Mortgage, Deed of Trust, Assignment, Security

MULTISTATE FORM - --------------------------------------------------------------------------------


AMENDED AND RESTATED
MORTGAGE, DEED OF TRUST, ASSIGNMENT, SECURITY
AGREEMENT, FINANCING STATEMENT AND FIXTURE FILING


FROM


CALPINE CORPORATION,
a Delaware corporation
(Taxpayer I.D. No. 77-0212977),
Trustor and Mortgagor


TO


JOHN QUICK, Trustee


AND


KEMP LEONARD, Trustee


AND


THE BANK OF NEW YORK,
not in its individual capacity but solely as Collateral Trustee,
(Taxpayer I.D. No. 13-5160382)
as Beneficiary


Dated as of July 16, 2003


- --------------------------------------------------------------------------------


"THIS INSTRUMENT CONTAINS AFTER-ACQUIRED PROPERTY PROVISIONS."


"THIS INSTRUMENT SECURES PAYMENT OF FUTURE ADVANCES."


"THOSE PORTIONS OF THE MORTGAGED PROPERTY WHICH ARE AS-EXTRACTED COLLATERAL (INCLUDING, WITHOUT LIMITATION, OIL AND GAS), AND THE ACCOUNTS RELATING THERETO, WILL BE FINANCED AT THE WELLHEADS OF THE WELLS LOCATED ON THE PROPERTIES DESCRIBED IN EXHIBIT A HERETO, AND THIS FINANCING STATEMENT IS TO BE FILED FOR RECORD, AMONG OTHER PLACES, IN THE REAL ESTATE RECORDS."


"MORTGAGOR HAS AN INTEREST OF RECORD IN THE REAL ESTATE CONCERNED, WHICH IS DESCRIBED IN EXHIBIT A HERETO."


"SOME OF THE PERSONAL PROPERTY CONSTITUTING A PORTION OF THE MORTGAGED PROPERTY IS OR IS TO BE AFFIXED TO THE PROPERTIES DESCRIBED IN EXHIBIT A HERETO AND THIS FINANCING STATEMENT IS TO BE FILED FOR RECORD, AMONG OTHER PLACES, IN THE REAL ESTATE RECORDS."


"A POWER OF SALE HAS BEEN GRANTED IN THIS MORTGAGE. A POWER OF SALE MAY ALLOW THE MORTGAGEE TO TAKE THE MORTGAGED PROPERTY AND SELL IT WITHOUT GOING TO COURT IN A FORECLOSURE ACTION UPON DEFAULT BY MORTGAGOR UNDER THIS MORTGAGE."


THIS INSTRUMENT WAS PREPARED BY AND WHEN RECORDED AND/OR FILED RETURN TO:


MAYER, BROWN, ROWE & MAW LLP 700 Louisiana Street Suite 3600 Houston, Texas 77002 Attn: Kevin L. Shaw, Esq.


AMENDED AND RESTATED
MORTGAGE, DEED OF TRUST, ASSIGNMENT, SECURITY
AGREEMENT, FINANCING STATEMENT AND FIXTURE FILING


THIS AMENDED AND RESTATED MORTGAGE, DEED OF TRUST, ASSIGNMENT, SECURITY AGREEMENT, FINANCING STATEMENT AND FIXTURE FILING (this "MORTGAGE"), dated as of July 16, 2003, is made by CALPINE CORPORATION, a Delaware corporation ("MORTGAGOR"), whose address is 50 West San Fernando Street, San Jose, CA 95113, to JOHN QUICK and KEMP LEONARD (whether one or more, collectively called "TRUSTEE"), and THE BANK OF NEW YORK, a New York banking corporation, not in its individual capacity but solely as Collateral Trustee under the Collateral Trust Agreement dated July 16, 2003 (the "COLLATERAL TRUST AGREEMENT") among Mortgagor, Beneficiary, the 2007 Trustee, the 2010 Trustee, the 2013 Trustee, Credit Agreement Agent and Term Loan Administrative Agent ("BENEFICIARY"), whose address is 101 Barclay Street, New York, New York 10286. References to this "Mortgage" shall mean this instrument and any and all renewals, modifications, amendments, supplements, extensions, consolidations, substitutions, spreaders, restatements and replacements of this instrument.


Capitalized terms not otherwise defined herein shall have the meanings ascribed thereto in the Collateral Trust Agreement.


ARTICLE I.


RECITALS AND DEFINITIONS


1.1 Mortgagor has heretofore executed and delivered to The Bank of Nova Scotia, for itself and as agent for the Lender Parties (together with its successors in such capacity, the "CREDIT AGREEMENT AGENT") and John Quick and Kemp Leonard, as Trustees, that certain mortgage or deed of trust, dated as of May 1, 2002, as supplemented and amended prior to the date hereof (as so supplemented and amended, herein called the "EXISTING MORTGAGE"), to secure (i) payment of indebtedness owed or to be owing to certain institutional lenders (the "EXISTING 2002 LENDERS") pursuant to the terms of that certain Credit Agreement, dated as of March 8, 2002 (herein, as the same may be amended, modified or supplemented from time to time, called the "EXISTING 2002 CREDIT AGREEMENT") pursuant to which the Existing 2002 Lenders made loans to Mortgagor and issued letters of credit for the benefit of Mortgagor (the "EXISTING 2002 LETTERS OF CREDIT") in amounts not to exceed at any one time outstanding $1,600,000,000, and Mortgagor, to evidence its indebtedness to the Existing 2002 Lenders under the Existing 2002 Credit Agreement, has executed and delivered to the Existing 2002 Lenders its secured promissory notes to mature not later than May 24, 2003 (the "EXISTING 2002 LOAN NOTES"), the Existing 2002 Loan Notes being payable to the order of the Existing 2002 Lenders, bearing interest as provided for therein, and containing provisions for payment of attorneys' fees and acceleration of maturity in the event of default, as therein set forth; and (ii) payment of indebtedness owed or to be owing to certain institutional lenders (the "EXISTING 2000 LENDERS", and together with the Existing 2002 Lenders, the "EXISTING LENDERS") pursuant to the terms of that certain Second Amended and Restated Credit Agreement dated as of May 23,


-1-


2000 (herein, as the same may be amended, modified, or supplemented from time to time, called the "EXISTING 2000 CREDIT AGREEMENT" and together with the Existing 2002 Credit Agreement, collectively, the "EXISTING CREDIT AGREEMENTS") pursuant to which the Existing 2000 Lenders made loans to Mortgagor and issued letters of credit for the benefit of Mortgagor (the "EXISTING 2000 LETTERS OF CREDIT") in amounts not to exceed at any one time outstanding $400,000,000, and Mortgagor, to evidence its indebtedness to the Existing 2000 Lenders under the Existing 2000 Credit Agreement, has executed and delivered to the Existing 2000 Lenders its secured promissory notes to mature not later than May 24, 2003 (the "EXISTING 2000 LOAN NOTES") (the Existing 2000 Loan Notes, together with the Existing 2002 Loan Notes, collectively, the "EXISTING LOAN NOTES"), the Existing 2000 Loan Notes being payable to the order of the Existing 2000 Lenders, bearing interest as provided for therein, and containing provisions for payment of attorney's fees and acceleration of maturity in the event of default, as therein set forth.


1.2 The Existing Mortgage, together with other mortgages and deeds of trust (a) have been filed and recorded, among other places, as set forth in Schedule I hereto; (b) have been supplemented and amended by various instruments that have been filed and recorded, among other places, as set forth in Schedule II hereto; and (c) have been amended and certain items of property mortgaged thereby have been released by various instruments that have been filed and recorded, among other places, as set forth in Schedule III hereto.


1.3 Mortgagor, the Existing Lenders and the Credit Agreement Agent are, (i) terminating the commitments under the Existing 2000 Credit Agreement, and (ii) amending and restating the Existing 2002 Credit Agreement (as so amended and restated, and as the same may, from time to time hereafter, be amended, supplemented, modified or amended and restated, the "AMENDED AND RESTATED CREDIT AGREEMENT".


1.4 Mortgagor is also (a) issuing $500,000,000 in aggregate principal amount of Second Priority Senior Floating Rate Secured Notes due 2007 (the "2007 NOTES") pursuant to the Indenture dated as of July 16, 2003 (the "2007 INDENTURE") between Mortgagor and Wilmington Trust Company, as Trustee (together with its successors in such capacity, the "2007 TRUSTEE"), (b) issuing $1,150,000,000 in aggregate principal amount of 8.5% Second Priority Senior Secured Fixed Rate Notes due 2010 (the "2010 NOTES") pursuant to the Indenture dated as of July 16, 2003 (the "2010 INDENTURE") between Mortgagor and Wilmington Trust Company, as Trustee (together with its successors in such capacity, the "2010 TRUSTEE"), (c) issuing $900,000,000 in aggregate principal amount of 8.75% Second Priority Senior Secured Fixed Rate Notes due 2013 (the "2013 NOTES") pursuant to the Indenture dated as of July 16, 2003 (the "2013 INDENTURE") between Mortgagor and Wilmington Trust Company, as Trustee (together with its successors in such capacity, the "2013 TRUSTEE"), and (d) borrowing $750,000,000 in Term Loans (the "TERM LOANS") pursuant to a Term Loan Agreement dated as of July 16, 2003 (the "TERM LOAN AGREEMENT") between Mortgagor and Goldman Sachs Credit Partners L.P., as Administrative Agent (together with its successors in such capacity, the "TERM LOAN ADMINISTRATIVE AGENT"). The proceeds


-2-


from the issuance of the 2007 Notes, the 2010 Notes and the 2013 Notes and the borrowing of the Term Loans will be used to refinance a portion of the loans and other indebtedness outstanding under the Existing Credit Agreements.


1.5 As permitted pursuant to the Secured Debt Documents, Mortgagor may incur future debt which could, together with the obligations under the Amended and Restated Credit Agreement, constitute Priority Lien Debt and Mortgagor may incur future debt which could, together with the 2007 Notes, the 2010 Notes, the 2013 Notes and the Term Loans, constitute Parity Lien Debt, provided that the aggregate amount of the Secured Debt to be secured hereby shall not exceed $4,200,000,000. Mortgagor intends to secure the Indebtedness, including its obligations (a) under the Amended and Restated Credit Agreement and any future Priority Lien Debt, equally and ratably, on a priority basis, and, (b) subject to such priority, under the 2007 Notes, 2010 Notes, 2013 Notes and Term Loans and any future Parity Lien Debt, equally and ratably, with liens and security interests in, among other collateral, the Mortgaged Property under the Existing Mortgage, as contemplated in the Collateral Trust Agreement.


1.6 Pursuant to the Collateral Trust Agreement and that certain Assignment of Liens of even date herewith, the Credit Agreement Agent has assigned to Beneficiary, all of the Credit Agreement Agent's right, title and interest in and to, and its interest as beneficiary under, the Existing Mortgage. This Mortgage amends and restates the Existing Mortgage. The Collateral Trust Agreement sets forth the terms on which the Collateral Trustee, as trustee for the present and future holders of the Indebtedness, will receive, hold, maintain, administer, maintain, enforce and distribute this Mortgage and all interests, rights, powers and remedies of the Collateral Trustee thereunder and the proceeds thereof.


1.7 For all purposes of this Mortgage, unless the context otherwise requires:


A. "Actionable Default" is defined in the Collateral Trust
Agreement.


B. "Affiliate" of any Person means any other Person which,
directly or indirectly, controls, is controlled by or is under common
control with such Person (excluding any trustee under, or any committee
with responsibility for administering, any Plan (as defined under ERISA)).
A Person shall be deemed to be "controlled by" any other Person if such
other Person possesses, directly or indirectly, power


(a) to vote 10% or more of the securities (on a fully diluted
basis) having ordinary voting power for the election of directors or
managing general partners; or


(b) to direct or cause the direction of the management and
policies of such Person whether by contract or otherwise.


C. "Applicable Law" means with respect to any Person or
matter, any federal, state, regional, tribal or local statute, law, code,
rule, treaty,


-3-


convention, application, order, decree, consent decree, injunction,
directive, determination or other requirement (whether or not having the
force of law) relating to such Person or matter and, where applicable, any
interpretation thereof by a Governmental Authority having jurisdiction
with respect thereto or charged with the administration or interpretation
thereof.


D. "Default Interest Rate" means the lesser of (a) ten percent
(10%), and (b) the Maximum Lawful Rate.


E. "Event of Default" means an Actionable Default.


F. "Environmental Laws" means any and all present and future
Applicable Laws issued, promulgated or entered thereunder relating to
pollution or protection of the environment, including laws relating to
reclamation of land and waterways and laws relating to emissions,
discharges, releases or threatened releases of pollutants, contaminants,
chemicals, or industrial, toxic or hazardous substances or wastes into the
environment (including, without limitation, ambient air, surface water,
ground water, land surface or subsurface strata) or otherwise relating to
the manufacture, processing, distribution, use, treatment, storage,
disposal, transport or handling of pollutants, contaminants, chemicals, or
industrial, toxic or hazardous substances or wastes.


G. "Governmental Authority" means any and all courts, boards,
agencies, commissions, offices or authorities of any nature whatsoever for
any governmental unit (federal, state, county, district, municipal, city,
tribe or otherwise) whether now or hereafter in existence charged with the
administration, interpretation or enforcement of any Applicable Law.


H. "Hedging Agreements" means: (a) interest rate swap
agreements, basis swap agreements, interest rate cap agreements, forward
rate agreements, interest rate floor agreements and interest rate collar
agreements, and all other agreements or arrangements designed to protect
such Person against fluctuations in interest rates or currency exchange
rates, and (b) forward contracts, options, futures contracts, futures
options, commodity swaps, commodity options, commodity collars, commodity
caps, commodity floors and all other agreements or arrangements designed
to protect such Person against fluctuations in the price of commodities.


I. "Hedging Obligations" means with respect to any Person, all
liabilities (including without limitation obligations and liabilities
arising in connection with or as a result of early or premature
termination of a Hedging Agreement, whether or not occurring as a result
of a default thereunder) of such Person under a Hedging Agreement.


J. "Hydrocarbons" means collectively, oil, gas, casinghead
gas, drip gasoline, natural gasoline, condensate, distillate and all other
liquid or


-4-


gaseous hydrocarbons and related minerals and all products therefrom, in
each case whether in a natural or a processed state.


K. "Indebtedness" shall have the meaning set forth in Section
2.2 of this Mortgage.


L. "Indemnification Claim" is defined in Section 4.6(a) of
this Mortgage.


M. "Indemnified Person" is defined in Section 3.10(c) of this
Mortgage.


N. "Joint Operating Agreements" shall mean, with respect to
the lands described in Exhibit A, the respective operating agreement
burdening the lands described in Exhibit A.


O. "lands described in Exhibit A" shall include the real
property or other interest in any lands which are either described in
Exhibit A attached hereto or the description of which is incorporated in
Exhibit A by reference to an instrument or document containing in, or
referring to, such a description, and shall also include any lands now or
hereafter unitized or pooled with lands which are either described in
Exhibit A or the description of which is incorporated in Exhibit A by
reference and Fixtures and all rights, titles and interests appurtenant
thereto. References to Exhibit A shall include, where applicable, Exhibit
A-1 as well.


P. "Leases" means any and all leases (including without
limitation oil and gas leases and oil, gas and other minerals leases),
surface leases or easements, subleases, licenses, concessions, operating
rights or other agreements (written or verbal, now or hereafter in effect)
which grant a possessory interest in and to, or the right to explore, use,
lease, license, possess, produce, process, store and transport
Hydrocarbons from, operate from, or otherwise enjoy, the Mortgaged
Property, together with all amendments, modifications, extensions and
renewals thereof.


Q. "Legal Requirements" means (i) any and all present and
future judicial decisions, statutes, rulings, rules, regulations,
licenses, decisions, orders, injunctions, decrees, permits, certificates
or ordinances of any Governmental Authority in any way applicable to
Mortgagor, or the Mortgaged Property, including the ownership, use,
occupancy, operation, maintenance, repair or reconstruction thereof, and
any other Applicable Law enacted by any Governmental Authority relating to
health or the environment, (ii) Mortgagor's presently or subsequently
effective Organic Documents, (iii) any and all Leases, (iv) any and all
leases and other contracts (written or oral) of any nature to which
Mortgagor, or the Mortgaged Property may be bound and (v) any and all
restrictions, restrictive covenants or zoning, present and future, as the
same may apply to the Mortgaged Property.


-5-


R. "Losses" is defined in Section 3.10(c) of this Mortgage.


S. "Maximum Lawful Rate" means the maximum nonusurious rate of
interest that may be received, charged or contracted for under Applicable
Law from time to time in effect.


T. "Mortgaged Property" means the properties, rights and
interests hereinafter described in Section 1.8 and defined as the
Mortgaged Property. U. "Obligations" means any and all of the covenants,
warranties, representations and other obligations (other than to repay the
Indebtedness) made or undertaken by Mortgagor or others under any of the
Secured Debt Documents.


U. "Obligations" means any and all of the covenants,
warranties, representations and other obligations (other than to repay the
Indebtedness) made or undertaken by Mortgagor or others under any of the
Secured Debt Documents.


V. "oil and gas leases" shall include oil, gas and mineral
leases, subleases and assignments thereof, operating rights, and shall
also include subleases and assignments of operating rights.


W. "Operating Equipment" means all surface or subsurface
machinery, goods, equipment, fixtures, inventory, facilities, supplies or
other property of whatsoever kind or nature (excluding drilling rigs,
trucks, automotive equipment or other property taken to the premises to
drill a well or for other similar temporary uses) now or hereafter located
on or under any of the lands described in Exhibit A which are useful for
the production, gathering, treatment, processing, storage or
transportation of Hydrocarbons (together with all accessions, additions
and attachments to any thereof), including, but not by way of limitation,
all oil wells, gas wells, water wells, injection wells, casing, tubing,
tubular goods, rods, pumping units and engines, christmas trees,
platforms, derricks, separators, compressors, gun barrels, flow lines,
tanks, gas systems (for gathering, treating and compression), pipelines
(including gathering lines, laterals and trunklines), chemicals,
solutions, water systems (for treating, disposal and injection), steam
generation and injection equipment and systems, power plants, poles,
lines, transformers, starters and controllers, supervisory control and
data acquisition systems, machine shops, tools, storage yards and
equipment stored therein, buildings and camps, telegraph, telephone and
other communication systems, roads, loading docks, loading racks and
shipping facilities.


X. "Organic Documents" means the Articles of Incorporation,
Certificate of Incorporation, limited liability company certificate of
formation and regulations or operating agreement, partnership agreement,
limited partnership agreement, joint venture agreement, trust agreement or
other similar documents governing the organization and operation of a
business association.


Y. "Parity Lien Debt" is defined in the Collateral Trust
Agreement.


Z. "Parity Lien Documents" is defined in the Collateral Trust
Agreement.


-6-


AA. "Parity Lien Obligations" means any and all of the
covenants, warranties, representations and other obligations (other than
to repay the Indebtedness) made or undertaken by Mortgagor or others under
any of the Parity Lien Documents.


BB. "Permits" means all authorizations, approvals, permits,
variances, land use entitlements, consents, licenses, franchises and
agreements issued by or entered into with any Governmental Authority now
or hereafter required for all stages of exploration, developing,
operating, and plugging and abandoning oil and gas wells (including,
without limitation, those shown on Exhibit A) on all or any part of the
lands described in Exhibit A (or any other lands any production from
which, or profits or proceeds from such production, is attributed to any
interest in the lands described in Exhibit A).


CC. "Permitted Encumbrances" means the outstanding liens,
easements, restrictions, exceptions, reservations, conditions,
limitations, security interests and other matters as permitted by and
defined in the Secured Debt Documents.


DD. "Person" means any natural person, corporation,
partnership, limited liability company, firm, association, trust,
government, governmental agency or any other entity, whether acting in an
individual, fiduciary or other capacity.


EE. "Personalty" means all of the right, title and interest of
Mortgagor now owned or hereafter acquired in and to all furniture,
furnishings, Equipment, machinery, Goods, General Intangibles, money,
Accounts, receivables, Contract Rights, Inventory, all refundable,
returnable or reimbursable fees, deposits or other funds or evidences of
credit or indebtedness deposited by or on behalf of Mortgagor with any
Governmental Authority, agencies, boards, corporations, providers of
utility services, public or private, including specifically, but without
limitation, all refundable, returnable or reimbursable tap fees, utility
deposits, commitment fees and development costs, and all other personal
property (other than the Fixtures) of any kind or character as defined in
and subject to the provisions of Article 9 of the Uniform Commercial Code,
now or hereafter located upon, within or about, or used in connection
with, the lands described in Exhibit A together with all accessories,
replacements and substitutions thereto or therefor and the Proceeds
thereof.


FF. "Priority Lien Debt" is defined in the Collateral Trust
Agreement.


GG. "Priority Lien Documents" is defined in the Collateral
Trust Agreement.


HH. "Priority Lien Obligations" means any and all of the
covenants, warranties, representations and other obligations (other than
to repay


-7-


the Indebtedness) made or undertaken by Mortgagor or others under any of
the Priority Lien Documents.


II. "Production Sale Contracts" means contracts now in effect,
or hereafter entered into by Mortgagor, or entered into by Mortgagor's
predecessors in interest, for the sale, purchase, exchange, gathering,
transportation, treating or processing of Hydrocarbons produced from the
lands described in Exhibit A.


JJ. "Rents and Revenues" means all of the rents, revenues,
income, proceeds, profits and other benefits paid or payable by parties to
the Leases other than Mortgagor for using, leasing, licensing, possessing,
operating, selling or otherwise enjoying the Mortgaged Property, including
the proceeds from the sale of Hydrocarbons.


KK. "Secured Debt" is defined in the Collateral Trust
Agreement.


LL. "Secured Debtholder" is defined in the Collateral Trust
Agreement.


MM. "Secured Debt Documents" is defined in the Collateral
Trust Agreement.


NN. "Secured Debt Representative" is defined in the Collateral
Trust Agreement.


OO. "Taxes" means all real property and personal property
taxes, production taxes, assessments, permit fees, water, gas, sewer,
electricity and other utility rates and charges, charges for any easement,
license or agreement maintained for the benefit of the Mortgaged Property,
and all other taxes, charges and assessments and any interest, costs or
penalties with respect thereto, of any kind and nature whatsoever which at
any time prior to or after the execution hereof may be charged, assessed,
levied or imposed upon the Mortgaged Property or the Rents and Revenues or
the ownership, use, occupancy or enjoyment thereof.


PP. "Transportation Agreements" shall mean any contracts or
agreements entered into from time to time by Mortgagor, or entered into by
Mortgagor's predecessors in interest, relating to the transportation of
Hydrocarbons, as any such agreement or contract may be amended,
supplemented, restated or otherwise modified from time to time.


QQ. "Water Rights" means (including without limitation those
described in Exhibit A hereto) all now or hereafter existing or acquired
water and water rights, reservoirs and reservoir rights, ditches and ditch
rights, wells and well rights, whether evidenced or initiated by permit,
decree, well reg ...