EXHIBIT 10.4
September 5, 2003
To: Lenders under the Calpine Corporation Credit Agreement
From: Calpine Corporation
Re: Technical Correction to Amendment and Waiver Request Concerning Proposed
South Point and Broad River Stock Pledges (the "Amendment and Waiver
Request")
Ladies and Gentlemen:
It has come to our attention that a technical correction needs to be made to the
Amendment and Waiver Request dated August 28, 2003.
Background: In March of 2003 (prior to the July 16, 2003 closing of the Amended
and Restated Credit Agreement), the contract entered into with the California
Department of Water Resources in connection with Calpine's 11 LM-6000 peaking
units (the "California Peaker Contract") was assigned by Calpine Energy
Services, L.P. ("CES") to Calpine California Equipment Finance Company, LLC, a
non-CES subsidiary of Calpine Corporation, in connection with the non-recourse
bank financing of Calpine's California peaking projects. In connection with the
proposed non-recourse bond financing of these peaking units, which is scheduled
to close the week of September 8, the California Peaker Contract will be
transferred to Gilroy Energy Center, LLC, another subsidiary of Calpine.
However, primarily for tax planning purposes, such transfer required the
rescission of the initial assignment, such that the California Peaker Contract
has temporarily resided at CES for a short period after the July 16 closing.
Consequently, as a technical matter, this contract would fall within the
existing definition of "CES Asset", even though it was not a "CES Asset" at the
time of closing the Amended and Restated Credit Agreement and was never intended
to be part of the group of contracts owned by CES. To avoid the unintentional
application of the Credit Agreement provisions relating to the transfer of CES
Assets, the definition of "Designated CES Contracts" will need to be amended to
include the California Peaker Contract (and thus exclude the California Peaker
Contract from the definition of CES Assets in relevant respects).
Amendment: With the approval of the requisite Lenders, the definition of
"Designated CES Contracts" will be deemed amended to read as follows (new
language is underlined):
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"Designated CES Contracts" means (i) the agreements pledged to secure the
CCFCII Credit Agreement and listed on Annex B to the Amendment and Waiver
Request Concerning Proposed South Point and Broad River Stock Pledges, dated
August 28, 2003, from the Borrower to the Lenders and (ii) Confirmation Letter
No. 3 related to 11 LM-6000 peaking units, entered into pursuant to the Master
Power Purchase and Sale Agreement dated as of April 22, 2002 between Calpine
Energy Services, L.P. and the State of California Department of Water Resources,
as amended and assigned from time to time.
Please provide your institution's acknowledgment and approval to this
Technical Correction at your earliest opportunity by sending an email or fax
message to the attention of Xxxxxx Xxxxxx of Scotia Capital at
xxxxxx_xxxxxx@xxxxxxxxxxxxx.xxx (fax number: (000) 000-0000), reaffirming your
institution's execution of the Amendment and Waiver Request, as amended by this
Technical Correction, by 5:00 p.m. (Eastern Time), Monday, September 8, 2003.
Should you have any questions, please feel free to contact me at 000-000-0000,
Xxxx Xxxx of Scotia Capital at 000-000-0000 or Xxxx Xxxx of Scotia Capital at
000-000-0000.
Thank you for your cooperation with this request.
Sincerely,
CALPINE CORPORATION
/s/ XXXXXXX XXXXXX
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Xxxxxxx Xxxxxx
Senior Vice President and Treasurer
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