Exhibit 4.1.7
WAIVER AGREEMENT
Dated as of June 9, 2006
among
CALPINE CONSTRUCTION FINANCE COMPANY, L.P.
CCFC FINANCE CORP.
THE GUARANTORS NAMED HEREIN
and
WILMINGTON TRUST FSB,
as Trustee
Relating to the Indenture
Dated as of August 14, 2003
and
Amended as of September 18, 2003, January 14, 2004, March 5, 2004
and March 15, 2006
WAIVER AGREEMENT UNDER INDENTURE, dated as of June 9, 2006 (the
"Waiver Agreement"), among Calpine Construction Finance Company, L.P., a
Delaware limited partnership (the "Company"), CCFC Finance Corp., a Delaware
corporation ("Finance Corp."), the Guarantors and Wilmington Trust FSB, as
trustee (the "Trustee").
WHEREAS, the Company, Finance Corp., the Guarantors and the Trustee
have executed that certain Indenture, dated as of August 14, 2003, as
supplemented by that certain Supplemental Indenture, dated as of September 18,
2003, as further supplemented by that certain Second Supplemental Indenture,
dated as of January 14, 2004, as further supplemented by that certain Third
Supplemental Indenture, dated as of March 5, 2004, and as further supplemented
by that certain Fourth Supplemental Indenture, dated as of March 15, 2006 (as
supplemented, the "Indenture"), in connection with the co-issuance by the
Company and Finance Corp. of certain Second Priority Senior Secured Floating
Rate Notes due 2011 (the "Notes");
WHEREAS, on December 20, 2005, Calpine Corporation ("Calpine") and
certain of its controlled subsidiaries, including, among others, Calpine
Operating Services Company, Inc. and Calpine Energy Services, L.P. ("CES"),
filed a voluntary proceeding for relief under Chapter 11 of the United States
Bankruptcy Code with the United States Bankruptcy Court for the Southern
District of New York (the "Proceeding");
WHEREAS, CES, the Company and certain of the Company's subsidiaries
are parties to the Index Based Gas Sale and Power Purchase Agreement dated as of
August 14, 2003, as amended (the "PPA"), pursuant to which the Company purchases
natural gas from CES for its power generating facilities, and CES purchases
power generated by the facilities from the Company;
WHEREAS, on November 1, 2005, as permitted under the Indenture, the
Company used net proceeds of approximately $212.0 million from the sale of one
of its facilities to make a prepayment to CES for gas under the PPA (the "Gas
Prepay Transaction");
WHEREAS, ordinarily under the PPA, the cost of gas consumed by the
Company's facilities is offset against the cost of power generated by the
facilities, with CES paying the Company only the net amount due, such payments
generally being made on the 25th of each month for services provided during the
prior month; however, due to the Gas Prepay Transaction, CES was obligated for a
period of time to pay the full cost for the power under the PPA, without offset,
which resulted in larger than usual payments owing to the Company under the PPA;
WHEREAS, CES failed to timely make a number of payments owing to
the Company under the PPA, including in respect of gas deliveries during
February 2006, approximately $18.5 million due on March 27, 2006 (the "March PPA
Payment" );
WHEREAS, the failure by CES to timely make the March PPA Payment
constitutes an Event of Default under the Indenture (the "March PPA Payment
Default");
WHEREAS, the Company has failed to timely provide to the Holders a
financial report for the periods ended December 31, 2005 and March 31, 2006 (the
"Financial Reports") as required to be provided to them pursuant to Section
4.03(1) of the Indenture;
WHEREAS, the failure by the Company to timely provide the Financial
Reports constitutes a Default (the "Reporting Default," and together with the
March PPA Payment Default, the "Specified Defaults");
WHEREAS, pursuant to a consent solicitation, commenced as of June
6, 2006 and completed as of June 9, 2006 (the "Consent Solicitation"), the
Company and Finance Corp. have requested that the Holders consent to a waiver of
the Specified Defaults (the "Waiver");
WHEREAS, pursuant to Sections 6.04 and 9.02 of the Indenture, the
Holders of at least a majority in aggregate principal amount of the Notes have
consented to the Waiver; and
WHEREAS, the Company and Finance Corp. have directed the Trustee to
execute and deliver this Waiver Agreement in accordance with the terms of the
Indenture.
NOW THEREFORE, for and in consideration of the premises and mutual
covenants herein contained, the Company, Finance Corp., the Guarantors and the
Trustee agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1 Definition of Terms.
Unless the context otherwise requires, capitalized terms used
herein that are not otherwise defined herein shall have the meaning assigned to
such terms in the Indenture.
ARTICLE II
WAIVER OF SPECIFIED DEFAULTS
Section 2.1 Waiver.
(a) Upon the satisfaction of the conditions set forth in Section
2.2 of this Waiver Agreement, the Holders, pursuant to Section 6.04 of the
Indenture, hereby waive application of Sections 6.01(4) and 6.01(11) of the
Indenture solely to the extent applicable to any Specified Default, such Waiver
being effective on the first date that all of the conditions set forth in
Section 2.2 of this Waiver Agreement shall have been satisfied (the "Waiver
Effective Date").
(b) Except for the Waiver expressly set forth above in subsection
(a), the Holders reserve each and every right and remedy they may have under the
Indenture and under applicable law with respect to any Default or Event of
Default.
Section 2.2 Conditions. The effectiveness of Section 2.1(a) of this
Waiver Agreement is subject to the satisfaction of the following conditions
precedent:
(a) Holders of at least a majority in aggregate principal amount of
the Notes shall have consented to this Waiver, and the Company, Finance Corp.,
and the Guarantors named as signatories hereto and the Trustee shall have
executed and delivered their respective counterparts of this Waiver Agreement;
(b) the Company shall have paid to the Trustee, in cash or other
immediately available funds, reimbursement of all outstanding fees and expenses
of the Trustee owing under Section 7.07 of the Indenture as well as all other
fees owing to the Trustee arising under this Waiver Agreement, the Indenture or
any other agreement; and
(c) a waiver agreement (in form and substance reasonably acceptable
to the Trustee) with the Lenders under (and as defined in) the Term Loan
Agreement shall have been negotiated and shall become effective concurrently
with this Waiver Agreement, provided that, any conditions to effectiveness or
consideration made available to such Lenders for such agreement shall be made
available to the Holders as conditions to effectiveness of, or as consideration
for, this Waiver Agreement; and
(d) the conditions specified in the Indenture which are applicable
to this Waiver Agreement shall have been satisfied.
Section 2.3 Representations and Warranties. The Company, Finance
Corp. and each Guarantor hereby represents and warrants to the Trustee that (a)
this Waiver Agreement has been duly authorized, executed and delivered by the
Company , Finance Corp. or Guarantor, as applicable, and constitutes its valid
and legally binding obligation, enforceable against it in accordance with its
terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and similar laws of generally applicability relating to or affecting
creditors' rights and to general equity principles; (b) the execution and
delivery of this Waiver Agreement (i) does not require any consent, approval,
authorization or order of, or filing with, any governmental agency or body or
any court, except such as have been obtained or made and are in full force and
effect as of the date hereof and (ii) will not violate any applicable law or
regulation or the charter, by laws or other organizational documents of the
Company or Guarantor, as applicable, or any order of any governmental agency or
body, or breach or conflict with any material agreement to which the Company,
Finance Corp. or Guarantor, as applicable, is a party or by which the Company,
Finance Corp. or Guarantor, as applicable, is bound; and (c) except for the
Specified Defaults, no Default or Event of Default under the Indenture exists
and is continuing.
Section 2.4 PPA. Notwithstanding the occurrence of the Waiver
Effective Date, this Waiver shall cease to be effective if (i) the Company,
Finance Corp. and the Holders shall not have reached agreement regarding the
assumption, whether on amended terms or otherwise, of the PPA in the Proceeding
on or before August 4, 2006 or (ii) the Company shall not have delivered to the
financial advisor to the Holders and the Lenders, subject to execution of an
appropriate and mutually agreed upon confidentiality agreement, on or prior to
June 19, 2006, the analysis of cash flows for the Company's facilities under the
PPA prepared by PA Consulting Group, Inc.
Section 2.5 Financial Advisor and Legal Expenses. The Company
hereby agrees to pay all reasonable fees of one financial advisor, who shall act
as financial advisor to both the Holders and the Lenders, for purposes of
analyzing issues relating to the PPA, including the analysis done by PPA
Consulting Group, Inc., and the impact of the PPA on the Company's business,
which fees shall not exceed $100,000 per month, for a period not to exceed two
(2) months. The Company hereby agrees to pay all reasonable fees, charges and
disbursements of ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP, as counsel to the Holders,
in accordance with the terms of the retention letter executed in March of 2006.
ARTICLE III
MISCELLANEOUS
Section 3.1 Interpretation.
This Waiver Agreement shall become effective on the Waiver
Effective Date and shall bind every Holder. After the Waiver Effective Date, the
Indenture shall be modified and amended in accordance with this Waiver
Agreement, and all the terms and conditions of both shall be read together as
though they constitute one instrument, except that, in case of conflict, the
provisions of this Waiver Agreement will control. The Indenture, as modified by
this Waiver Agreement, is hereby ratified and confirmed in all respects and
shall bind every Holder. In case of conflict between the terms and conditions
contained in the Notes and those contained in the Indenture, as modified and
amended by this Waiver Agreement, the provisions of the Indenture, as modified
and amended by this Waiver Agreement, shall control.
Section 3.2 The Trustee.
The Trustee shall not be responsible in any manner whatsoever for
or in respect of the validity or sufficiency of this Waiver Agreement or for or
in respect of the recitals contained herein, all of which are made solely by the
Company and Finance Corp. Section 3.3 Certain Duties and Responsibilities of the
Trustee.
(a) In entering into this Waiver Agreement, the Trustee shall be
entitled to the benefit of every provision of the Indenture relating to the
conduct or affecting the liability or affording protection to the Trustee,
whether or not elsewhere herein so provided.
Section 3.4 Continuing Effect of the Indenture. Except as expressly
set forth herein, this Agreement shall not by implication or otherwise limit,
impair, constitute a waiver of, or otherwise affect the rights and remedies of
the Holders, the Trustee, the Company, Finance Corp. or the Guarantors under the
Indenture and shall not alter, modify, amend or in any way affect any of the
terms, conditions, obligations, covenants or agreements contained in the
Indenture, all of which are ratified and affirmed in all respects and shall
continue in full force and effect. Nothing herein shall be deemed to entitle the
Company, Finance Corp. or the Guarantors to a consent to, or a waiver,
amendment, modification or other change of, any of the terms, conditions,
obligations, covenants or agreements contained in the Indenture in similar or
different circumstances. This Agreement shall apply and be effective only with
respect to the provisions of the Indenture specifically referred to herein.
After the Waiver Effective Date, any reference to the Indenture shall mean the
Indenture as amended and modified hereby.
Section 3.5 Counterparts.
This Waiver 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. The delivery of an executed signature of this Waiver Agreement
by facsimile transmission shall be effective as delivery of a manually executed
counterpart hereof.
Section 3.6 Applicable Law.
This Waiver Agreement and the right 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. Section
3.7 Proof of Claim.
The Company shall include in its proof of claim against CES in the
Proceeding, the amount of the unpaid March PPA Payment.
Section 3.8 Preservation of Prior Representations.
Notwithstanding anything herein to the contrary, all agreements,
admissions, affirmations, representations, ratifications and releases by the
Company, Finance Corp. and each Guarantor made in the Waiver Agreement dated
March 15, 2006, including, but not limited to, those in Sections 2.5 and 3.4
thereof, are expressly confirmed and preserved.
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IN WITNESS WHEREOF, the parties hereto have caused this Waiver
Agreement to be duly executed as of the day and year first above written.
CALPINE CONSTRUCTION FINANCE COMPANY, L.P.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇.
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Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Chief Financial Officer
CCFC FINANCE CORP.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇.
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Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Chief Financial Officer
CALPINE HERMISTON, LLC, as a Guarantor
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇.
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Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Chief Financial Officer
CPN HERMISTON, LLC, as a Guarantor
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇.
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Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Chief Financial Officer
HERMISTON POWER PARTNERSHIP, as a Guarantor
By: Calpine Hermiston, LLC, its General Partner
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇.
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Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Chief Financial Officer
WILMINGTON TRUST FSB, as Trustee
By: /s/ W. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
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Name: W. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Title: Authorized Signer