by any Agent and the Lenders in enforcing any Second Priority Term Loan         
Obligations of or in collecting any payments due from any Obligor hereunder or  
under the other Second Priority Term Loan Documents by reason of such Default or
Event of Default (including in connection with the sale of, collection from, or 
other realization upon any of the Collateral or the enforcement of the Second   
Priority Term Loan Guarantees) or in connection with any refinancing or         
restructuring of the credit arrangements provided hereunder in the nature of a  
"work-out" or pursuant to any Bankruptcy Case or Insolvency Proceeding.         

SECTION 12.03. Indemnity.                                                       

       (a)      In addition to the payment of costs and expenses pursuant to
Section 12.02 (Expenses), whether or not the transactions contemplated hereby   
shall be consummated, the Borrower and the Guarantors agree to defend (subject  
to Indemnitees' selection of counsel), indemnify, pay and hold harmless the     
Administrative Agent and the Lenders and each of their respective Affiliates and
each and all of the directors, officers, partners, trustees, employees,         
attorneys and agents, and (in each case) their respective heirs,                
representatives, successors and assigns (each of the foregoing, an "Indemnitee")
from and against any and all Indemnified Liabilities; provided, no Indemnitee   
shall be entitled to indemnification hereunder with respect to any Indemnified  
Liability to the extent such Indemnified Liability is found by a final and      
nonappealable decision of a court of competent jurisdiction to have resulted    
directly and primarily from the bad faith, gross negligence or willful          
misconduct of such Indemnitee.                                                  

109 

EX-10.2.4
116th Page of 171
TOC
1st
Previous
Next
↓Bottom
Just 116th
      (b)      All amounts due under Section 12.03(a) shall be payable not
later than 10 days after written demand therefor.                               

        (c)      To the extent that the undertakings to defend, indemnify, pay
and hold harmless set forth in Section 12.03(a) may be unenforceable in whole or
in part because they are violative of any law or public policy, the Borrower and
the Guarantors shall contribute the maximum portion that they are permitted to  
pay and satisfy under applicable law to the payment and satisfaction of all     
Indemnified Liabilities incurred by Indemnitees or any of them.                 

     (d)      The Borrower and the Guarantors shall not assert any claim
against any Indemnitee, on any theory of liability, for any lost profits or     
special, indirect or consequential damages or (to the fullest extent lawful) any
punitive damages arising out of, in connection with, or as a result of, this    
Agreement or any other Second Priority Term Loan Document or any agreement or   
instrument or transaction contemplated hereby or relating in any respect to any 
Indemnified Liability, and the Borrower and the Guarantors hereby forever waive,
release and agree not to sue upon any claim for any such lost profits or        
special, indirect, consequential or (to the fullest extent lawful) punitive     
damages, whether or not accrued and whether or not known or suspected to exist  
in its favor.                                                                   

       (e)      The agreements in this Section 12.03 shall survive repayment
of the Second Priority Term Loans and all other amounts payable hereunder.      

SECTION 12.04. Set-Off. In addition to any rights now or hereafter granted under
applicable law and not by way of limitation of any such rights, upon the        
occurrence of any Event of Default each Lender is hereby authorized by the      
Borrower and the Guarantors at any time or from time to time subject to the     
consent of the Administrative Agent, without prior written notice to such Person
or to any other Person (other than the Administrative Agent), any such notice   
being hereby expressly waived, to set off and to appropriate and to apply any   
and all deposits (general or special, including Indebtedness evidenced by       
certificates of deposit, whether matured or unmatured, but not including trust  
accounts) and any other Indebtedness at any time held or owing by such Lender to
or for the credit or the account of the Borrower or any Guarantor against and on
account of the obligations and liabilities of such party to such Lender         
hereunder, and under the other Second Priority Term Loan Documents, including   
all claims of any nature or description arising out of or connected hereto, or  
with any other Second Priority Term Loan Document, irrespective of whether or   
not (a) such Lender shall have made any demand hereunder or (b) the principal of
or the interest on the Second Priority Term Loans or any other amounts due      
hereunder shall have become due and payable pursuant to Article II and although 
such obligations and liabilities, or any of them, may be contingent or          
unmatured.                                                                      

SECTION 12.05. Amendments and Waivers.                                          

      (a)      Requisite Lenders' Consent. Subject to Section 12.05(e), no
amendment, modification, termination or waiver of any provision of the Second   
Priority Term Loan Documents, or consent to any departure by any Obligor        
therefrom, shall in any event be effective without the written concurrence of   
the Requisite Lenders and any additional consents required by Sections 12.05(b) 
and (c).                                                                        

110 

EX-10.2.4
117th Page of 171
TOC
1st
Previous
Next
↓Bottom
Just 117th
 (b)      Affected Lenders' Consent. No amendment, modification,
termination, or consent shall be effective if the effect thereof would:         

              (i)      extend the scheduled final maturity of any Second
         Priority Term Loan or Second Priority Term Loan Note outstanding to any
Lender without the prior written consent of that Lender;      

              (ii)     waive, reduce or postpone any scheduled repayment
  (but not prepayment) due to any Lender without the prior written
consent of that Lender;                                       

               (iii)    reduce the rate of interest on any Second Priority
       Term Loan (other than any waiver of any increase in the interest rate
      applicable to any Second Priority Term Loan pursuant to Section 2.07
       (Default Interest)) payable to any Lender or reduce or extend any fee
      payable hereunder to any Lender without the prior written consent of
that Lender;                                                  

               (iv)     reduce the principal amount of any Second Priority
       Term Loan outstanding to any Lender without the prior written consent
of that Lender;                                               

               (v)      amend, modify, terminate or waive any provision of
      this Section 12.05(b), as it applies to any Lender without the prior
written consent of that Lender;                               

                (vi)     amend the definition of "Requisite Lenders" or "Pro
Rata Share" without the prior written consent of all Lenders; 

                 (vii)    release any Collateral from the Liens created by the
 Security Documents, except as specifically provided for in this
         Agreement and the Security Documents, without the prior written consent
of all Lenders;                                               

                 (viii)   release any Guarantor from its obligations under its
    Second Priority Term Loan Guarantee(s) or otherwise consent to the
assignment or transfer by any Obligor of any of its rights and
      obligations under any Second Priority Term Loan Document without the
prior written consent of all Lenders; or                      

                  (ix)     amend or modify any provision which requires pro rata
     payments among and as between the Lenders without the prior written
consent of all Lenders                                        

     (c)      Other Consents. No amendment, modification, termination or
waiver of any provision of the Second Priority Term Loan Documents, or consent  
to any departure by any Obligor therefrom, shall amend, modify, terminate or    
waive any provision of Article VIII as the same applies to the Administrative   
Agent, or any other provision hereof as the same applies to the rights or       
obligations of any Agent, in each case without the consent of the Administrative
Agent.                                                                          

      (d)      Execution of Amendments, etc. The Administrative Agent may,
but shall have no obligation to, with the concurrence of any Lender, execute    
amendments, modifications, waivers or consents on behalf of such Lender. Any    
waiver or consent shall be effective only in the specific instance and for the  
specific purpose for which it was given. No notice to or demand on              

111 

EX-10.2.4
118th Page of 171
TOC
1st
Previous
Next
↓Bottom
Just 118th
any Obligor in any case shall entitle any Obligor to any other or further notice
or demand in similar or other circumstances. Any amendment, modification,       
termination, waiver or consent effected in accordance with this Section 12.05   
shall be binding upon each Lender at the time outstanding, each future Lender   
and, if signed by an Obligor, on such Obligor.                                  

       (e)      Certain Amendments. Notwithstanding the preceding provisions
of this Section 12.05, the Borrower and the Administrative Agent may amend or   
supplement the Second Priority Term Loan Documents without the consent of any   
Lender:                                                                         

            (i)      to cure any ambiguity, defect or inconsistency;

            (ii)     to provide for the assumption of the Borrower's
       obligations to the Lenders by a successor to the Borrower pursuant to
Article VI hereof;                                            

                 (iii)    to make any change that would provide any additional
         rights or benefits to the Lenders or that does not adversely affect the
legal rights hereunder of any Lender;                         

                 (iv)     to allow any Subsidiary of the Borrower to provide a
         Second Priority Term Loan Guarantee or allow any Guarantor to execute a
      supplemental Guarantee with respect to the Second Priority Term Loan
Obligations;                                                  

                 (v)      to make, complete or confirm any grant of Collateral
permitted or required by this Agreement or any of the Security
      Documents or any release of Collateral that becomes effective as set
forth in this Agreement or any of the Security Documents;     

              (vi)     to conform the text of this Agreement, the Second
        Priority Term Loan Notes or the Security Documents to any provision of
      the Description of New Term Loans or Description of Notes section of
  the Offering Memorandum to the extent that such provision of the
      Description of New Term Loans or Description of Notes section of the
   Offering Memorandum was intended to be a verbatim recitation of a
    provision of this Agreement, the Second Priority Term Loans or the
Security Documents; or                                        

              (vii)    to reflect any waiver or termination of any right
        arising under the provisions of this Agreement that otherwise would be
       enforceable by any holder of the Notes, if such waiver or termination
       is set forth in the indentures governing such Notes, provided that no
   such waiver or amendment shall adversely affect the rights of the
Lenders.                                                      

SECTION 12.06. Successors and Assigns; Participations.                          

      (a)      Generally. This Agreement shall be binding upon the parties
hereto and their respective successors and assigns and shall inure to the       
benefit of the parties hereto and the successors and assigns of the Lenders and 
the other parties hereto. No Obligor's rights or obligations hereunder nor any  
interest therein may be assigned or delegated by any Obligor without the prior  
written consent of all Lenders. Nothing in this Agreement, expressed or implied,
shall be construed to confer upon any Person (other than the parties hereto,    
their respective successors and assigns permitted hereby and, to the extent     
expressly contemplated                                                          

112 

EX-10.2.4
119th Page of 171
TOC
1st
Previous
Next
↓Bottom
Just 119th
hereby, Affiliates of each of the Agents and the Lenders) any legal or equitable
right, remedy or claim under or by reason of this Agreement.                    

   (b)      Register. The Borrower, the Administrative Agent and the
Lenders shall deem and treat the Persons listed as Lenders in the Register as   
the holders and owners of the corresponding Second Priority Term Loan           
Commitments and Second Priority Term Loans listed therein for all purposes      
hereof, and no assignment or transfer of any such Second Priority Term Loan     
Commitment or Second Priority Term Loan (including any Second Priority Term Loan
represented by a Second Priority Term Loan Note) shall be effective, in each    
case, unless and until an Assignment Agreement effecting the assignment or      
transfer thereof shall have been delivered to and accepted by the Administrative
Agent and recorded in the Register as provided in Section 12.06(e). Prior to    
such recordation, all amounts owed with respect to the applicable Second        
Priority Term Loan Commitment or Second Priority Term Loan shall be owed to the 
Lender listed in the Register as the owner thereof, and any request, authority  
or consent of any Person who, at the time of making such request or giving such 
authority or consent, is listed in the Register as a Lender shall be conclusive 
and binding on any subsequent holder, assignee or transferee of the             
corresponding Second Priority Term Loan Commitments or Second Priority Term     
Loans.                                                                          

        (c)      Right to Assign. Each Lender shall have the right at any time
to sell, assign or transfer all or a portion of its rights and obligations under
this Agreement, including all or a portion of its Second Priority Term Loan     
Commitment or Second Priority Term Loans owing to it or other Second Priority   
Term Loan Obligation (provided, however, that each such assignment shall be of a
uniform, and not varying, percentage of all rights and obligations under and in 
respect of any Second Priority Term Loan and any related Second Priority Term   
Loan Commitments):                                                              

                (i)      to any Person meeting the criteria of clause (a) of
      the definition of the term of "Eligible Assignee" upon the giving of
notice to the Borrower and the Administrative Agent; and      

                (ii)     to any Person meeting the criteria of clause (b) of
the definition of the term of "Eligible Assignee";            

provided, further each such assignment pursuant to this Section 12.06(c) shall  
be in an aggregate amount of not less than $1,000 (or such lesser amount as may 
be agreed to by the Borrower and the Administrative Agent or as shall constitute
the aggregate amount of the Second Priority Term Loan Commitments and Second    
Priority Term Loans outstanding to the assigning Lender).                       

        (d)      Mechanics; Fee. The assigning Lender and the assignee thereof
shall execute and deliver to the Administrative Agent an Assignment Agreement,  
together with such forms, certificates or other evidence, if any, with respect  
to United States federal income tax withholding matters as the assignee under   
such Assignment Agreement may be required to deliver to the Administrative Agent
pursuant to Section 2.16(e) (Taxes; Withholding, etc.).                         

        (e)      Notice of Assignment. Upon its receipt of a duly executed and
completed Assignment Agreement (and any forms, certificates or other evidence   
required by this                                                                

113 

EX-10.2.4
120th Page of 171
TOC
1st
Previous
Next
↓Bottom
Just 120th
Agreement in connection therewith), the Administrative Agent shall record the   
information contained in such Assignment Agreement in the Register, shall give  
prompt notice thereof to the Borrower and shall maintain a copy of such         
Assignment Agreement.                                                           

        (f)      Representations and Warranties of Assignee. Each Lender, upon
execution and delivery hereof or upon executing and delivering an Assignment    
Agreement, as the case may be, and without limiting any other representation or 
warranty contained in any such Assignment Agreement, represents and warrants as 
of the Closing Date or as of the applicable Effective Date (as defined in the   
applicable Assignment Agreement) that (i) it is an Eligible Assignee; (ii) it   
has experience and expertise in the making of or investing in commitments or    
loans such as the applicable Second Priority Term Loan Commitments or Second    
Priority Term Loans, as the case may be; and (iii) it shall make or invest in,  
as the case may be, its Second Priority Term Loan Commitments or Second Priority
Term Loans for its own account in the ordinary course of its business and       
without a view to distribution of such Second Priority Term Loan Commitments or 
Second Priority Term Loans within the meaning of the Securities Act or the      
Exchange Act or other federal securities laws (it being understood that, subject
to the provisions of this Section 12.06, the disposition of such Second Priority
Term Loan Commitments or Second Priority Term Loans or any interests therein    
shall at all times remain within its exclusive control).                        

       (g)      Effect of Assignment. Subject to the terms and conditions of
this Section 12.06, as of the "Effective Date" specified in the applicable      
Assignment Agreement:                                                           

              (i)      the assignee thereunder shall have the rights and
   obligations of a "Lender" hereunder to the extent such rights and
 obligations hereunder have been assigned to it pursuant to such
   Assignment Agreement and shall thereafter be a party hereto and a
"Lender" for all purposes hereof;                             

                 (ii)     the assigning Lender thereunder shall, to the extent
  that rights and obligations hereunder have been assigned thereby
     pursuant to such Assignment Agreement, relinquish its rights (other
    than any rights which survive the termination hereof under Section
       12.08 (Survival of Representations, Warranties and Agreements) and be
 released from its obligations hereunder (and, in the case of an
  Assignment Agreement covering all or the remaining portion of an
        assigning Lender's rights and obligations hereunder, such Lender shall
        cease to be a party hereto; provided, anything contained in any of the
      Second Priority Term Loan Documents to the contrary notwithstanding,
       such assigning Lender shall continue to be entitled to the benefit of
       all indemnities hereunder as specified herein with respect to matters
    arising out of the prior involvement of such assigning Lender as a
Lender hereunder); and                                        

                (iii)    if any such assignment occurs after the issuance of
    any Second Priority Term Loan Note hereunder, the assigning Lender
 shall, upon the effectiveness of such assignment or as promptly
     thereafter as practicable, surrender its applicable Second Priority
   Term Loan Notes to the Administrative Agent for cancellation, and
         thereupon the Borrower shall issue and deliver new Second Priority Term
         Loan Notes, if so requested by the assignee and/or assigning Lender, to
 such assignee and/or to such assigning Lender, with appropriate
       insertions, to reflect the new outstanding Second Priority Term Loans
of the assignee and/or the assigning Lender.                  

114 

EX-10.2.4
121st Page of 171
TOC
1st
Previous
Next
↓Bottom
Just 121st
       (h)      Participations. Each Lender shall have the right at any time
to sell one or more participations to any Person (other than the Borrower, any  
of its Restricted Subsidiaries or any of its Affiliates) in all or any part of  
its Second Priority Term Loans or in any other Second Priority Term Loan        
Obligation. The holder of any such participation, other than an Affiliate of the
Lender granting such participation, shall not be entitled to require such Lender
to take or omit to take any action hereunder except with respect to any         
amendment, modification or waiver that would:                                   

              (i)      extend the final scheduled maturity of any Second
    Priority Term Loan or Second Priority Term Loan Note in which such
        participant is participating, or reduce the rate or extend the time of
         payment of interest or fees thereon (except in connection with a waiver
     of applicability of any post-default increase in interest rates) or
    reduce the principal amount thereof, or increase the amount of the
        participant's participation over the amount thereof then in effect (it
         being understood that a waiver of any Default or Event of Default shall
         not constitute a change in the terms of such participation, and that an
      increase in any Second Priority Term Loan shall be permitted without
      the consent of any participant if the participant's participation is
not increased as a result thereof);                           

                 (ii)     consent to the assignment or transfer by any Obligor
of any of its rights and obligations under this Agreement; or 

               (iii)    release all or substantially all of the Collateral
   under the Security Documents (except as expressly provided in the
     Second Priority Term Loan Documents) supporting the Second Priority
Term Loan Obligations hereunder in which such participant is  
participating.                                                

The Borrower agrees that each participant shall be entitled to the benefits of  
Sections 2.14(c) (Making or Maintaining Second Priority Term Loans), 2.15       
(Increased Costs; Capital Adequacy) and 2.16 (Taxes; Withholding, etc.) to the  
same extent as if it were a Lender and had acquired its interest by assignment  
pursuant to paragraph (c) of this Section; provided, (i) a participant shall not
be entitled to receive any greater payment under Section 2.14 (Making or        
Maintaining Second Priority Term Loans) or 2.15 (Increased Costs; Capital       
Adequacy) than the applicable Lender would have been entitled to receive with   
respect to the participation sold to such participant, unless the sale of the   
participation to such participant is made with the Borrower's prior written     
consent and (ii) a participant that would be a Non-U.S. Lender if it were a     
Lender shall not be entitled to the benefits of Section 2.16 (Taxes;            
Withholding, etc.) unless the Borrower is notified of the participation sold to 
such participant and such participant agrees, for the benefit of the Borrower,  
to comply with Section 2.16 (Taxes; Withholding, etc.) as though it were a      
Lender. To the extent permitted by law, each participant also shall be entitled 
to the benefits of Section 12.04 (Set-Off) as though it were a Lender, provided 
such participant agrees to be subject to Section 2.13 (Ratable Sharing) as      
though it were a Lender.                                                        

(i)      Certain Other Assignments.                           

          (i)      In addition to any other assignment permitted
         pursuant to this Section 12.06, any Lender may assign and/or pledge all
    or any portion of its Second Priority Term Loans, the other Second
Priority Term Loan Obligations owed by or to such             

115 

EX-10.2.4
122nd Page of 171
TOC
1st
Previous
Next
↓Bottom
Just 122nd
    Lender, and its Second Priority Term Loan Notes, if any, to secure
         obligations of such Lender including (A) to any Federal Reserve Bank as
        collateral security pursuant to Regulation A of the Board of Governors
         of the Federal Reserve System and any operating circular issued by such
        Federal Reserve Bank and (B) with respect to any Lender that is a fund
     that invests in bank loans, to any trustee or holder of obligations
owed, or securities issued by, such fund as security for such 
  obligations or securities or to any other representative of such
        holders; provided, no Lender, as between the Borrower and such Lender,
      shall be relieved of any of its obligations hereunder as a result of
         any such assignment and pledge, and provided further, in no event shall
the applicable Federal Reserve Bank, trustee or such holder of
      obligations be considered to be a "Lender" or be entitled to require
    the assigning Lender to take or omit to take any action hereunder.

                  (ii)     At the request of the Borrower in connection with the
      payment in full of all of the Second Priority Term Loan Obligations,
         whether by voluntary or mandatory prepayment thereof or on the Maturity
 Date or otherwise, each Lender shall execute and deliver to the
         Borrower (or to such Person(s) as the Borrower requests) such documents
      and instruments as the Borrower reasonably requests to assign all of
        such Lender's Second Priority Term Loan Obligations (together with all
     of such Lender's right, title and interest in, to and under all the
        Second Priority Term Loan Documents) to such Person(s) as the Borrower
may direct; provided, that (A) upon the effectiveness of such 
     assignment the Borrower shall execute and deliver to each Lender an
      instrument pursuant to which the Borrower and the Guarantors release
       such Lender from all claims under this Agreement and all of the other
      Second Priority Term Loan Documents and (B) such assignment shall be
        without recourse to and without any representations or warranties from
        the assigning Lender. If any such assignment occurs after the issuance
       to it of any Second Priority Term Loan Notes hereunder, then upon the
      effectiveness of such assignment, the assigning Lender shall deliver
all of its Second Priority Term Loan Notes to the Borrower for
cancellation or re-issuance to the new Lender.                

SECTION 12.07. Independence of Covenants. All covenants hereunder shall be given
independent effect so that if a particular action or condition is not permitted 
by any of such covenants, the fact that it would be permitted by an exception   
to, or would otherwise be within the limitations of, another covenant shall not 
avoid the occurrence of a Default or an Event of Default if such action is taken
or condition exists.                                                            

SECTION 12.08. Survival of Representations, Warranties and Agreements. All      
agreements made herein shall survive the execution and delivery hereof and the  
making of any Second Priority Term Loan. Notwithstanding anything herein or     
implied by law to the contrary, the agreements of the Borrower and the          
Guarantors set forth in Sections 2.14(c) (Making or Maintaining Second Priority 
Term Loans), 2.15 (Increased Costs; Capital Adequacy), 2.16 (Taxes; Withholding,
etc.), 12.02 (Expenses), 12.03 (Indemnity), 12.04 (Set-Off), 12.15 (Consent to  
Jurisdiction), 12.16 (Waiver of Jury Trial) and 12.17 (Confidentiality) and the 
agreements of Lenders set forth in Sections 2.13 (Ratable Sharing), 8.03(b)     
(General Immunity) and 8.06 (Right to Indemnity) shall survive the payment of   
the Second Priority Term Loans and the termination hereof.                      

116 

EX-10.2.4
123rd Page of 171
TOC
1st
Previous
Next
↓Bottom
Just 123rd
SECTION 12.09. No Waiver; Remedies Cumulative. No failure or delay on the part  
of any Agent or any Lender in the exercise of any power, right or privilege     
hereunder or under any other Second Priority Term Loan Document shall impair    
such power, right or privilege or be construed to be a waiver of any default or 
acquiescence therein, nor shall any single or partial exercise of any such      
power, right or privilege preclude other or further exercise thereof or of any  
other power, right or privilege. The rights, powers and remedies given to each  
Agent and each Lender hereby are cumulative and shall be in addition to and     
independent of all rights, powers and remedies existing by virtue of any statute
or rule of law or in any of the other Second Priority Term Loan Documents. Any  
forbearance or failure to exercise, and any delay in exercising, any right,     
power or remedy hereunder shall not impair any such right, power or remedy or be
construed to be a waiver thereof, nor shall it preclude the further exercise of 
any such right, power or remedy.                                                

SECTION 12.10. Marshalling; Payments Set Aside. Neither any Agent nor any Lender
shall be under any obligation to marshal any assets in favor of any Obligor or  
any other Person or against or in payment of any or all of the Second Priority  
Term Loan Obligations. To the extent that any Obligor makes a payment or        
payments to the Administrative Agent or the Lenders (or to the Administrative   
Agent, on behalf of the Lenders), or the Administrative Agent or the Lenders    
enforce any security interests or exercise their rights of setoff, and such     
payment or payments or the proceeds of such enforcement or setoff or any part   
thereof are subsequently invalidated, declared to be fraudulent or preferential,
set aside and/or required to be repaid to a trustee, receiver or any other party
under any bankruptcy law, any other state or federal law, common law or any     
equitable cause, then, to the extent of such recovery, the obligation or part   
thereof originally intended to be satisfied, and all Liens, rights and remedies 
therefor or related thereto, shall be revived and continued in full force and   
effect as if such payment or payments had not been made or such enforcement or  
setoff had not occurred.                                                        

SECTION 12.11. Severability. In case any provision in or obligation under any   
Second Priority Term Loan Document shall be invalid, illegal or unenforceable in
any jurisdiction, the validity, legality and enforceability of the remaining    
provisions or obligations, or of such provision or obligation in any other      
jurisdiction, shall not in any way be affected or impaired thereby.             

SECTION 12.12. Second Priority Term Loan Obligations Several; Independent Nature
of Lenders' Rights. The obligations of the Lenders hereunder are several and no 
Lender shall be responsible for the obligations or Second Priority Term Loan    
Commitment of any other Lender hereunder. Nothing contained herein or in any    
other Second Priority Term Loan Document, and no action taken by the Lenders    
pursuant hereto or thereto, shall be deemed to constitute the Lenders as a      
partnership, an association, a joint venture or any other kind of entity. The   
amounts payable at any time hereunder to each Lender shall be a separate and    
independent debt, and each Lender shall be entitled to protect and enforce its  
rights arising out hereof and it shall not be necessary for any other Lender to 
be joined as an additional party in any proceeding for such purpose.            

SECTION 12.13. Headings. Section headings herein are included herein for        
convenience of reference only and shall not constitute a part hereof for any    
other purpose or be given any substantive effect.                               

117 

EX-10.2.4
124th Page of 171
TOC
1st
Previous
Next
↓Bottom
Just 124th
SECTION 12.14. Applicable Law. This Agreement and the rights and obligations of 
the parties hereunder shall be governed by, and shall be construed and enforced 
in accordance with, the laws of the State of New York without regard to conflict
of laws principles thereof.                                                     

SECTION 12.15. Consent to Jurisdiction. ALL JUDICIAL PROCEEDINGS BROUGHT AGAINST
ANY PARTY HERETO ARISING OUT OF OR RELATING HERETO OR ANY OTHER SECOND PRIORITY 
TERM LOAN DOCUMENT, OR ANY OF THE SECOND PRIORITY TERM LOAN OBLIGATIONS, MAY BE 
BROUGHT IN ANY STATE OR FEDERAL COURT OF COMPETENT JURISDICTION IN THE STATE,   
COUNTY AND CITY OF NEW YORK. BY EXECUTING AND DELIVERING THIS AGREEMENT, EACH   
PARTY HERETO, FOR ITSELF AND IN CONNECTION WITH ITS PROPERTIES, IRREVOCABLY (A) 
ACCEPTS GENERALLY AND UNCONDITIONALLY THE NONEXCLUSIVE JURISDICTION AND VENUE OF
SUCH COURTS; (B) WAIVES ANY DEFENSE OF FORUM NON CONVENIENS; (C) AGREES THAT    
SERVICE OF ALL PROCESS IN ANY SUCH PROCEEDING IN ANY SUCH COURT MAY BE MADE BY  
REGISTERED OR CERTIFIED MAIL, RETURN RECEIPT REQUESTED, TO THE APPLICABLE       
OBLIGOR AT ITS ADDRESS PROVIDED IN ACCORDANCE WITH SECTION 12.01 (NOTICES); (D) 
AGREES THAT SERVICE AS PROVIDED IN CLAUSE (C) ABOVE IS SUFFICIENT TO CONFER     
PERSONAL JURISDICTION OVER THE APPLICABLE OBLIGOR IN ANY SUCH PROCEEDING IN ANY 
SUCH COURT, AND OTHERWISE CONSTITUTES EFFECTIVE AND BINDING SERVICE IN EVERY    
RESPECT; AND (E) AGREES THAT THE AGENTS AND THE LENDERS RETAIN THE RIGHT TO     
SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO BRING PROCEEDINGS      
AGAINST ANY OBLIGOR IN THE COURTS OF ANY OTHER JURISDICTION.                    

SECTION 12.16. Waiver Of Jury Trial. EACH OF THE PARTIES HERETO HEREBY AGREES TO
WAIVE ITS RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION     
BASED UPON OR ARISING HEREUNDER OR UNDER ANY OF THE OTHER SECOND PRIORITY TERM  
LOAN DOCUMENTS OR ANY DEALINGS BETWEEN THEM RELATING TO THE SUBJECT MATTER OF   
THIS LOAN TRANSACTION OR THE LENDER/COMPANY RELATIONSHIP THAT IS BEING          
ESTABLISHED. THE SCOPE OF THIS WAIVER IS INTENDED TO BE ALL-ENCOMPASSING OF ANY 
AND ALL DISPUTES THAT MAY BE FILED IN ANY COURT AND THAT RELATE TO THE SUBJECT  
MATTER OF THIS TRANSACTION, INCLUDING CONTRACT CLAIMS, TORT CLAIMS, BREACH OF   
DUTY CLAIMS AND ALL OTHER COMMON LAW AND STATUTORY CLAIMS. EACH PARTY HERETO    
ACKNOWLEDGES THAT THIS WAIVER IS A MATERIAL INDUCEMENT TO ENTER INTO A BUSINESS 
RELATIONSHIP, THAT EACH HAS ALREADY RELIED ON THIS WAIVER IN ENTERING INTO THIS 
AGREEMENT, AND THAT EACH WILL CONTINUE TO RELY ON THIS WAIVER IN ITS RELATED    
FUTURE DEALINGS. EACH PARTY HERETO FURTHER WARRANTS AND REPRESENTS THAT IT HAS  
REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL AND THAT IT KNOWINGLY AND           
VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL      
COUNSEL. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER 
ORALLY OR IN WRITING (OTHER THAN BY A MUTUAL WRITTEN WAIVER SPECIFICALLY        
REFERRING TO THIS SECTION 12.16 AND                                             

118 

EX-10.2.4
125th Page of 171
TOC
1st
Previous
Next
↓Bottom
Just 125th
EXECUTED BY EACH OF THE PARTIES HERETO), AND THIS WAIVER SHALL APPLY TO ANY     
SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS HERETO OR ANY OF  
THE OTHER SECOND PRIORITY TERM LOAN DOCUMENTS OR TO ANY OTHER DOCUMENTS OR      
AGREEMENTS RELATING TO THE SECOND PRIORITY TERM LOAN OBLIGATIONS. IN THE EVENT  
OF LITIGATION, THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY   
THE COURT.                                                                      

SECTION 12.17. Confidentiality.                                                 

 Each Lender shall hold all non-public information regarding the
Borrower and its business identified as such by the Borrower and obtained by    
such Lender pursuant to the requirements hereof in accordance with such Lender's
customary procedures for handling confidential information of such nature, it   
being understood and agreed by the Borrower that, in any event, a Lender may    
make:                                                                           

                  (i)      disclosures of such information to Affiliates of such
Lender and to their agents and advisors (and to other Persons 
     authorized by a Lender or Agent to organize, present or disseminate
   such information in connection with disclosures otherwise made in
accordance with this Section 12.17);                          

                (ii)     disclosures of such information reasonably required
      by any bona fide or potential assignee, transferee or participant in
        connection with the contemplated assignment, transfer or participation
    by such Lender of any Second Priority Term Loan Obligations or any
participations therein;                                       

                 (iii)    disclosure to any rating agency when required by it,
  provided that, prior to any disclosure, such rating agency shall
undertake in writing to preserve the confidentiality of any   
       confidential information relating to the Obligors received by it from
any of the Agents or any Lender, and                          

                  (iv)     disclosures required or requested by any governmental
    agency or representative thereof or by the National Association of
   Insurance Commissioners or pursuant to legal or judicial process;
     provided, unless specifically prohibited by applicable law or court
         order, each Lender shall make reasonable efforts to notify the Borrower
     of any request by any governmental agency or representative thereof
        (other than any such request in connection with any examination of the
         financial condition or other routine examination of such Lender by such
        governmental agency) for disclosure of any such non-public information
prior to disclosure of such information.                      

SECTION 12.18. Usury Savings Clause. Notwithstanding any other provision herein,
the aggregate interest rate charged with respect to any of the Second Priority  
Term Loan Obligations, including all charges or fees in connection therewith    
deemed in the nature of interest under applicable law shall not exceed the      
Highest Lawful Rate. If the rate of interest (determined without regard to the  
preceding sentence) under this Agreement at any time exceeds the Highest Lawful 
Rate, the outstanding amount of the Second Priority Term Loan Obligations shall 
bear interest at the Highest Lawful Rate until the total amount of interest due 
hereunder                                                                       

119 

EX-10.2.4
126th Page of 171
TOC
1st
Previous
Next
↓Bottom
Just 126th
equals the amount of interest which would have been due hereunder if the stated 
rates of interest set forth in this Agreement had at all times been in effect.  
In addition, if when the Second Priority Term Loan Obligations are repaid in    
full the total interest due hereunder (taking into account the increase provided
for above) is less than the total amount of interest which would have been due  
hereunder if the stated rates of interest set forth in this Agreement had at all
times been in effect, then to the extent permitted by law, the Borrower shall   
pay to the Administrative Agent an amount equal to the difference between the   
amount of interest paid and the amount of interest which would have been paid if
the Highest Lawful Rate had at all times been in effect. Notwithstanding the    
foregoing, it is the intention of the Lenders and the Borrower to conform       
strictly to any applicable usury laws. Accordingly, if any Lender contracts for,
charges, or receives any consideration which constitutes interest in excess of  
the Highest Lawful Rate, then any such excess shall be cancelled automatically  
and, if previously paid, shall at such Lender's option be applied to the        
outstanding amount of the Second Priority Term Loan Obligations or be refunded  
to the Borrower.                                                                

SECTION 12.19. Counterparts; Execution by Facsimile.                            

        (a)      This Agreement may be executed in any number of 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.

       (b)      The delivery of an executed signature page of this Agreement
by facsimile transmission shall be effective as delivery of a manually executed 
counterpart hereof.                                                             

SECTION 12.20. Effectiveness. This Agreement shall become effective upon the    
execution of a counterpart hereof by each of the parties hereto and receipt by  
the Borrower and the Administrative Agent of written or telephonic notification 
of such execution and authorization of delivery thereof.                        

SECTION 12.21. Statements Required in Certificate or Opinion.                   

         Each certificate or opinion with respect to compliance with a condition
or covenant provided for in this Agreement must include:                        

                (i)      a statement that the Person making such certificate
or opinion has read such covenant or condition;               

                (ii)     a brief statement as to the nature and scope of the
    examination or investigation upon which the statements or opinions
contained in such certificate or opinion are based;           

                (iii)    a statement that, in the opinion of such Person, he
      or she has made such examination or investigation as is necessary to
       enable him or her to express an informed opinion as to whether or not
such covenant or condition has been satisfied; and            

                (iv)     a statement as to whether or not, in the opinion of
such Person, such condition or covenant has been satisfied.   

120 

EX-10.2.4
127th Page of 171
TOC
1st
Previous
Next
↓Bottom
Just 127th
SECTION 12.22. No Recourse Against the Borrower or the Guarantors.              
NOTWITHSTANDING ANYTHING TO THE CONTRARY SET FORTH IN THIS AGREEMENT OR ANY     
OTHER SECOND PRIORITY TERM LOAN DOCUMENT, THE SECOND PRIORITY TERM LOANS AND THE
SECOND PRIORITY TERM LOAN GUARANTEES ARE NON-RECOURSE SECURED OBLIGATIONS OF THE
BORROWER AND THE APPLICABLE GUARANTORS, RESPECTIVELY. THE ONLY RECOURSE A LENDER
WILL HAVE WITH RESPECT TO THE PAYMENT OF PRINCIPAL OF, OR INTEREST OR PREMIUM   
ON, THE SECOND PRIORITY TERM LOAN OBLIGATIONS (WHETHER UNDER THIS AGREEMENT OR  
PURSUANT TO THE GUARANTEES) WILL BE ENFORCEMENT OF ITS RIGHTS AGAINST THE       
COLLATERAL PURSUANT TO THE SECURITY DOCUMENTS.                                  

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

121 

EX-10.2.4
128th Page of 171
TOC
1st
Previous
Next
↓Bottom
Just 128th
         IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered by their respective officers thereunto duly         
authorized as of the date first written above.                                  

                          CALPINE GENERATING COMPANY, LLC,
         as the Borrower

            By: /s/ ZAMIR RAUF
                                  --------------------------------
                  Name: Zamir Rauf
                       Title: Vice President

[Second Priority Credit and Guarantee Agreement - Calpine Generating Company,   
LLC]                                                                            

EX-10.2.4
129th Page of 171
TOC
1st
Previous
Next
↓Bottom
Just 129th
                        MORGAN STANLEY SENIOR FUNDING,
                                    INC., as Administrative Agent and a Lender

                   By: /s/ LUCY K. GALBRAITH
                                  --------------------------------
       Name:
        Title:

                              MORGAN STANLEY SENIOR FUNDING, INC.,
                                   as Sole Lead Arranger and Sole Bookrunner

                   By: /s/ LUCY K. GALBRAITH
                                  --------------------------------
       Name:
        Title:

[Second Priority Credit and Guarantee Agreement - Calpine Generating Company,   
LLC]                                                                            

EX-10.2.4
130th Page of 171
TOC
1st
Previous
Next
↓Bottom
Just 130th
                              UNION BANK OF CALIFORNIA, N.A., as a
Lender

                  By: /s/ W. T. SAURENMANN
                                  --------------------------------
                        Name: W. T. Saurenmann
            Title: SVP

[Second Priority Credit and Guarantee Agreement - Calpine Generating Company,   
LLC]                                                                            

EX-10.2.4
131st Page of 171
TOC
1st
Previous
Next
↓Bottom
Just 131st
         THE GUARANTORS:

                       CALGEN EXPANSION COMPANY, LLC
            CPN FREESTONE, LLC
                CALPINE FREESTONE, LLC
                          CALPINE FREESTONE ENERGY GP, LLC
                               CALPINE CHANNEL ENERGY CENTER LP, LLC
                               CALPINE CHANNEL ENERGY CENTER GP, LLC
               CHANNEL POWER GP, LLC
                                CALGEN EQUIPMENT FINANCE HOLDINGS, LLC
                          CALGEN PROJECT EQUIPMENT FINANCE
          COMPANY ONE, LLC
                                  CALGEN PROJECT EQUIPMENT FINANCE COMPANY
   THREE LLC
                               CALGEN EQUIPMENT FINANCE COMPANY, LLC
               NUECES BAY ENERGY LLC
                                  CALPINE NORTHBROOK SOUTHCOAST INVESTORS,
LLC   
                               CALPINE CORPUS CHRISTI ENERGY GP, LLC
         ZION ENERGY LLC
                        LOS MEDANOS ENERGY CENTER, LLC
                   MORGAN ENERGY CENTER, LLC
             CARVILLE ENERGY LLC
                    DECATUR ENERGY CENTER, LLC
                    CALPINE ONETA POWER I, LLC
                     CALPINE ONETA POWER II, LLC
                               CALPINE BAYTOWN ENERGY CENTER LP, LLC
                               CALPINE BAYTOWN ENERGY CENTER GP, LLC
               BAYTOWN POWER GP, LLC
             COLUMBIA ENERGY LLC
                  DELTA ENERGY CENTER, LLC
                                  CALGEN PROJECT EQUIPMENT FINANCE COMPANY
  TWO, LLC
                         PASTORIA ENERGY FACILITY L.L.C.
                        CALPINE PASTORIA HOLDINGS, LLC

                                   Executing this Agreement on behalf of and
                                     so as to bind each of the limited liability
                                 companies named above under the caption
          "The Guarantors"

            By: /s/ ZAMIR RAUF
                                  --------------------------------
                  Name: Zamir Rauf
                       Title: Vice President

[Second Priority Credit and Guarantee Agreement - Calpine Generating Company,   
LLC]                                                                            

EX-10.2.4
132nd Page of 171
TOC
1st
Previous
Next
↓Bottom
Just 132nd
         THE GUARANTORS:

                       FREESTONE POWER GENERATION LP
                      CALPINE FREESTONE ENERGY, LP
                    CALPINE POWER EQUIPMENT LP
           CHANNEL POWER, LP
                   CHANNEL ENERGY CENTER, LP
                           CALPINE CORPUS CHRISTI ENERGY, LP
                        CORPUS CHRISTI COGENERATION LP
                   CALPINE ONETA POWER, L.P.
                   BAYTOWN ENERGY CENTER, LP
           BAYTOWN POWER, LP

                                   Executing this Agreement on behalf of and
                           so as to bind each of the limited
                                    partnerships named above under the caption
          "The Guarantors"

            By: /s/ ZAMIR RAUF
                                  --------------------------------
                  Name: Zamir Rauf
                       Title: Vice President

[Second Priority Credit and Guarantee Agreement - Calpine Generating Company,   
LLC]                                                                            

EX-10.2.4
133rd Page of 171
TOC
1st
Previous
Next
↓Bottom
Just 133rd
                                                                      APPENDIX A
                                          TO SECOND PRIORITY TERM LOAN AGREEMENT

 INITIAL SECOND PRIORITY TERM LOAN COMMITMENTS

                                                                [Download Table]

                                          Second Priority                     
               Lender                   Term Loan Commitment    Pro Rata Share
-----------------------------------     --------------------    --------------
                                                                              
Morgan Stanley Senior Funding, Inc.        $85,000,000.00             85%     

Union Bank of California, N.A.             $15,000,000.00             15%     
                                        --------------------    --------------
Total                                      $100,000,000.00            100%    
                                        ====================    ==============

A-1 

EX-10.2.4
134th Page of 171
TOC
1st
Previous
Next
↓Bottom
Just 134th
                                                                      APPENDIX B
                                          TO SECOND PRIORITY TERM LOAN AGREEMENT

NOTICE ADDRESSES

Administrative Agent's                                                          
Principal Office:                       Morgan Stanley Senior Funding, Inc.     
                           as the Administrative Agent
             1585 Broadway
                  New York, NY 10036
                      Attention: Lisa Malone
                     Phone: (212) 537-1312
                         Facsimile: (212) 537-1867
                                     E-mail: lisa.malone@morganstanley.com

Collateral Agent:                       Wilmington Trust Company                
                   Rodney Square North
                        1100 North Market Street
                         Wilmington, DE 19890-1615
                  Attn: Kristin Long

Borrower:                               Calpine Generating Company, LLC         
                           50 West San Fernando Street
                   San Jose,  CA 95113
                              Attn:  Chief Financial Officer
                     Fax:  (408) 995- 0505
                       Phone:  (408) 995- 5115

Each Guarantor:                         c/o Calpine Generating Company, LLC     
                           50 West San Fernando Street
                   San Jose,  CA 95113
                              Attn:  Chief Financial Officer
                     Fax:  (408) 995- 0505
                       Phone:  (408) 995- 5115

B-1 

EX-10.2.4
135th Page of 171
TOC
1st
Previous
Next
↓Bottom
Just 135th
                                                                       EXHIBIT A
                                          TO SECOND PRIORITY TERM LOAN AGREEMENT

 FORM OF SUBORDINATION TERMS

[TO BE INCLUDED AS AN ARTICLE IN THE INSTRUMENT EVIDENCING "AFFILIATE           
SUBORDINATED INDEBTEDNESS" INCURRED PURSUANT TO THIS AGREEMENT, THIRD PARTY     
SUBORDINATED INDEBTEDNESS INCURRED PURSUANT TO THIS AGREEMENT, AND AS OTHERWISE 
REQUIRED BY THIS AGREEMENT]                                                     

[THE COLLATERAL AGENT SHALL EITHER BE A PARTY TO OR A THIRD PARTY BENEFICIARY OF
THESE SUBORDINATION TERMS]                                                      

ARTICLE [__]

 SUBORDINATION

                  Section [__].1. Definitions. All capitalized terms used herein
and not otherwise defined herein shall have the meanings given to such terms in 
the Collateral Trust Agreement, dated as of March 23, 2004, among Calpine CalGen
Holdings, Inc., Calpine Generating Company, LLC ("CalGen"), CalGen Finance      
Corp., the guarantors party thereto from time to time (the "Guarantors"), the   
Secured Debt Representatives party thereto and Wilmington Trust Company, as     
collateral agent (the "Collateral Agent"), as in effect on the date hereof. As  
used in this Article, the following terms shall have the following respective   
meanings:                                                                       

                          "Junior Claimant" means [INSERT NAME OF LENDER UNDER
SUBORDINATED DEBT].                                           

                        "Proceeding" means any (a) insolvency, bankruptcy,
         receivership, liquidation, reorganization, readjustment, composition or
       other similar proceeding of or against the Subordinated Debtor or its
        property or its creditors as such, (b) proceeding for any liquidation,
       dissolution or other winding-up of the Subordinated Debtor, voluntary
   or involuntary, whether or not involving insolvency or bankruptcy
         proceedings, (c) general assignment for the benefit of creditors of the
    Subordinated Debtor, or (d) other marshalling of the assets of the
Subordinated Debtor.                                          

                    "Senior Claimants" means the holders of Senior
Obligations.                                                  

                     "Senior Claim Documents" means the Secured Debt
Documents other than the Other Junior Lien Debt Documents.    

                  "Senior Claims" means, collectively, (a) the
principal of, and premium, if any, and interest on, the Senior
        Obligations (in each case, including, without limitation, any interest
  accruing thereon at the legal rate after the commencement of any
        Proceeding and any additional interest that would have accrued thereon
but for the commencement of                                   

A-1 

EX-10.2.4
136th Page of 171
TOC
1st
Previous
Next
↓Bottom
Just 136th
     such Proceeding), and (b) all other Obligations of the Subordinated
   Debtor to the Senior Claimants, whether now existing or hereafter
incurred or created, under or with respect to the Senior Claim
   Documents or any replacement, supplement to or refinancing of the
Senior Obligations.                                           

                        "Senior Obligations" means all Secured Obligations
other than the Other Junior Lien Obligations.                 

                          "Senior Obligations Termination Date" means the date
         on which all Senior Obligations (including all interest accrued thereon
     after the commencement of any bankruptcy, insolvency or liquidation
     proceeding at the rate, including any applicable post-default rate,
  specified in the applicable Senior Claim Documents, even if such
      interest is not enforceable, allowable or allowed as a claim in such
proceeding) have been paid in full in cash (and/or defeased in
         accordance with the applicable Senior Claim Documents), all commitments
      to extend credit under all Senior Claim Documents have terminated or
      expired and all outstanding letters of credit issued pursuant to any
Senior Claim Documents have been cancelled, terminated or cash
collateralized at 102.5% of the aggregate undrawn amount.     

                         "Subordinated Debt" means all indebtedness owing to
      Junior Claimant arising under or in respect of the Subordinated Debt
Documents.                                                    

                   "Subordinated Debt Documents" means [DESCRIBE
        SUBORDINATED DEBT INSTRUMENT], any promissory note or other instrument
  relating thereto and any other documents or instruments directly
    relating to the foregoing (in each case, including any amendments,
replacements or substitutions thereof).                       

                   "Subordinated Debtor" means [INSERT CALGEN OR
GUARANTOR INCURRING THE SUBORDINATED DEBT].                   

              Section [_].2.      Certain Subordination Terms. Until the
Senior Obligations Termination Date, and notwithstanding anything in the        
Subordinated Debt Documents to the contrary:                                    

                           [__].2.1.  Except as permitted under the Senior Claim
Documents, the Subordinated Debtor shall not, directly or indirectly, make any  
payment of principal, interest or otherwise on or in respect of the Subordinated
Debt.                                                                           

                           [__].2..2. Except for the right to accept payments as
provided in Section [__].2.1 or [__].2.5(b), Junior Claimant shall not demand,  
sue for or accept from the Subordinated Debtor or any other Person any such     
payment or collateral, nor take any other action to enforce or collect upon any 
such payment or to enforce its rights to receive any such payment, in either    
case in respect of the Subordinated Debt, provided, however, that nothing herein
shall limit the right or ability of Junior Claimant (i) to receive payments from
the Subordinated Debtor in respect of the Subordinated Debt as provided in      
Section [__].2.1 so long as no default or event of default under any Secured    
Debt Document has occurred and is continuing, or (ii) to accelerate the maturity
of the Subordinated Debt at any time after all of the Senior Claims have been   
accelerated; and provided further, that in the event that after an              

 A-2

EX-10.2.4
137th Page of 171
TOC
1st
Previous
Next
↓Bottom
Just 137th
acceleration any of the Senior Claimants rescind the acceleration of the Senior 
Claims, and provide written notice to Junior Claimant thereof, or Junior        
Claimant otherwise becomes aware of such rescission, Junior Claimant shall      
rescind the acceleration of the Subordinated Debt.                              

                           [__].2.3.  Neither the Subordinated Debtor nor Junior
Claimant shall take any action prejudicial to or inconsistent with the Senior   
Claimants' priority position over Junior Claimant created by this Article,      
including, without limitation, any action which will hinder, delay or otherwise 
prevent the Senior Claimants from taking any action they deem necessary to      
enforce rights with respect to the Senior Claims or the Lien of the Senior Claim
Documents. The Junior Claimant shall not take any action or otherwise act to    
contest on account of the Subordinated Debt (i) the validity or priority of any 
Liens or security interests granted to, or for the benefit of, the Senior       
Claimants, (ii) the relevant rights and duties of the Senior Claimants with     
respect to Junior Claimant on account of any Subordinated Debt as established in
this Article or (iii) the Senior Claimants' exercise of remedies in accordance  
with the Senior Claim Documents.                                                

                       [__].2.4.  Each document or instrument evidencing
Subordinated Debt shall bear a legend providing that payment of the Subordinated
Debt thereunder has been subordinated to prior payment of the Senior Claims in  
the manner and to the extent set forth in this Article.                         

                           [__].2.5.  Junior Claimant shall not commence or join
with any other creditor or creditors of the Subordinated Debtor in commencing   
any Proceeding against the Subordinated Debtor, [CalGen, CalGen Holdings or any 
Guarantor--ADD ALL THAT ARE NOT SUBORDINATED DEBTORS], but may join in any      
Proceeding after it has commenced. At any general meeting of creditors of       
Subordinated Debtor, [CalGen, CalGen Holdings or any Guarantor--ADD ALL THAT ARE
NOT SUBORDINATED DEBTORS], or in the event of any Proceeding, if all Senior     
Claims have not been paid in full in cash at such time, the Collateral Agent on 
behalf of the Senior Claimants is hereby irrevocably authorized at any such     
meeting or in any such Proceeding:                                              

                          (a)        To enforce claims comprising Subordinated
                Debt in the name of Junior Claimant, by proof of debt, proof
of claim, suit or otherwise;                

                          (b)        To collect any assets of the Subordinated
                Debtor distributed, divided or applied by way of dividend or
           payment as a result of a Proceeding, or such securities
               issued, on account of Subordinated Debt as a result thereof
               and apply the same, or the proceeds of any realization upon
                the same that the Senior Claimants in their discretion elect
                  to effect, to Senior Claims until all Senior Claims shall have
          been paid in full in cash (the Senior Claimants hereby
                  agreeing to render any surplus to Junior Claimant and/or other
            subordinated creditors, as their interests appear, or to
     interplead such surplus with a court of competent
jurisdiction); and                          

                           (c)        To take generally any action in connection
             with any such meeting or proceeding which Junior Claimant
                might otherwise take in respect of the Subordinated Debt and
claims relating thereto.                    

 A-3

EX-10.2.4
138th Page of 171
TOC
1st
Previous
Next
↓Bottom
Just 138th
                           After the commencement of any such Proceeding, Junior
Claimant may inquire in writing of the Collateral Agent on behalf of the Senior 
Claimants whether the respective Senior Claimants intend to exercise the        
foregoing rights with respect to the Subordinated Debt. Should the Senior       
Claimants fail, at least 20 days before the deadline therefor, either to file a 
proof of claim with respect to the Subordinated Debt and to furnish a copy      
thereof to Junior Claimant, or to inform Junior Claimant in writing that the    
Senior Claimants intend to exercise their rights to assert the Subordinated Debt
in the manner hereinabove provided, Junior Claimant may, but shall not be       
required to, proceed to file a proof of claim with respect to the Subordinated  
Debt and take such further steps with respect thereto, not inconsistent with    
this Article, as Junior Claimant may deem proper.                               

                   [__].2.6.  Upon the occurrence and during the
continuation of an event of default under a Secured Debt Document, Junior       
Claimant may, but shall have no obligation to, upon not less than 10 days prior 
written notice to the Collateral Agent, purchase all of the outstanding Senior  
Obligations owing to the Senior Claimants by irrevocably tendering, in          
immediately available funds, full payment of the Purchase Price (as defined     
below) to the Senior Claimants:                                                 

                         (a)        The Purchase Price shall be equal to the
             total amount of Senior Claims at the time of acceleration
      (assuming such obligations have been accelerated);

                           (b)        Any such purchase by Junior Claimant shall
                 be without warranty by, or recourse to, the Senior Claimants,
                except with respect to the legal and beneficial ownership by
                  the Senior Claimants of the Obligations so purchased, free and
clear of all Liens and rights of others; and

                         (c)        Concurrently with any such purchase, the
               Senior Claimants shall forthwith sell, assign, transfer and
           convey to Junior Claimant all of their right, title and
                interest in and to the Senior Obligations, and all Liens and
             other security interests in favor of the Senior Claimants
          securing the obligations of the Subordinated Debtor in
connection therewith.                       

          Section [__].3.     Senior Claim Documents. The Junior
Claimant acknowledges that it has been provided with a copy of the Senior Claim 
Documents and has read and is familiar with the provisions thereof.             

                Section [__].4.     Time of Filing. Notwithstanding the time
of filing, attachment or recording of any document or other instrument, it is   
agreed by Junior Claimant that any Liens arising under or pursuant to the Senior
Claim Documents shall be senior to any Liens arising in favor of Junior Claimant
as part of or relating to the Subordinated Debt Documents, if any; provided,    
however, that nothing herein shall be deemed to permit Junior Claimant to obtain
any such Liens.                                                                 

                Section [__].5.     Wrongful Collections. Should any payment
on account of, or any collateral for any part of, the Subordinated Debt be      
received by Junior Claimant in violation of this Article, such payment or       
collateral shall be delivered forthwith to the Collateral Agent by              

 A-4

EX-10.2.4
139th Page of 171
TOC
1st
Previous
Next
↓Bottom
Just 139th
the recipient for application to Senior Claims, in the form received. The       
Collateral Agent is irrevocably authorized to supply any required endorsement or
assignment which may have been omitted. Until so delivered, any such payment or 
collateral shall be held by the recipient in trust for the Senior Claimants and 
shall not be commingled with other funds or property of the recipient.          

                 Section [__].6.     Ownership of Subordinated Debt; Amendment
of Subordinated Debt Documents.                                                 

                   [__].6.1.  The Junior Claimant represents and
warrants that it is the lawful owner of the Subordinated Debt. Any security     
interest in the Junior Claimant's interest in the Subordinated Debt will at all 
times be subject to the rights of the Senior Claimants hereunder. The Junior    
Claimant agrees that it may not assign all or any portion of the Subordinated   
Debt or any of its rights or remedies under the Subordinated Debt Documents     
unless any assignee expressly agrees in writing for the benefit of the          
Collateral Agent that it takes such Subordinated Debt subject in all respects to
the rights of the Senior Claimants hereunder.                                   

                           [__].6.2.  The Subordinated Debt Documents may not be
amended so as to have an adverse effect upon the Senior Claims or the           
Subordinated Debtor's ability to pay the Senior Claims at any time.             

             Section [__].7.     Waivers. The Collateral Agent and the
Senior Claimants are hereby authorized to demand specific performance of this   
Article, whether or not the Subordinated Debtor shall have complied with the    
provisions hereof applicable to it, at any time when Junior Claimant shall have 
failed to comply with any provision hereof applicable to it. Junior Claimant    
hereby irrevocably waives any defense based on the adequacy of a remedy at law  
which might be asserted as a bar to the remedy of specific performance hereof in
any action brought therefor by the Senior Claimants. Junior Claimant (a) further
waives presentment, notice and protest in connection with all negotiable        
instruments evidencing Senior Claims or Subordinated Debt to which Junior       
Claimant may be a party, notice of the acceptance of this Article by the Senior 
Claimants, notice of any loan made, extension granted or other action taken in  
reliance hereon, and all demands and notices of every kind in connection with   
this Article, Senior Claims or time of payment of Senior Claims or Subordinated 
Debt and (b) hereby assents to any renewal, extension or postponement of the    
time of payment of Senior Claims or any other indulgence with respect thereto,  
to any increase in the amount of Senior Claims, to any substitution, exchange or
release of collateral therefor and to the addition or release of any person     
primarily or secondarily liable thereon and assents to the provisions of any    
instrument, security or other writing evidencing Senior Claims.                 

                  Section [__].8.     Subrogation; No Impairment of Subordinated
Debtor's Obligations. Subject to and from and after the Senior Obligations      
Termination Date, Junior Claimant shall be subrogated to the rights of the      
Senior Claimants to receive payments or distributions of cash, property or      
securities of the Subordinated Debtor applicable to the Senior Claims until all 
amounts owing on the Subordinated Debt shall be paid in full. For purposes of   
such subrogation, no payments or distributions to the Senior Claimants to which 
Junior Claimant would be entitled but for the provisions of this Article, and no
payments paid over by Junior                                                    

 A-5

EX-10.2.4
140th Page of 171
TOC
1st
Previous
Next
↓Bottom
Just 140th
Claimant to Senior Claimants pursuant to this Article shall, as among the       
Subordinated Debtor, its creditors other than the Senior Claimants, and Junior  
Claimant, be deemed to be a payment or distribution on account of the           
Subordinated Debt, it being understood that the provisions of this Article are  
intended solely for the purpose of defining the relative rights of Junior       
Claimant and the Senior Claimants. Nothing contained in this Article is intended
to or shall impair, as between the Subordinated Debtor and Junior Claimant, the 
obligation of the Subordinated Debtor, which is absolute and unconditional, to  
pay to Junior Claimant the principal of and the premium, if any, and the        
interest on the Subordinated Debt, and all other amounts payable by the         
Subordinated Debtor under the Subordinated Debt Documents, as and when the same 
shall become due and payable, or to affect the relative rights of Junior        
Claimant and creditors of Subordinated Debtor other than the Senior Claimants.  

                Section [__].9.     Reinstatement. The obligations of Junior
Claimant under this Article shall continue to be effective, or be reinstated, as
the case may be, if at any time any payment in respect of any Senior Claim, or  
any other payment to any holder of any Senior Claim in its capacity as such, is 
rescinded or must otherwise be restored or returned by the holder of such Senior
Claims upon the occurrence of any Proceeding, or upon or as a result of the     
appointment of a receiver, intervenor or conservator of, or trustee or similar  
officer for, the Subordinated Debtor or any substantial part of its property, or
otherwise, all as though such payment had not been made.                        

                Section [__].10.    Bankruptcy. This Article shall remain in
full force and effect as between Junior Claimant and the Senior Claimants       
notwithstanding the occurrence of any Proceeding affecting the Subordinated     
Debtor.                                                                         

            Section [__].11.    Further Assurances. The Subordinated
Debtor and Junior Claimant shall execute and deliver to the Senior Claimants    
such further instruments and shall take such further action as the Senior       
Claimants may at any time or times reasonably request in order to carry out the 
provisions and intent of this Article.                                          

                 Section [__].12.    Successors and Assigns. The provisions of
this Article shall be binding upon and inure to the benefit of the parties      
hereto and their respective successors and assigns. Neither Junior Claimant nor 
the Senior Claimants shall have a duty to preserve rights against prior parties 
in any property of any kind received hereunder. Nothing contained herein shall  
impose on the Senior Claimants any duties with respect to any property of the   
Subordinated Debtor or Junior Claimant received hereunder.                      

                  Section [__].13.    Governing Law. This Article is intended to
take effect as a sealed instrument, shall be binding upon the parties hereto and
their respective executors, administrators, other legal representatives,        
successors and assigns, and shall inure to the benefit of the Senior Claimants, 
their respective successors and assigns and shall be governed by the laws of the
State of New York without reference to principles of conflict of laws (other    
than Section 5-1401 of the New York General Obligations Law). The parties hereto
intend and agree that this Article shall remain binding on such parties (other  
than the Subordinated Debtor) notwithstanding the termination (except upon the  
payment in full of Senior Claims in cash) or unenforceability of this Article as
against the Subordinated Debtor.                                                

 A-6

EX-10.2.4
141st Page of 171
TOC
1st
Previous
Next
↓Bottom
Just 141st
                                                                       EXHIBIT B
                                          TO SECOND PRIORITY TERM LOAN AGREEMENT

 FORM OF
ASSIGNMENT AGREEMENT

                                                          Date: _______ __, ____

Morgan Stanley Senior Funding, Inc.                                             
as the Administrative Agent                                                     
1585 Broadway                                                                   
New York, NY 10036                                                              
Attention: Lisa Malone                                                          

Calpine Generating Company, LLC                                                 
50 West San Fernando Avenue, 5th Floor                                          
San Jose, CA  95113                                                             
Attention:  President                                                           

Re:      Calpine Generating Company, LLC - Assignment Agreement                 

Ladies and Gentlemen:                                                           

      Reference is made to the Credit and Guarantee Agreement, dated as of
March 23, 2004 (as amended, supplemented, replaced or otherwise modified from   
time to time, the "Second Priority Term Loan Agreement"), among Calpine         
Generating Company, LLC, a Delaware limited liability company (the "Borrower"), 
the guarantors from time to time party thereto, the lenders from time to time   
party thereto, Morgan Stanley Senior Funding, Inc., as administrative agent     
(with its successors and permitted assigns in such capacity, the "Administrative
Agent") and each of the other agents and arrangers listed on the signature pages
thereto. Unless otherwise defined herein, terms defined in the Second Priority  
Term Loan Agreement and used herein shall have the meanings given to them in the
Second Priority Term Loan Agreement.                                            

     As of [INSERT EFFECTIVE DATE OF ASSIGNMENT] (the "Effective Date"),
[INSERT NAME OF ASSIGNOR] (the "Assignor") irrevocably sells, transfers, conveys
and assigns, without recourse, representation or warranty (except as expressly  
set forth herein), to [INSERT NAME OF ASSIGNEE] (the "Assignee"), and the       
Assignee irrevocably purchases from the Assignor and assumes (as more           
particularly described in Schedule I hereto), (a) [INSERT PERCENTAGE OF SECOND  
PRIORITY TERM LOANS TO BE ASSIGNED]% of the Second Priority Term Loans under the
Second Priority Term Loan Agreement (which represents $[INSERT AMOUNT OF SECOND 
PRIORITY TERM LOANS TO BE ASSIGNED]) and (b) all rights, benefits, obligations, 
liabilities, and indemnities related to such Second Priority Term Loans under   
and in connection with the Second Priority Term Loan Agreement and the other    
Second Priority Term Loan Documents (the "Assigned Portion").                   

 B-1

EX-10.2.4
142nd Page of 171
TOC
1st
Previous
Next
↓Bottom
Just 142nd
  In addition, this Assignment Agreement constitutes notice to the
Administrative Agent, pursuant to Section 12.06 of the Second Priority Term Loan
Agreement, of the assignment and delegation to the Assignee of the Assigned     
Portion of the Second Priority Term Loans of the Assignor outstanding under the 
Second Priority Term Loan Agreement as of the Effective Date, subject to its    
written consents.                                                               

      All accrued and unpaid interest, fees and other amounts payable with
respect to the Assigned Portion for any period of time prior to the Effective   
Date shall be payable to the Assignor, and all accrued and unpaid interest, fees
and other amounts payable with respect to the Assigned Portion for any period   
from and after the Effective Date shall be payable to the Assignee. The Assignor
and Assignee each agree to hold in trust for the other any such amounts that it 
receives pursuant to any Second Priority Term Loan Document and to which the    
other party is entitled.                                                        

   The Assignee confirms and agrees that in becoming a Lender and in
making its Second Priority Term Loans under the Second Priority Term Loan       
Agreement, such actions have and will be made without recourse to, or           
representation or warranty by, the Administrative Agent, except for the         
representations expressly set forth below.                                      

       The Assignor represents and warrants that it is legally authorized to
enter into and deliver this Assignment Agreement, that its existing aggregate   
Second Priority Term Loans are as set forth on Schedule I hereto, that it is the
legal and beneficial owner of the Assigned Portion and that it has not created  
any adverse claim on its interest in the Assigned Portion. Except as set forth  
in the previous sentence, the Assignor makes no representation or warranty and  
assumes no responsibility with respect to any statements, warranties or         
representations made pursuant to or in connection with this Assignment          
Agreement, or the execution, legality, validity, enforceability, genuineness,   
sufficiency or value of this Assignment Agreement, the Second Priority Term Loan
Agreement, any other Second Priority Term Loan Document or any other instrument 
or document furnished pursuant hereto or thereto, including the financial       
condition of any CalGen Company or the performance or observance by any Lender  
or any of the Agents of any of its obligations under the Second Priority Term   
Loan Agreement, any other Second Priority Term Loan Document or any other       
instrument or document furnished pursuant hereto or thereto.                    

     The Assignee (a) represents and warrants that (i) it is an Eligible
Assignee and that it is legally authorized to enter into and deliver this       
Assignment Agreement, (ii) it has experience and expertise in the making of or  
investing in loans such as the applicable Second Priority Term Loans and (iii)  
it will make or invest in its Second Priority Term Loans for its own account in 
the ordinary course of business and without a view to the distribution of such  
Second Priority Term Loans within the meaning of the Securities Act or the      
Exchange Act or other federal securities laws, (b) confirms that it has received
a copy of the Second Priority Term Loan Agreement, together with copies of the  
most recent financial statements delivered pursuant to Section 3.19 of the      
Second Priority Term Loan Agreement and copies of the documents which were      
required to be delivered under the Second Priority Term Loan Agreement as a     
condition to the making of Second Priority Term Loans thereunder and such other 
documents and information as it has deemed appropriate to make its own credit   
analysis and decision to enter into this Assignment Agreement, (c) agrees that  
it will perform in accordance with their terms all of the obligations           

 B-2

EX-10.2.4
143rd Page of 171
TOC
1st
Previous
Next
↓Bottom
Just 143rd
which by the terms of the Second Priority Term Loan Agreement and the other     
Second Priority Term Loan Documents are required to be performed by it as a     
Lender, (d) acknowledges that it has received copies of, consented to and       
approved the Collateral Trust Agreement, and authorizes the Agents to perform   
their respective obligations thereunder and (e) attaches the forms prescribed by
applicable Governmental Authorities as to the Assignee's status for purposes of 
determining exemption from withholding taxes with respect to all payments to be 
made to the Assignee under any of the Second Priority Term Loan Documents or    
such other documents as are necessary to indicate that all such payments are    
subject to such rates at a rate reduced by an applicable tax treaty. In         
addition, the Assignee, independently and without reliance upon the Assignor,   
the Administrative Agent, any other Agent or any other Lender, and based on such
documents and information as it shall deem appropriate at the time, shall       
continue to make its own credit decisions in taking or not taking action under  
the Second Priority Term Loan Agreement, the other Second Priority Term Loan    
Documents and the other instruments and documents delivered in connection       
therewith. ASSIGNEE HEREBY ACKNOWLEDGES AND AGREES THAT ITS LIEN PRIORITIES, THE
DISTRIBUTION OF PROCEEDS OF COLLATERAL, THE EXERCISE OF REMEDIES UNDER THE      
Second PRIORITY TERM LOAN AGREEMENT, AMENDMENTS AND WAIVERS TO THE Second       
PRIORITY TERM LOAN DOCUMENTS, AND OTHER MATTERS RELATED TO THE COLLATERAL ARE   
SUBJECT TO AND GOVERNED BY THE COLLATERAL TRUST AGREEMENT.                      

  Following the execution of this Assignment Agreement, it will be
delivered to the Administrative Agent for recording by the Administrative Agent 
pursuant to Section 12.06 of the Second Priority Term Loan Agreement, effective 
as of the Effective Date. The Assignor attaches hereto the Second Priority Term 
Loan Note held by it, if any, evidencing the Assigned Portion and (i) upon      
request by the Assignee, will request that the Administrative Agent exchange the
attached Second Priority Term Loan Note for a new Second Priority Term Loan     
Note, payable to the Assignee and (ii) if the Assignor has retained any         
interest, may request that the Administrative Agent exchange the attached Second
Priority Term Loan Note for a new Second Priority Term Loan Note, payable to the
Assignor, and in each case in amounts which reflect the assignment being made   
hereby and after giving effect to any other assignments which have become       
effective on the Effective Date.                                                

Except as otherwise provided in the Second Priority Term Loan 
Agreement, effective as of the Effective Date:                                  

(a)      the Assignee:                      

                           (i)      shall be deemed automatically to have become
         a party to the Second Priority Term Loan Agreement, have all the rights
   and obligations of a "Lender" under the Second Priority Term Loan
      Agreement and the other Second Priority Term Loan Documents as if it
   were an original signatory thereto to the extent specified in the
     second paragraph of this Assignment Agreement, and hereby expressly
    confirms its undertakings regarding its appointments and indemnity
     obligations provided for in Article XII of the Second Priority Term
Loan Agreement; and                                           

 B-3

EX-10.2.4
144th Page of 171
TOC
1st
Previous
Next
↓Bottom
Just 144th
                  (ii)     agrees to be bound by the terms and
         conditions set forth in the Second Priority Term Loan Agreement and the
     other Second Priority Term Loan Documents as if it were an original
signatory thereto; and                                        

                (b)      the Assignor shall be released from its obligations
     and shall relinquish its rights under the Second Priority Term Loan
    Agreement and the other Second Priority Term Loan Documents to the
        extent specified in the second paragraph of this Assignment Agreement,
   except with regard to those provisions that expressly survive the
      termination of the Second Priority Term Loan Agreement to the extent
 such provisions relate to the time prior to the Effective Date.

         The Assignee hereby advises each of you of the following administrative
details with respect to the assigned Second Priority Term Loan Commitments and  
Second Priority Term Loans:                                                     

(A)      Address for Notices:               

Institution Name:                           
Attention:                                  
Domestic Office:                            
Telephone:                                  
Facsimile:                                  

(B)      Payment Instructions:              

 [ASSIGNEE TO COMPLETE.]

   The Assignee has attached hereto the forms, certificates or other
evidence required by Section 2.16(e) of the Second Priority Term Loan Agreement 
no later than the date of acceptance hereof by the Administrative Agent. The    
Assignee has also attached hereto any powers of attorney or other public or     
private documents requested by the Collateral Agent which are necessary to      
enable the Collateral Agent to enforce any of the Security Documents on behalf  
of the Secured Parties.                                                         

The Administrative Agent shall notify the Borrower of any such
assignments.                                                                    

        This Assignment Agreement may be executed by the Assignor and Assignee
in any number of 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 agreement. The delivery of an executed signature page of   
this Assignment Agreement by facsimile transmission shall be effective as       
delivery of a manually executed counterpart hereof. The parties hereto hereby   
agree to execute and deliver such other documents or instruments as shall be    
necessary to effect the purposes of this Assignment Agreement.                  

         This Assignment Agreement shall be governed by the laws of the State of
New York without regard to the conflicts of law provisions thereof, other than  
sections 5-1401 and 5-1402 of the General Obligations Law of the State of New   
York.                                                                           

 B-4

EX-10.2.4
145th Page of 171
TOC
1st
Previous
Next
↓Bottom
Just 145th
(signature page follows)

 B-5

EX-10.2.4
146th Page of 171
TOC
1st
Previous
Next
↓Bottom
Just 146th
        IN WITNESS WHEREOF, each of the undersigned has executed and delivered
this Assignment Agreement as of the date first written above.                   

                 [INSERT NAME OF ASSIGNOR]

                                    By: ________________________________________
     Name:
      Title:

                 [INSERT NAME OF ASSIGNEE]

                                    By: ________________________________________
     Name:
      Title:

Accepted and acknowledged                                                       
for recording in the Register                                                   
this ____ day of ________, ____                                                 

MORGAN STANLEY SENIOR FUNDING, INC.                                             

By: ________________________________________                                    
Name:                                                                   
Title:                                                                  

 B-6

EX-10.2.4
147th Page of 171
TOC
1st
Previous
Next
↓Bottom
Just 147th
[INCLUDE THE FOLLOWING ACKNOWLEDGEMENTS AND AGREEMENTS IN RESPECT OF ASSIGNMENTS
FOR LESS THAN $1,000 IF SUCH ASSIGNMENT IS FOR AN AMOUNT THAT DOES NOT          
CONSTITUTE THE AGGREGATE AMOUNT OF THE SECOND PRIORITY TERM LOANS OUTSTANDING TO
THE ASSIGNOR:]                                                                  

Acknowledged and Agreed:                                                        

MORGAN STANLEY SENIOR FUNDING, INC.                                             

By: ________________________________________                                    
Name:                                                                   
Title:                                                                  

CALPINE GENERATING COMPANY, LLC                                                 

By: ________________________________________                                    
Name:                                                                   
Title:                                                                  

 B-7

EX-10.2.4
148th Page of 171
TOC
1st
Previous
Next
↓Bottom
Just 148th
                                                                      SCHEDULE I
                                                         to Assignment Agreement

Second Priority Term Loans

                                                        [Enlarge/Download Table]

    AGGREGATE AMOUNT OF SECOND       AMOUNT OF SECOND PRIORITY    PERCENTAGE OF ASSIGNED    
PRIORITY TERM LOANS FOR ALL LENDERS     TERM LOANS ASSIGNED     SECOND PRIORITY TERM LOANS  
                                                                                            
                                                                                           %
                                                                                           %
                                                                                           %
                                                                                           %
                                                                                           %

 B-8

EX-10.2.4
149th Page of 171
TOC
1st
Previous
Next
↓Bottom
Just 149th
                                                                       EXHIBIT C
                                          TO SECOND PRIORITY TERM LOAN AGREEMENT

 [LETTERHEAD OF NON-U.S. LENDER]

 FORM OF CERTIFICATE RE: NON-BANK STATUS

                                              Certificate Date: _______ __, ____

Morgan Stanley Senior Funding, Inc.                                             
as the Administrative Agent                                                     
1585 Broadway                                                                   
New York, NY 10036                                                              
Attention: Lisa Malone                                                          

Re: Calpine Generating Company, LLC - Non-Bank Status                           

Ladies and Gentlemen:                                                           

      Reference is made to the Credit and Guarantee Agreement, dated as of
March 23, 2004 (as amended, supplemented, replaced or otherwise modified from   
time to time, the "Second Priority Term Loan Agreement"), among Calpine         
Generating Company, LLC, a Delaware limited liability company (the "Borrower"), 
the guarantors from time to time party thereto, the lenders from time to time   
party thereto, Morgan Stanley Senior Funding, Inc., as administrative agent     
(with its successors and permitted assigns in such capacity, the "Administrative
Agent") and each of the other agents and arrangers listed on the signature pages
thereto. Unless otherwise defined herein, terms defined in the Second Priority  
Term Loan Agreement and used herein shall have the meanings given to them in the
Second Priority Term Loan Agreement.                                            

       [INSERT NAME OF NON-U.S. LENDER] (the "Non-U.S. Lender") is providing
this certificate pursuant to Section 2.16(e) of the Second Priority Term Loan   
Agreement. The Non-U.S. Lender hereby represents and warrants as follows:       

         1.       The Non-U.S. Lender is the sole record and beneficial owner of
the Second Priority Term Loans or the obligations evidenced by Second Priority  
Term Loan Note in respect of which it is providing this certificate.            

      2.       The Non-U.S. Lender is not a "bank" for purposes of Section
871(h) or 881(c)(3)(A) of the Internal Revenue Code of 1986, as amended (the    
"Code"). In this regard, the Non-U.S. Lender further represents and warrants    
that:                                                                           

                (a)      the Non-U.S. Lender is not subject to regulatory or
               other Legal Requirements as a bank in any jurisdiction; and

               (b)      the Non-U.S. Lender has not been treated as a bank
              for purposes of any tax, securities law or other filing or
submission made to any Governmental         

C-1 

EX-10.2.4
150th Page of 171
TOC
1st
Previous
Next
↓Bottom
Just 150th
         Authority, any application made to a rating agency or
               qualification for any exemption from tax, securities law or
other Legal Requirements.                   

     3.       The Non-U.S. Lender is not a 10 percent shareholder of the
Borrower within the meaning of Section 871(h) or 881(c)(3)(B) of the Code.      

      4.       The Non-U.S. Lender is not a controlled foreign corporation
receiving interest from a related person within the meaning of Section 871(h) or
881(c)(3)(C) of the Code.                                                       

(signature page follows)

C-2 

EX-10.2.4
151st Page of 171
TOC
1st
Previous
Next
↓Bottom
Just 151st
        IN WITNESS WHEREOF, the undersigned has duly executed this certificate
by its respective authorized representative as of the day and year first above  
written.                                                                        

                          [INSERT NAME OF NON-U.S. LENDER]

                                     By:________________________________________
     Name:
      Title:

C-3 

EX-10.2.4
152nd Page of 171
TOC
1st
Previous
Next
↓Bottom
Just 152nd
                                                                       EXHIBIT D
                                          TO SECOND PRIORITY TERM LOAN AGREEMENT

[LETTERHEAD OF THE BORROWER]

 FORM OF
 CONTINUATION NOTICE

                                                            Date: _____ __, ____

Morgan Stanley Senior Funding, Inc.                                             
as the Administrative Agent                                                     
1585 Broadway                                                                   
New York, NY 10036                                                              
Attention: Lisa Malone                                                          

Re: Calpine Generating Company, LLC - Continuation Notice                       

Ladies and Gentlemen:                                                           

      Reference is made to the Credit and Guarantee Agreement, dated as of
March 23, 2004 (as amended, supplemented, replaced or otherwise modified from   
time to time, the "Second Priority Term Loan Agreement"), among Calpine         
Generating Company, LLC, a Delaware limited liability company (the "Borrower"), 
the guarantors from time to time party thereto, the lenders from time to time   
party thereto, Morgan Stanley Senior Funding, Inc., as administrative agent     
(with its successors and permitted assigns in such capacity, the "Administrative
Agent") and each of the other agents and arrangers listed on the signature pages
thereto. Unless otherwise defined herein, terms defined in the Second Priority  
Term Loan Agreement and used herein shall have the meanings given to them in the
Second Priority Term Loan Agreement.                                            

        The Borrower hereby gives you notice, irrevocably, pursuant to Section
2.06 of the Second Priority Term Loan Agreement, that the Borrower hereby       
requests a [CONTINUATION] [CONVERSION] of Second Priority Term Loans under the  
Second Priority Term Loan Agreement and, in connection therewith, sets forth    
below the information relating to such [CONTINUATION] [CONVERSION] (the         
"Proposed [CONTINUATION] [CONVERSION]") as required by Section 2.06 of the      
Second Priority Term Loan Agreement.                                            

       (a)      The Borrower hereby requests that Second Priority Term Loans
be [CONTINUED] [CONVERTED] as follows:                                          

                (i)      The first day of the new Interest Period in respect
        of the Proposed [CONTINUATION] [CONVERSION] shall be ________ __, ____
(which is a Business Day).                                    

          (ii)     [IF SUCH SECOND PRIORITY TERM LOANS ARE TO BE
       CONTINUED WITH NO CHANGE IN ANY TYPE OF LOAN(1):] $___________ of the
currently outstanding principal amount of                     

-------------------------                                                       
(1)      LIBOR Rate Loans may only be continued in a minimum amount equal to    
      $5,000,000 and in integral multiples of $1,000,000 in excess of that
amount.                                                       

 D-1

EX-10.2.4
153rd Page of 171
TOC
1st
Previous
Next
↓Bottom
Just 153rd
 Second Priority Term Loans currently being maintained as Second
    Priority Term Loans with an Interest Period of [ONE] [TWO] [THREE]
        [SIX] month(s), the last day of which is the day immediately preceding
      the first day of the Proposed Continuation referred to in clause (i)
         above, should be continued as $__________ of Second Priority Term Loans
with an Interest Period of [ONE] [TWO] [THREE] [SIX] month(s).

          (iii)    [IF SUCH SECOND PRIORITY TERM LOANS ARE TO BE
        CONVERTED:] $___________ of the currently outstanding principal amount
       of Second Priority Term Loans which are [BASE RATE LOANS] [LIBOR RATE
LOANS(2)] with an Interest Period of [ONE] [TWO] [THREE] [SIX]
      month(s), the last day of which is the day immediately preceding the
       first day of the Proposed Conversion referred to in clause (i) above,
     should be converted to [BASE RATE LOANS] [LIBOR RATE LOANS] with an
Interest Period of [ONE] [TWO] [THREE] [SIX] month(s).        

        (b)      The Borrower hereby certifies that, as of the date hereof, no
Default or Event of Default has occurred and is continuing.                     

(signature page follows)

-------------------------                                                       
(2)      LIBOR Rate Loans may only be converted upon the expiration of the      
Interest Period applicable to such LIBOR Rate Loan.           

EX-10.2.4
154th Page of 171
TOC
1st
Previous
Next
↓Bottom
Just 154th
         IN WITNESS WHEREOF, the Borrower has caused this Continuation Notice to
be executed and delivered by a duly authorized officer of the Borrower on the   
date first written above.                                                       

                         CALPINE GENERATING COMPANY, LLC

                                     By:________________________________________
         Name:
          Title:

D-2 

EX-10.2.4
155th Page of 171
TOC
1st
Previous
Next
↓Bottom
Just 155th
                                                                       EXHIBIT E
                                          TO SECOND PRIORITY TERM LOAN AGREEMENT

 CALPINE GENERATING COMPANY, LLC
 50 WEST SAN FERNANDO STREET
SAN JOSE, CALIFORNIA 95113

FORM OF FUNDING NOTICE

                                            Certificate Date:  March __, 2004(1)

Morgan Stanley Senior Funding, Inc.                                             
as the Administrative Agent                                                     
1585 Broadway                                                                   
New York, NY 10036                                                              
Attention: Lisa Malone                                                          

Re: Calpine Generating Company, LLC - Funding Notice                            

Ladies and Gentlemen:                                                           

      Reference is made to the Credit and Guarantee Agreement, dated as of
March 23, 2004 (as amended, supplemented, replaced or otherwise modified from   
time to time, the "Second Priority Term Loan Agreement"), among Calpine         
Generating Company, LLC, a Delaware limited liability company (the "Borrower"), 
the guarantors from time to time party thereto, the lenders from time to time   
party thereto, Morgan Stanley Senior Funding, Inc., as administrative agent     
(with its successors (and permitted assigns) in such capacity, the              
"Administrative Agent") and each of the other agents and arrangers listed on the
signature pages thereto. Unless otherwise defined herein, terms defined in the  
Second Priority Term Loan Agreement and used herein shall have the meanings     
given to them in the Second Priority Term Loan Agreement.                       

         The Borrower hereby gives you notice in accordance with Section 2.01 of
the Second Priority Term Loan Agreement that the Borrower irrevocably requests  
that a Second Priority Term Loan be made on March 23, 2004 (which date is a     
Business Day), which shall be a LIBOR Rate Loan in an aggregate principal amount
of $100,000,000 with an initial Interest Period ending March 31, 2004.          

(signature page follows)

--------------------------                                                      
(1)      The Borrower must deliver the Funding Notice to the Administrative     
    Agent or before the date which is three Business Days prior to the
Closing Date.                                                 

E-1 

EX-10.2.4
156th Page of 171
TOC
1st
Previous
Next
↓Bottom
Just 156th
       IN WITNESS WHEREOF, the Borrower has caused this Funding Notice to be
executed and delivered by a duly authorized officer of the Borrower on the date 
first written above.                                                            

                         CALPINE GENERATING COMPANY, LLC

                                     By:________________________________________
         Name:
          Title:

E-2 

EX-10.2.4
157th Page of 171
TOC
1st
Previous
Next
↓Bottom
Just 157th
                                                                       EXHIBIT F
                                          TO SECOND PRIORITY TERM LOAN AGREEMENT

 FORM OF SECOND PRIORITY TERM NOTE

THIS SECOND PRIORITY TERM LOAN NOTE IS ISSUED WITH ORIGINAL ISSUE DISCOUNT FOR  
UNITED STATES FEDERAL INCOME TAX PURPOSES AND IS SUBJECT TO TREASURY REGULATIONS
REGARDING THE REPORTING OF ORIGINAL ISSUE DISCOUNT. HOLDERS MAY CONTACT THE     
CHIEF FINANCIAL OFFICER OF THE COMPANY AT 50 WEST SAN FERNANDO STREET, 5TH      
FLOOR, SAN JOSE, CALIFORNIA 95113, WHO WILL PROVIDE UPON REQUEST INFORMATION    
RELATING TO ORIGINAL ISSUE DISCOUNT, INCLUDING THE ISSUE PRICE, THE AMOUNT OF   
ORIGINAL ISSUE DISCOUNT, THE ISSUE DATE, AND THE YIELD TO MATURITY.             

$__________________                                      _____________, ________

         FOR VALUE RECEIVED, the undersigned, Calpine Generating Company, LLC, a
Delaware limited liability company (the "Borrower"), hereby unconditionally     
promises to pay to the order of ________________________ (the "Lender") the     
principal sum in immediately available funds, of ________________________ or    
such lesser amount as may be outstanding from time to time hereunder pursuant to
the Second Priority Term Loan Agreement (as defined below). The Borrower further
agrees to pay interest in like money at the Principal Office on the unpaid      
principal amount hereof from time to time outstanding at the rates and on the   
dates specified in Section 2.05 of the Second Priority Term Loan Agreement.     

    The holder of this Second Priority Term Loan Note is authorized to
endorse on the schedules annexed hereto and made a part hereof, or on a         
continuation thereof which shall be attached hereto and made a part hereof, the 
date and amount of each payment or prepayment of principal hereof, each         
continuation hereof and the length of each Interest Period with respect hereto. 
Each such endorsement shall constitute prima facie evidence of the accuracy of  
the information endorsed. The failure to make any such endorsement or any error 
in any such endorsement shall not affect the obligations of the Borrower in     
respect of any Second Priority Term Loan.                                       

       This Second Priority Term Loan Note (a) is one of the Second Priority
Term Loan Notes referred to in the Credit and Guarantee Agreement, dated as of  
March 23, 2004 (as amended, supplemented, replaced or otherwise modified from   
time to time, the "Second Priority Term Loan Agreement"), among the Borrower,   
the guarantors from time to time party thereto, the lenders from time to time   
party thereto, Morgan Stanley Senior Funding, Inc., as administrative agent     
(with its successors and permitted assigns in such capacity, the "Administrative
Agent") and each of the other agents and arrangers listed on the signature pages
thereto; (b) is subject to the provisions of the Second Priority Term Loan      
Agreement and (c) is subject to voluntary and mandatory prepayment in whole or  
in part as provided in the Second Priority Term Loan Agreement. This Second     
Priority Term Loan Note is secured and guaranteed as provided in the Second     
Priority Term Loan Documents. Reference is hereby made to the Second Priority   
Term                                                                            

F-1 

EX-10.2.4
158th Page of 171
TOC
1st
Previous
Next
↓Bottom
Just 158th
Loan Documents for a description of the properties and assets in which a        
security interest has been granted, the nature and extent of the security and   
the guarantees, the terms and conditions upon which the security interests and  
each guarantee were granted and the rights of the holder of this Second Priority
Term Loan Note in respect thereof.                                              

    Upon the occurrence of any Event of Default, all principal and all
accrued interest then remaining unpaid on this Second Priority Term Loan Note   
shall become, or may be declared to be, immediately due and payable, all as     
provided in, and subject to, the Second Priority Term Loan Agreement.           

  All parties now and hereafter liable with respect to this Second
Priority Term Loan Note, whether maker, principal, surety, guarantor, endorser  
or otherwise, hereby waive presentment, demand, protest and all other notices of
any kind.                                                                       

      This Second Priority Term Loan Note is subject to the limitations on
recourse set forth in Section 12.22 of the Second Priority Term Loan Agreement. 

  Repayments of principal, interest and all other amounts due with
respect to or in connection with this Second Priority Term Loan Note are subject
to the terms of the Collateral Trust Agreement (as defined in the Second        
Priority Term Loan Agreement).                                                  

       Unless otherwise defined herein, terms defined in the Second Priority
Term Loan Agreement and used herein shall have the meanings given to them in the
Second Priority Term Loan Agreement.                                            

         This Second Priority Term Loan Note has been delivered in New York, New
York and shall be deemed to be a contract made under, governed by and construed 
in accordance with the laws of the State of New York without regard to the      
conflict of law provisions thereof (other than sections 5-1401 and 5-1402 of the
General Obligations Law of the state of New York).                              

                           CALPINE GENERATING COMPANY, LLC

                                     By:________________________________________
       Name:
        Title:

F-2 

EX-10.2.4
159th Page of 171
TOC
1st
Previous
Next
↓Bottom
Just 159th
                                                                      Schedule A

                                               to Second Priority Term Loan Note

 SECOND PRIORITY TERM LOANS AND REPAYMENTS OF SECOND PRIORITY TERM LOANS

                                                        [Enlarge/Download Table]

Date    Amount of Second Priority Term Loans    Type of Loan    Interest Period    Amount of Principal Repaid    Notation Made By
---------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                 

---------------------------------------------------------------------------------------------------------------------------------

---------------------------------------------------------------------------------------------------------------------------------

---------------------------------------------------------------------------------------------------------------------------------

---------------------------------------------------------------------------------------------------------------------------------

---------------------------------------------------------------------------------------------------------------------------------

---------------------------------------------------------------------------------------------------------------------------------

---------------------------------------------------------------------------------------------------------------------------------

---------------------------------------------------------------------------------------------------------------------------------

---------------------------------------------------------------------------------------------------------------------------------

---------------------------------------------------------------------------------------------------------------------------------

---------------------------------------------------------------------------------------------------------------------------------

---------------------------------------------------------------------------------------------------------------------------------

---------------------------------------------------------------------------------------------------------------------------------

EX-10.2.4
160th Page of 171
TOC
1st
Previous
Next
↓Bottom
Just 160th
                                                                       EXHIBIT G
                                          TO SECOND PRIORITY TERM LOAN AGREEMENT

FORM OF OPINIONS

[SEE ATTACHED]

G-1 

EX-10.2.4
161st Page of 171
TOC
1st
Previous
Next
↓Bottom
Just 161st
                                                                      SCHEDULE A
                                          TO SECOND PRIORITY TERM LOAN AGREEMENT

 THIRD PARTY PROJECT DOCUMENTS

Baytown                                                                         

     1.   Energy Services Agreement, dated as of January 12, 2000, between Bayer
       Corporation and Baytown Energy Center, L.P. (as assignee of Calpine
   Construction Finance Company, L.P.), as amended by Amendment of
Project Documents dated as of August 13, 2002.              

2.   Services Agreement, dated as of January 12, 2000, between Bayer  
       Corporation and Baytown Energy Center, L.P. (as assignee of Calpine
   Construction Finance Company, L.P.), as amended by Amendment of
Project Documents, dated as of August 13, 2002.             

 3.   Ground Lease and Easement Agreement, dated as of January 12, 2000,
          between Bayer Corporation and Baytown Energy Center, L.P. (as assignee
 of Calpine Construction Finance Company, L.P.), as amended by
Amendment of Project Documents, dated as of August 13, 2002.

Carville                                                                        

1.   Energy Services Agreement, dated as of December 28, 1999, between
         Cos-Mar Incorporated and Carville Energy LLC, as amended by Amendment
       No. 1 to Energy Services Agreement, dated as of April 30, 2000, and
      Amendment No. 2 to Energy Services Agreement, dated as of June 26,
2001.                                                       

  2.   Agreement for Purchased Power from Qualified Cogeneration Facility,
      dated as of August 31, 2002, between Entergy Gulf States, Inc. and
Carville Energy LLC.                                        

Channel                                                                         

1.   Energy Services Agreement, dated as of January 25, 2000, between 
  Lyondell-Citgo Refining LP and Channel Energy Center, L.P. (as
assignee of Calpine Construction Finance Company, L.P.).    

 2.   Facility Services Agreement, dated as of January 25, 2000, between
  Lyondell-Citgo Refining LP and Channel Energy Center, L.P. (as
assignee of Calpine Construction Finance Company, L.P.).    

3.   Operating Lease Agreement, dated as of January 25, 2000, between 
  Lyondell-Citgo Refining LP and Channel Energy Center, L.P. (as
assignee of Calpine Construction                            

Schedule A-1

EX-10.2.4
162nd Page of 171
TOC
1st
Previous
Next
↓Bottom
Just 162nd
      Finance Company, L.P.), as amended by Amendment No. 1 to Operating
Lease Agreement, dated as of March 30, 2001.                

    4.   Amended and Restated Ground Lease and Easement Agreement, dated as of
    October 30, 2001, between Lyondell-Citgo Refining LP and Channel
Energy Center, L.P.                                         

Columbia                                                                        

1.   Energy Services Agreement, dated as of August 15, 2000, between  
         Eastman Chemical Company and Columbia Energy LLC, as amended by First
       Amendment to Energy Services Agreement, dated as of August 1, 2001,
          and Second Amendment to Energy Services Agreement, dated as of October
1, 2002.                                                    

 2.   Amended and Restated Ground Lease Agreement, dated as of August 1,
      2001, between Eastman Chemical Company and Columbia Energy LLC, as
   amended by First Amendment to Amended and Restated Ground Lease
Agreement, dated as of October 22, 2002.                    

Corpus Christi                                                                  

    1.   Energy Services Agreement. dated as of March 23, 1999. between Corpus
      Christi Cogeneration LP (as assignee of Nueces Bay Energy LLC) and
        Citgo Refining and Chemicals, L.P., as amended by Amendment No. 1 to
     Energy Services Agreement, dated as of March 22, 2001, and Second
        Amendment of Energy Services Agreement, dated as of August 24, 2001.

     2.   Restated Energy Services Agreement - Steam, dated as of July 26, 2002,
      between Corpus Christi Cogeneration LP and Elementis Chromium L.P.

   3.   Energy Services Agreement, dated as of July 24, 2003, between Corpus
Christi Cogeneration LP and Flint Hills Resources, LP.      

4.   Project Site Lease Agreement, dated as of June 21, 1999, between 
         Corpus Christi Cogeneration LP (as assignee of Nueces Bay Energy LLC)
         and Citgo Refining and Chemicals, L.P., as amended by First Amendment
 of Project Site Lease Agreement, dated as of August 24, 2001.

Decatur                                                                         

 1.   Second Amended and Restated Lease, Steam Sales and Shared Services
     Agreement, dated as of January 31, 2001, between Solutia Inc. and
       Decatur Energy Center, LLC, as amended by First Amendment to Second
          Amended and Restated Lease, Steam Sales and Shared Services Agreement,
     dated as of June 28, 2001, Second Amendment to Second Amended and
          Restated Lease, Steam Sales and Shared Services Agreement, dated as of
          August 13, 2001, Third Amendment to Second Amended and Restated Lease,
      Steam Sales and Shared Services Agreement, dated as of October 31,
2001, Fourth Amendment                                      

Schedule A-2

EX-10.2.4
163rd Page of 171
TOC
1st
Previous
Next
↓Bottom
Just 163rd
         to Second Amended and Restated Lease, Steam Sales and Shared Services
          Agreement, dated as of January 28, 2002, and Fifth Amendment to Second
          Amended and Restated Lease, Steam Sales and Shared Services Agreement,
dated as of October 7, 2002.                                

   2.   Power Purchase Agreement, dated as of June 21, 2002, between Decatur
Energy Center, LLC and Tennessee Valley Authority.          

Delta                                                                           

1.   Merchant Plant Lease, dated as of April 13, 2000, between The Dow
         Chemical Company and Delta Energy Center, LLC (as assignee of Calpine
         Construction Finance Company, L.P.), as amended by First Amendment to
        Merchant Plant Lease, dated as of July 31, 2001, Second Amendment to
        Merchant Plant Lease, dated as of December 14, 2001, Third Amendment
      to Merchant Plant Lease, dated as of February 20, 2003, and Fourth
     Amendment to Merchant Plant Lease, dated as of February 20, 2003.

 2.   Must-Run Service Agreement, dated as of February 10, 2003, between
      Delta Energy Center LLC and California Independent System Operator
Corporation and Offer Letter from Delta Energy Center LLC to
       California Independent System Operator Corporation for Provision of
RMR Services in 2004.                                       

Freestone                                                                       

None.                                                                           

Los Medanos                                                                     

 1.   Energy Purchase and Sale Agreement, dated as of December 21, 1998,
       between USS-POSCO Industries and Los Medanos Energy Center, LLC (as
         successor in interest to Pittsburg District Energy Facility, LLC), as
         amended by Modification Agreement (First Amendment to Energy Purchase
        and Sale Agreement), dated as of June 30, 1999, and Second Amendment
     to Energy Purchase and Sale Agreement, dated as of April 30, 2001

     2.   Ground Lease Agreement, dated as of October 4, 1999, between USS-POSCO
  Industries and Los Medanos Energy Center, LLC (as successor in
       interest to Pittsburg District Energy Facility, LLC), as amended by
     First Amendment to Ground Lease Agreement, dated as of August 25,
         2000, Second Amendment to Ground Lease Agreement, dated as of October
         30, 2000, Third Amendment to Ground Lease Agreement, dated as of July
        6, 2001, and Fourth Amendment to Ground Lease Agreement, dated as of
May 31, 2002.                                               

3.   Energy Supply Arrangements with Dow comprising: Binding Letter of
          Intent, dated as of December 10, 2002, among The Dow Chemical Company,
     Los Medanos Energy Center, LLC, Calpine Pittsburg, LLC, and Delta
        Energy Center, LLC; Steam Supply Agreement, dated as of December 10,
       2002, between Calpine Pittsburg, LLC and Los Medanos Energy Center,
    LLC; and Agreement Regarding Power and Steam Supply, dated as of

Schedule A-3

EX-10.2.4
164th Page of 171
TOC
1st
Previous
Next
↓Bottom
Just 164th
       December 10, 2002, among Calpine Pittsburg, LLC, Los Medanos Energy
Center, LLC, and Delta Energy Center, LLC.                  

    4.   Amended and Restated Must-Run Service Agreement, dated June 17, 2003,
     between Los Medanos Energy Center, LLC and California Independent
System Operator Corporation.                                

Morgan                                                                          

     1.   Project Agreement, dated as of June 1, 2000, between BP Amoco Chemical
 Company and Morgan Energy Center, LLC (as assignee of Calpine
         Construction Finance Company, L.P.), as amended by First Amendment to
Project Agreement, dated as of August 20, 2001.             

 2.   Energy Sales Agreement, dated as of June 1, 2000, between BP Amoco
          Chemical Company and Morgan Energy Center, LLC (as assignee of Calpine
         Construction Finance Company, L.P.), as amended by First Amendment to
   Energy Sales Agreement, dated as of August 20, 2001, and Second
   Amendment to Energy Sales Agreement, dated as of July 31, 2003.

   3.   Site Interface Agreement, dated as of September 29, 2000, between BP
        Amoco Chemical Company and Morgan Energy Center, LLC (as assignee of
Calpine Construction Finance Company, L.P.).                

    4.   Land Lease, dated as of September 29, 2000, between BP Amoco Chemical
 Company and Morgan Energy Center, LLC (as assignee of Calpine
         Construction Finance Company, L.P.), as amended by First Amendment of
          Land Lease and Memorandum of Lease and Grant of Easements, dated as of
         August 20, 2001, and Second Amendment of Land Lease and Memorandum of
Lease and Grant of Easements, dated as of December 13, 2001.

  5.   Power Purchase Agreement, dated as of June 19, 2003, between Morgan
Energy Center, LLC and Tennessee Valley Authority.          

Oneta                                                                           

None.                                                                           

Pastoria                                                                        

   1.   Ground Lease, dated as of July 19, 2001, between Tejon Ranchcorp and
Pastoria Energy Facility L.L.C., as amended by Landlord     
          Non-disturbance and Consent Agreement, dated as of September 28, 2001.

Zion                                                                            

Schedule A-4

EX-10.2.4
165th Page of 171
TOC
1st
Previous
Next
↓Bottom
Just 165th
   1.   Amended and Restated Fuel Conversion Services Agreement, dated as of
        April 28, 2003, between Zion Energy LLC and Wisconsin Electric Power
Company.                                                    

Schedule A-5

EX-10.2.4
166th Page of 171
TOC
1st
Previous
Next
↓Bottom
Just 166th
                                                                   SCHEDULE 2.09
                                          TO SECOND PRIORITY TERM LOAN AGREEMENT

 AMORTIZATION SCHEDULE

                                                                [Download Table]

                                  PERCENTAGE OF ORIGINAL PRINCIPAL
 PAYMENT DATE                      AMOUNT PAYABLE ON SUCH DATE    
 ------------                      ---------------------------    
                                                                  
July 1, 2008                                  0.250%              

October 1, 2008                               0.250%              

January 1, 2009                               0.250%              

April 1, 2009                                 0.250%              

July 1, 2009                                  0.250%              

October 1, 2009                               0.250%              

January 1, 2010                               0.250%              

   All remaining principal of the Second Priority Term Loans will be payable
on April 1, 2010.                                                               

 Schedule 2.09-1

EX-10.2.4
167th Page of 171
TOC
1st
Previous
Next
↓Bottom
Just 167th
                                                                   SCHEDULE 4.01
                                          TO SECOND PRIORITY TERM LOAN AGREEMENT

 CAPITAL STRUCTURE

[SEE ATTACHED]

 Schedule 4.01-1

EX-10.2.4
168th Page of 171
TOC
1st
Previous
Next
↓Bottom
Just 168th
                                                                   SCHEDULE 4.11
                                          TO SECOND PRIORITY TERM LOAN AGREEMENT

LITIGATION

         We are party from time to time to various litigation matters arising in
the normal course of business. On July 22, 2003, PG&E filed with CPUC a         
complaint and request for immediate issuance of an order to show cause against  
Calpine, CPN Pipeline Company, CES, Calpine Natural Gas Company and LGS. The    
complaint requests that CPUC issue an order requiring the defendants to (i) show
cause why they should not be ordered to cease and desist from using any direct  
interconnections between the facilities of CPN Pipeline Company and those of    
LGS, unless such parties first seek and obtain regulatory approval from CPUC,   
and (ii) pay to PG&E any underpayments of PG&E's tariffed transportation rates  
and to make restitution for any profits earned from any business activity       
related to LGS' direct interconnections to any entity other than PG&E. The      
complaint also seeks an order permanently enjoining LGS and any entity other    
than PG&E from entering into or utilizing direct interconnections with LGS, and 
directing defendants to pay to PG&E any underpayments of PG&E's tariffed        
transportation rates and to make restitution for any profits earned from any    
business activity related to LGS' direct interconnections to any entity other   
than PG&E. The complaint also alleges that various natural gas consumers,       
including Calpine-affiliated generation facilities within California, are       
engaged with defendants in the acts complained of, and that the defendants      
unlawfully bypass PG&E's system and operate as an unregulated local distribution
company within PG&E's service territory. On August 27, 2003, Calpine filed its  
answer and a motion to dismiss, which was denied on October 16, 2003.           

      On January 15, 2004, PG&E, the Calpine entities and LGS entered into
the Settlement which would resolve all issues raised by the complaint. Although 
the Settlement became effective as of January 15, 2004, certain of its terms    
will only become effective upon approval of the Settlement by CPUC, and in the  
event that CPUC does not approve the Settlement certain of its provisions will  
become null and void. Upon approval of the Settlement by CPUC, PG&E would be    
paid $2.7 million and the parties would release all claims relating to prior    
periods. PG&E also would agree not to pursue any new claim of unauthorized      
public utility activity against the Calpine entities named in the complaint,    
except insofar as such new claim raises matters not raised in the complaint, or 
with respect to a change in the facts and circumstances relating to alleged     
unauthorized public utility activity from those facts and circumstances existing
as of January 15, 2004. As provided by the Settlement. the direct               
interconnections between CPN Pipeline and LGS have been shut down pending       
possible future regulatory action.                                              

     In accordance with the procedural schedule adopted by the presiding
administrative law judge, a settlement meeting was conducted pursuant to CPUC   
settlement procedures on January 26, 2004. The settling parties filed a motion  
for approval of the Settlement on February 6. Comments on the Settlement were   
due March 8, and no party filed comments opposing any provision of the          
settlement agreement. Reply comments are due March 23.                          

 Schedule 4.11-1

EX-10.2.4
169th Page of 171
TOC
1st
Previous
Next
↓Bottom
Just 169th
 The complaint does not name us or our facilities as defendants.
However, if the Settlement is not approved, there can be no assurances that this
litigation will not adversely affect CPN Pipeline Company's ability to perform  
its obligations under the Cotenancy, Operating and Maintenance Agreement among  
CPN Pipeline Company, Gilroy Energy Center, LLC, the Delta facility and the Los 
Medanos facility.                                                               

         On June 11, 2003, the Estate of Darrell Jones and the Estate of Cynthia
Jones filed a complaint against Calpine in the U.S. District Court, Western     
District of Washington. Calpine purchased Goldendale Energy, Inc., a Washington 
corporation, from Darrell Jones. The agreement provided, among other things,    
that upon substantial completion of the Goldendale facility, Calpine would pay  
Mr. Jones (i) $6.0 million and (ii) $18.0 million less $0.2 million per day for 
each day that elapsed between July 1, 2002 and the date of substantial          
completion. Substantial completion of the Goldendale facility has not occurred  
and the daily reduction in the payment amount has reduced the $18.0 million     
payment to zero. The complaint alleges that by not achieving substantial        
completion by July 1, 2002, Calpine breached its contract with Mr. Jones,       
violated a duty of good faith and fair dealing, and caused an inequitable       
forfeiture. The complaint seeks damages in an unspecified amount in excess of   
$75,000. On July 28, 2003, Calpine filed a motion to dismiss the complaint for  
failure to state a claim upon which relief can be granted. The court granted    
Calpine's motion to dismiss the complaint on March 10, 2004. The plaintiffs may 
appeal, and could also seek reconsideration of the decision.                    

       The ultimate outcome of these matters cannot presently be determined,
nor can the liability that could potentially result from a negative outcome in  
each case presently be reasonably estimated.                                    

 Schedule 4.11-1

EX-10.2.4
170th Page of 171
TOC
1st
Previous
Next
↓Bottom
Just 170th
                                                               SCHEDULE 4.18 (B)
                                          TO SECOND PRIORITY TERM LOAN AGREEMENT

 QUALIFYING FACILITIES

1. Baytown Energy Center, LP                                                    

2. Carville Energy LLC                                                          

3. Channel Energy Center, LP                                                    

4. Corpus Christi Cogeneration LP                                               

5. Columbia Energy LLC                                                          

6. Decatur Energy Center, LLC                                                   

7. Los Medanos Energy Center LLC                                                

8. Morgan Energy Center, LLC                                                    

Schedule 4.18(b)-1

EX-10.2.4
Last Page of 171
TOC
1st
Previous
Next
↓Bottom
Just 171st
                                                                SCHEDULE 4.18(C)
                                          TO SECOND PRIORITY TERM LOAN AGREEMENT

 EXEMPT WHOLESALE GENERATORS

1. Delta Energy Center, LLC                                                     

2. Goldendale Energy Center, LLC                                                

3. Pastoria Energy Center L.L.C.                                                

4. Freestone Power Generation LP                                                

5. Calpine Oneta Power, L.P.                                                    

6. Zion Energy LLC                                                              

Schedule 4.18(c)

Dates Referenced Herein   and   Documents Incorporated by Reference

				Referenced-On Page
This ‘10-K’ Filing		Date		First		Last			Other Filings
		12/31/10		76					10-K
		4/1/10		35		166
		4/1/09		60		95			4
		4/1/08		60
		7/1/04		32					4
		3/31/04		33		155			10-Q,  10-Q/A,  8-K
Filed as of:		3/25/04
Filed on:		3/24/04
		3/23/04		1		157			8-K
		3/17/04		37
		3/16/04		76					4,  8-K
		3/15/04		71					4,  8-K,  NT 10-K
		3/12/04		32		74			8-K
		3/10/04		169					8-K
		1/26/04		168
		1/15/04		168
For Period End:		12/31/03		73		80			10-K/A,  11-K,  NT 10-K,  NT 11-K
		10/16/03		168					8-K
		8/27/03		168					8-K
		7/31/03		164
		7/28/03		169
		7/24/03		24		162			8-K
		7/22/03		168
		6/19/03		164
		6/17/03		164					8-K
		6/11/03		169
		4/28/03		165
		2/20/03		163
		2/10/03		163
		12/10/02		163		164
		10/22/02		162
		10/7/02		163
		10/1/02		162
		8/31/02		161
		8/13/02		161
		7/26/02		162
		7/1/02		169
		6/21/02		163
		5/31/02		163					8-K
		1/28/02		163
		12/14/01		163					424B5
		12/13/01		164					8-K
		10/31/01		162
		10/30/01		162
		9/28/01		164					8-A12B/A,  8-K,  U-57
		8/24/01		162
		8/20/01		164
		8/13/01		162
		8/1/01		162
		7/31/01		163					S-3/A
		7/19/01		164
		7/6/01		163					8-K
		6/28/01		162
		6/26/01		161					8-K
		4/30/01		163					8-K,  S-3
		3/30/01		23		162			424B5
		3/22/01		162					424B5
		1/31/01		23		162
		10/30/00		163					424B5
		10/16/00		24
		9/29/00		164					S-3
		8/25/00		163					424B5
		8/15/00		23		162
		6/1/00		164
		4/30/00		161
		4/13/00		163					DEF 14A
		1/25/00		161
		1/12/00		23		161
		12/28/99		161
		10/4/99		163
		6/30/99		163					10-Q
		6/21/99		162
		3/23/99		24		162			10-K/A
		12/21/98		163
									List all Filings