AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 22, 2001
REGISTRATION NO. 333-66078

SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D.C. 20549
AMENDMENT NO. 1
TO
FORM S-3
 REGISTRATION STATEMENT
UNDER
 THE SECURITIES ACT OF 1933
CALPINE CORPORATION
 (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

            DELAWARE                                             77-0212977
(STATES OR OTHER JURISDICTIONS OF                             (I.R.S. EMPLOYER
 INCORPORATION OR ORGANIZATION)                            IDENTIFICATION NUMBERS)	

50 WEST SAN FERNANDO STREET
SAN JOSE, CALIFORNIA 95113
 (408) 995-5115
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
PETER CARTWRIGHT
CHAIRMAN, PRESIDENT AND CHIEF EXECUTIVE OFFICER, CALPINE CORPORATION
50 WEST SAN FERNANDO STREET
SAN JOSE, CALIFORNIA 95113
 (408) 995-5115
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
COPIES TO:

  BRUCE C. BENNETT, ESQ.                                 JOSEPH A. COCO, ESQ.
    COVINGTON & BURLING                        SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP
1330 AVENUE OF THE AMERICAS                                FOUR TIMES SQUARE
 NEW YORK, NEW YORK 10019                              NEW YORK, NEW YORK 10036
      (212) 841-1000                                        (212) 735-3000	

APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time to time after the effective date of this Registration Statement as determined by market conditions.
If the only securities being registered on this Form are being offered pursuant to dividend or interest reinvestment plans, please check the following box: [ ]
If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, other than securities offered only in connection with dividend or interest reinvestment plans, please check the following box: [X] If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering: [ ] If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering: [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box: [ ]
CALCULATION OF REGISTRATION FEE

---------------------------------------------------------------------------------------------------------------------------------
                                                                           PROPOSED            PROPOSED
                                                                            MAXIMUM             MAXIMUM
               TITLE OF EACH CLASS                   AMOUNT TO BE       OFFERING PRICE         AGGREGATE           AMOUNT OF
         OF SECURITIES TO BE REGISTERED              REGISTERED(1)        PER UNIT(1)      OFFERING PRICE(1)   REGISTRATION FEE
---------------------------------------------------------------------------------------------------------------------------------
 Zero-Coupon Convertible Debentures Due April 30,
   2021 of Calpine Corporation(2)................      1,000,000           $1,000.00        $1,000,000,000         $250,000
---------------------------------------------------------------------------------------------------------------------------------
 Common Stock, par value $.001 per share, of
   Calpine Corporation...........................         (3)                 (3)                 (3)                 (3)
---------------------------------------------------------------------------------------------------------------------------------
 Total...........................................         --                  --            $1,000,000,000        $250,000(4)
---------------------------------------------------------------------------------------------------------------------------------	

(1) Estimated solely for the purpose of determining the registration fee in accordance with Rule 457(o) under the Securities Act and exclusive of accrued interest and dividends, if any.
(2) $1,000,000,000 in aggregate principal amount of Calpine Corporation's Zero-Coupon Convertible Debentures Due April 30, 2021 (the "Debentures") were issued by Calpine Corporation on April 30, 2001 in an offering exempt from registration under Section 4(2) of the Securities Act of 1933 and Rule 144A thereunder. Pursuant to a Registration Rights Agreement, dated April 30, 2001, Calpine Corporation is obligated to file this Registration Statement to permit registered resales of the Debentures and related common stock from time to time by holders thereof.
(3) The Debentures are convertible into common stock, par value $.001 per share (the "Common Stock") of Calpine Corporation at an initial conversion rate of 13.2714 shares of Common Stock per $1,000 principal amount at maturity of the Debentures (or a total of 13,271,400 shares of Common Stock assuming conversion of all of the Debentures), subject to adjustment under certain circumstances. Shares of Common Stock issued upon conversion of the Debentures will be issued without the payment of additional consideration. Pursuant to Rule 457(i) of the Securities Act, no registration fee is attributable to the Common Stock registered hereby.
(4)Previously paid.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.

THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE SECURITIES AND EXCHANGE COMMISSION RELATING TO THESE SECURITIES IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER TO SELL THESE SECURITIES AND IS NOT SEEKING AN OFFER TO BUY THESE SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
SUBJECT TO COMPLETION, DATED OCTOBER 22, 2001
PROSPECTUS
$1,000,000,000
CALPINE CORPORATION
Zero-Coupon Convertible Debentures Due April 30, 2021

[CALPINE LOGO]
THE SECURITIES
The Zero-Coupon Convertible Debentures Due April 30, 2021, or the Debentures, represent Calpine Corporation's senior unsecured obligations. The Debentures are convertible into shares of our common stock, par value $.001, as described below. We will not pay interest on the Debentures unless an upward interest adjustment becomes payable. The issue price represents a yield to maturity of 0% per annum unless an upward interest adjustment becomes payable.
An upward interest adjustment to the yield to maturity on the Debentures equivalent to 7.25% per annum may be made on April 30, 2004, 2006, 2008, 2011 or 2016. An upward interest adjustment will be made on each upward interest adjustment date if the trading price of the Debentures is less than 98% of the accreted value as of such upward interest adjustment date for 20 out of the last 30 New York Stock Exchange trading days ending 90 days prior to such upward interest adjustment date. If an upward interest adjustment is in effect for a particular semi-annual period, we will pay a portion of the upward interest adjustment as cash interest at a rate of 0.25% per annum or 0.125% per semi-annual period, of the accreted value as of the beginning of the applicable semi-annual period and the remaining interest of 7.0% per annum will be accrued and payable at the earlier of maturity or the redemption or repurchase of the Debentures. "Accreted Value" means, as of any date, the sum of the issue price of the Debentures and the accrued and unpaid interest as of such date (excluding any accrued and unpaid interest which will be paid as cash interest).
If an upward interest adjustment is in effect during a semi-annual period, other than a semi-annual period immediately preceding an upward interest adjustment date, and the trading price of the Debentures is greater than or equal to 98% of the accreted value as of the next following interest payment date for 20 out of the last 30 NYSE trading days ending on such interest payment date, the upward interest adjustment will be adjusted downward on such interest payment date, such that, from and including such date, the Debentures will cease to accrue interest unless and until there is a subsequent upward interest adjustment. If an upward interest adjustment is in effect during a semi-annual period immediately preceding an upward interest adjustment date, a downward interest adjustment will be made on the next upward interest adjustment date if the trading price of the Debentures is greater than or equal to 98% of the accreted value as of such upward interest adjustment date for 20 out of the last 30 NYSE trading days ending 90 days prior to such upward interest adjustment date. If a downward interest adjustment is made, no upward interest adjustment may be made until the next upward interest adjustment date.
We will not pay cash interest on the Debentures prior to maturity unless an upward interest adjustment occurs or we elect to do so following a tax event.
On or after April 30, 2004, we may redeem for cash all or part of the Debentures at a redemption price equal to the issue price plus any accrued and unpaid interest to the redemption date. On April 30, 2002, 2004, 2006, 2008, 2011 and 2016 any holder may require us to repurchase such holder's Debentures. The initial repurchase price will be $1,000 per Debenture, but will be higher if an upward interest adjustment applies for one or more semi-annual periods. We may choose to pay the repurchase price in cash or shares of our common stock or a combination of cash and shares of our common stock, except in 2016, when we may only pay the repurchase price in cash. The Debentures will mature on April 30, 2021, unless earlier redeemed or repurchased. At maturity, we will pay the accreted value of the Debentures in cash.
The Debentures are convertible at the option of the holder into shares of our common stock at a conversion rate of 13.2714 shares of common stock per $1,000 principal amount at maturity of the Debentures, subject to adjustment upon certain events. This is equivalent to an initial conversion price of $75.35 per share of common stock based on the issue price of the Debentures.
The Debentures are evidenced by global notes deposited with a custodian for and registered in the name of a nominee of The Depository Trust Company, or DTC. Except as described in this prospectus, beneficial interests in the global notes will be shown on, and the transfers thereof will be effected only through, records maintained by DTC and its direct and indirect participants.
The Debentures are eligible for trading in the Private Offerings, Resale and Trading through Automatic Linkages (PORTAL) Market of the National Association of Securities Dealers, Inc.
THE OFFERING
The Debentures and the common stock issuable upon conversion of the Debentures may be offered and sold from time to time pursuant to this prospectus by the holders of those securities or by their transferees, pledgees, donees or successors (all of which we refer to as selling holders).
The securities may be sold by the selling holders directly to purchasers or through agents, underwriters or dealers. The names of any selling holders, agents, underwriters or dealers involved in the sale of the securities, and the agent's commission, dealer's purchase price or underwriter's discount, if any, will be provided in supplements to this prospectus. The selling holders will receive all of the proceeds from the sale of the securities and will pay all underwriting discounts and selling commissions, if any, applicable to any sale. We are responsible for the payment of all other expenses incident to the offer and sale of the securities. The selling holders and any broker-dealers, agents or underwriters that participate in the distribution of the securities may be deemed to be "underwriters" within the meaning of the Securities Act, and any commission received by them and any profit on the resale of the securities purchased by them may be deemed to be underwriting commissions or discounts under the Securities Act.
Calpine's common stock is traded on The New York Stock Exchange under the symbol "CPN." On October 16, 2001, the last reported sales price of the common stock on that exchange was $27.58.
INVESTING IN THE DEBENTURES INVOLVES RISKS. SEE "RISK FACTORS" ON PAGE 17.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
The date of this prospectus is , 2001.

TABLE OF CONTENTS

                                                              PAGE
                                                              ----
SUMMARY.....................................................    4
RISK FACTORS................................................   17
WHERE YOU CAN FIND MORE INFORMATION.........................   18
FORWARD-LOOKING STATEMENTS..................................   19
CONSOLIDATED RATIO OF EARNINGS TO FIXED CHARGES.............   20
USE OF PROCEEDS.............................................   20
SELLING HOLDERS.............................................   21
PLAN OF DISTRIBUTION........................................   24
PRICE RANGE OF COMMON STOCK.................................   26
DIVIDEND POLICY.............................................   26
CAPITALIZATION..............................................   27
SECURITIES OFFERED..........................................   28
DESCRIPTION OF DEBENTURES...................................   29
REGISTRATION RIGHTS.........................................   46
DESCRIPTION OF CAPITAL STOCK................................   48
CERTAIN UNITED STATES FEDERAL INCOME TAX CONSEQUENCES.......   52
LEGAL MATTERS...............................................   58
INDEPENDENT AUDITORS........................................   58	

This document is called a prospectus and is part of a registration statement that we filed with the Securities and Exchange Commission (the "SEC") using a "shelf" registration or continuous offering process. Under this shelf process, selling holders may from time to time sell the securities described in this prospectus in one or more offerings.
This prospectus provides you with a general description of the securities that the selling holders may offer. Each time a selling holder sells securities, the selling holders are required to provide you with a prospectus supplement containing specific information about the selling holder and the terms of the securities being offered. That prospectus supplement may include additional risk factors or other special considerations applicable to those securities. The prospectus supplement may also add, update or change information in this prospectus. If there is any inconsistency between the information in this prospectus and any prospectus supplement, you should rely on the information in that prospectus supplement. You should read both this prospectus and any prospectus supplement together with the additional information described under the heading "Where You Can Find More Information."
The registration statement containing this prospectus, including the exhibits to the registration statement, provides additional information about us and the securities offered under this prospectus. The registration statement, including the exhibits, can be read at the SEC web site or at the SEC offices mentioned under the heading "Where You Can Find More Information."
You should rely only on the information incorporated by reference or provided in this prospectus and the prospectus supplement. We have not authorized anyone to provide you with different information. We are not making an offer or soliciting a purchase of these securities in any jurisdiction in which the offer or solicitation is not authorized or in which the person making the offer or solicitation is not qualified to do so or to anyone to whom it is unlawful to make the offer or solicitation. You should not assume that the information in this prospectus or the prospectus supplement is accurate as of any date other than the date on the front of the document.
2

The prospectus incorporates business and financial information about us that is not included in or delivered with this document. YOU MAY REQUEST AND OBTAIN THIS INFORMATION FREE OF CHARGE BY WRITING OR TELEPHONING US AT THE FOLLOWING ADDRESS: CALPINE CORPORATION, 50 WEST SAN FERNANDO STREET, SAN JOSE, CALIFORNIA 95113, ATTENTION: LISA M. BODENSTEINER, ASSISTANT SECRETARY,
TELEPHONE: (408) 995-5115.
Unless we have indicated otherwise, references hereafter in this prospectus to "Calpine," "we," "us," and "our" or similar terms are to Calpine Corporation and its consolidated subsidiaries, excluding Calpine Capital Trust III, Calpine Capital Trust II and Calpine Capital Trust. On April 19, 2001, we acquired Encal Energy Ltd. ("Encal") in a merger transaction that was accounted for as a pooling-of-interests under U.S. GAAP. All financial information contained in this prospectus has been restated for all periods presented as if Encal and Calpine had always been combined. As used in this prospectus, "EBITDA" is defined as net income less income from unconsolidated investments, plus cash received from unconsolidated investments, plus provision for tax, plus interest expense, plus one-third of operating lease expenses, plus depreciation and amortization, plus distributions on our company-obligated mandatorily redeemable convertible preferred securities of subsidiary trusts. This non-GAAP measure is presented not as a measure of operating results, but rather as a measure of Calpine's ability to service debt. EBITDA should not be construed as an alternative to either (i) income from operations (determined in accordance with U.S. GAAP) or (ii) cash flows from operating activities (determined in accordance with U.S. GAAP).
3

SUMMARY
This summary highlights information contained elsewhere or incorporated by reference in this prospectus. This summary is not complete and does not contain all of the information that you should consider before investing in the Debentures. You should carefully read the entire prospectus, including the risk factors, the financial statements and the documents incorporated by reference.
All information in this prospectus reflects the 2 for 1 stock split that became effective on October 7, 1999, the 2 for 1 stock split that became effective on June 8, 2000 and the 2 for 1 stock split that became effective on November 14, 2000.
THE COMPANY
We are a leading independent power company engaged in the development, acquisition, ownership and operation of power generation facilities and the sale of electricity and steam in the United States, Canada and the United Kingdom. We have experienced significant growth in all aspects of our business over the last five years. Currently, we own interests in 61 power plants having a net capacity of 11,085 megawatts. We also have 30 gas-fired projects under construction having a net capacity of 16,673 megawatts and have announced plans to develop 26 gas-fired projects (power plants and expansions of current facilities) with a net capacity of 14,915 megawatts. Upon completion of the projects under construction, we will have interests in 87 power plants located in 22 U.S. states, three Canadian provinces and the United Kingdom, having a net capacity of 27,758 megawatts. Of this total generating capacity, 97% will be attributable to gas-fired facilities and 3% will be attributable to geothermal facilities. As a result of our expansion program, our revenues, EBITDA, earnings and assets have grown significantly over the last five years, as shown in the table below.

                                                                      COMPOUND ANNUAL
                                               1996        2000         GROWTH RATE
                                               ----        ----       ---------------
                                                 (IN MILLIONS)
Total Revenue..............................  $  291.5    $ 2,547.1           72%
EBITDA.....................................     144.2      1,017.2           63%
Net Income.................................      14.8        372.6          124%
Total Assets...............................   1,245.0     10,323.2           70%	

Since our inception in 1984, we have developed substantial expertise in all aspects of the development, acquisition and operation of power generation facilities. We believe that the vertical integration of our extensive engineering, construction management, operations, fuel management, power marketing and financing capabilities provides us with a competitive advantage to successfully implement our acquisition and development program and has contributed to our significant growth over the past five years.
We are a corporation organized and existing under the laws of the State of Delaware. Our principal executive office is located at 50 West San Fernando Street, San Jose, California 95113. Our registered office is located at 9 East Loockerman Street, Dover, Delaware 19901, c/o National Registered Agents, Inc.
CONSOLIDATED RATIOS OF EARNINGS TO FIXED CHARGES

      YEAR ENDED DECEMBER 31,            SIX MONTHS
------------------------------------   ENDED JUNE 30,
1996   1997    1998    1999    2000         2001
----   -----   -----   -----   -----        ----
1.30x  1.68x   1.52x   1.83x   2.26x        1.51x	

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THE MARKET
The power industry represents the third largest industry in the United States, with an estimated end-user market of over $215 billion of electricity sales in 2000 produced by an aggregate base of power generation facilities with a capacity of approximately 860,000 megawatts. In response to increasing customer demand for access to low-cost electricity and enhanced services, new regulatory initiatives have been and are continuing to be adopted at both the state and federal level to increase competition in the domestic power generation industry. The power generation industry historically has been largely characterized by electric utility monopolies producing electricity from old, inefficient, high-cost generating facilities selling to a captive customer base. Industry trends and regulatory initiatives have transformed the existing market into a more competitive market where end-users purchase electricity from a variety of suppliers, including non-utility generators, power marketers, public utilities and others.
There is a significant need for additional power generating capacity throughout the United States, both to satisfy increasing demand, as well as to replace old and inefficient generating facilities. Due to environmental and economic considerations, we believe this new capacity will be provided predominantly by gas-fired facilities. We believe that these market trends will create substantial opportunities for efficient, low-cost power producers that can produce and sell energy to customers at competitive rates.
In addition, as a result of a variety of factors, including deregulation of the power generation market, utilities, independent power producers and industrial companies are disposing of power generation facilities. To date, numerous utilities have sold or announced their intentions to sell their power generation facilities and have focused their resources on the transmission and distribution business segments. Many independent producers operating a limited number of power plants are also seeking to dispose of their plants in response to competitive pressures, and industrial companies are selling their power plants to redeploy capital in their core businesses.
STRATEGY
Our strategy is to continue our rapid growth by capitalizing on the significant opportunities in the power market, primarily through our active development and acquisition programs. In pursuing this growth strategy, we utilize our management and technical knowledge to implement a fully integrated approach to the acquisition, development and operation of power generation facilities. This approach uses our expertise in design, engineering, procurement, finance, construction management, fuel and resource production, acquisition, operations and power marketing, which we believe provides us with a competitive advantage. The key elements of our strategy are as follows:
- Development of new and expansion of existing power plants. We are actively pursuing the development of new and expansion of our existing highly efficient, low-cost, gas-fired power plants to replace old and inefficient generating facilities and meet the demand for new generation.
- Acquisition of power plants. Our strategy is to acquire power generating facilities that meet our stringent criteria, provide significant potential for revenue, cash flow and earnings growth and provide the opportunity to enhance the operating efficiencies of the plants.
- Enhancement of existing power plants. We continually seek to maximize the power generation and revenue potential of our operating assets and minimize our operating and maintenance expenses and fuel costs.
5

RECENT DEVELOPMENTS
In addition to the recent developments described below, please see the recent developments described in Calpine's Annual Report on Form 10-K for the year ended December 31, 2000, Calpine's Quarterly Reports on Form 10-Q for the quarters ended March 31, 2001 and June 30, 2001, and Calpine's Current Reports on Form 8-K filed on April 10, 2001, April 19, 2001, April 30, 2001, June 26, 2001, July 9, 2001, July 13, 2001, July 17, 2001, July 27, 2001, September 5, 2001, September 10, 2001, October 9, 2001, and October 12, 2001, each of which is incorporated by reference in this prospectus.
On July 5, 2001, Calpine announced an agreement to acquire a 1,200-megawatt natural gas-fired power plant at Saltend near Hull, Yorkshire, England from Entergy Wholesale Operations for L562.5 million (U.S.$814.4 million at exchange rates at the closing of the acquisition). The Saltend facility, a cogeneration facility, provides electricity and steam for BP Chemical's Hull Works plant under a 15-year agreement. The balance of the Saltend facility's electricity output is sold into the deregulated UK power market. The Saltend transaction is Calpine's first acquisition of a power facility in Europe. The acquisition closed on August 24, 2001.
On July 10, 2001, Calpine announced an agreement to acquire approximately 85% of the voting stock of Michael Petroleum Corporation, a Houston, Texas-based natural gas exploration and development company, for approximately $273.6 million and the assumption of $54.5 million of debt. The acquisition includes 204 billion cubic feet equivalent of proven natural gas reserves currently producing 43 mmcfe per day and an inventory of drilling locations within a 94,000 acreage position in close proximity to our South Texas Magic Valley and Hidalgo Energy Centers. The acquisition closed on August 15, 2001.
On October 2, 2001, we announced four concurrent offerings of senior notes in the U.S. dollar, Canadian dollar, Sterling and Euro fixed income markets. The Canadian dollar offering will consist of C$250 million of Senior Notes Due 2007 to be issued by Calpine's wholly-owned subsidiary Calpine Canada Energy Finance ULC and guaranteed by Calpine. The Sterling and Euro offerings will consist of L275 million equivalent of senior notes to be issued by Calpine's wholly-owned subsidiary Calpine Canada Energy Finance II ULC and guaranteed by Calpine. These notes will be issued in two separate tranches denominated in sterling and euros. The U.S. dollar offerings will consist of $500 million of senior notes to be issued by Calpine Canada Energy Finance ULC and guaranteed by Calpine, and $287 million of senior notes issued by Calpine directly. Proceeds from the offerings will be used to refinance existing bridge loan financings incurred to fund recently completed transactions and for working capital and general corporate purposes. Calpine also expects to offer approximately $654.5 million of pass through certificates relating to certain sale/leaseback transactions concurrently with the senior note offerings. These pass through certificates will not be registered under the Securities Act and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements of the Securities Act. Proceeds from this offering will be used to refinance outstanding borrowings under Calpine's construction loan facilities and certain project-specific debt, and for working capital and general corporate purposes.
California Power Market. The deregulation of the California power market has produced significant unanticipated results in the past year and a half. The deregulation froze the rates that utilities can charge their retail and business customers in California, until recent rate increases approved by the California Public Utilities Commission ("CPUC"), and prohibited the utilities from buying power on a forward basis, while wholesale power prices were not subjected to limits.
6

In the past year and a half, a series of factors have reduced the supply of power to California, which has resulted in wholesale power prices that have been at times significantly higher than historical levels. Several factors contributed to this increase. These included:
- significantly increased volatility in prices and supplies of natural gas;
- an unusually dry fall and winter in the Pacific Northwest during 2000, which reduced the amount of available hydroelectric power from that region (typically, California imports a portion of its power from this source);
- the large number of power generating facilities in California nearing the end of their useful lives, resulting in increased downtime (either for repairs or because they have exhausted their air pollution credits and replacement credits have become too costly to acquire on the secondary market); and
- continued obstacles to new power plant construction in California, which deprived the market of new power sources that could have, in part, ameliorated the adverse effects of the foregoing factors.
As a result of this situation, two major California utilities that are subject to the retail rate freeze, including Pacific Gas & Electric Company ("PG&E"), have faced wholesale prices that far exceed the retail prices they are permitted to charge. This has led to significant under-recovery of costs by these utilities. As a consequence, these utilities have defaulted under a variety of contractual obligations, including payment obligations to power generators. PG&E has defaulted on payment obligations to Calpine under Calpine's long-term qualifying facility ("QF") contracts, which are subject to federal regulation under the Public Utility Regulatory Policies Act of 1978, as amended ("PURPA"). The PG&E QF contracts are in place at 11 of Calpine's facilities and represent nearly 600 megawatts of electricity for Northern California customers.
PG&E Bankruptcy Proceedings. On April 6, 2001, PG&E filed for bankruptcy protection under Chapter 11 of the United States Bankruptcy Code. As of April 6, 2001, Calpine had recorded approximately $266 million in accounts receivable with PG&E under its QF contracts, plus a $69 million note receivable not yet due and payable. Calpine is currently selling power to PG&E pursuant to its long-term QF contracts, and PG&E is paying on a current basis for these purchases. With respect to the receivables recorded under these contracts on July 6, 2001, Calpine announced that it had entered into a binding agreement with PG&E to modify all of Calpine's QF contracts with PG&E and that, based upon such modification, PG&E had agreed to assume all of the QF contracts. Under the terms of this agreement, Calpine will continue to receive its contractual capacity payments under the QF contracts, plus a five-year fixed energy component that averages 5.37 cents per kilowatt-hour. In addition, all past due receivables under the QF contracts will be elevated to administrative priority status in the PG&E bankruptcy proceeding and will be paid to Calpine, with interest, upon the effective date of a confirmed plan of reorganization. Administrative claims enjoy priority over payments made to the general unsecured creditors in bankruptcy. The bankruptcy court approved the agreement on July 12, 2001. On September 20, 2001, PG&E filed its proposed plan of reorganization with the bankruptcy court. This plan is consistent with the agreement between Calpine and PG&E described above. Calpine cannot predict when the bankruptcy court will confirm a plan of reorganization for PG&E.
CPUC Proceedings Regarding QF Contract Pricing. Calpine's QF contracts with PG&E provide that the CPUC has the authority to determine the appropriate utility "avoided cost" to be used to set energy payments for certain QF contracts, including those for all of Calpine's QF plants in California which sell power to PG&E. Section 390 of the California Public Utility Code provided QFs the option to elect to receive energy payments based on the California Power Exchange ("PX") market clearing price. In mid-2000, Calpine's QF facilities elected this option and were paid based upon the PX zonal day ahead clearing price ("PX Price") from summer
7

2000 until January 19, 2001, when the PX ceased operating a day ahead market. Since that time, the CPUC has ordered that the price to be paid for energy deliveries by QFs electing the PX Price shall be based on a natural gas cost-based "transition formula." The CPUC has conducted proceedings (R. 99-11-022) to determine whether the PX Price was the appropriate price for the energy component upon which to base payments to QFs which had elected the PX based pricing option. The CPUC has issued a proposed decision to the effect that the PX price was the appropriate price for energy payments under the California Public Utility Code. However, a final decision has not been issued to date. Therefore, it is possible that the CPUC could order a payment adjustment based on a different energy price determination. Calpine believes that the PX Price was the appropriate price for energy payments but there can be no assurance that this will be the outcome of the CPUC proceedings.
On March 28, 2001, the CPUC issued an order (Decision 01-03-067) (the "March 2001 Decision") proposing to change, on a prospective basis, the composition of the short run avoided cost ("SRAC") energy price formula, which is reset monthly, used by the California utilities in QF contracts. Prior to the March 2001 Decision, CPUC regulations calculated SRAC based on 50% Topock and 50% Malin border gas indices. In the March 2001 Decision, the CPUC changed this formulation to eliminate the prices at Topock from the SRAC formula. The March 2001 Decision is subject to challenges at the CPUC and the Federal Energy Regulatory Commission ("FERC").
On June 14, 2001, however, the CPUC issued an order (Decision 01-06-015) (the "June 2001 Decision") that authorized the California utilities, including PG&E, to amend QF contracts to elect a fixed energy price component that averages 5.37 cents per kilowatt-hour for a five-year term under those contracts in lieu of using the SRAC energy price formula. By this order, the CPUC authorized the QF contract energy price amendments without further CPUC concurrence. As part of the agreement Calpine entered into with PG&E pursuant to which PG&E agreed to assume its QF contracts with Calpine in bankruptcy, PG&E agreed with Calpine to amend these contracts to adopt the fixed price component that averages 5.37 cents pursuant to the June 2001 Decision. This election became effective as of July 16, 2001. As a result of the June 2001 Decision and Calpine's agreement with PG&E to amend the QF contracts to adopt the fixed price energy component, the energy price component in Calpine's QF contracts is now fixed for five years and Calpine is no longer subject to any uncertainty that may have existed with respect to this component of Calpine's QF contract pricing as a result of the March 2001 Decision. Further, the March 2001 Decision has no bearing on PG&E's agreement with Calpine to assume the QF contracts in bankruptcy or on the amount of the receivable that was so assumed.
California Long-Term Supply Contracts. California has adopted legislation permitting it to issue long-term revenue bonds to provide funding for wholesale purchases of power. The bonds will be repaid with the proceeds of payments by retail customers over time. The California Department of Water Resources ("DWR") sought bids for long-term power supply contracts in a publicly announced auction. Calpine successfully bid in that auction and signed several long-term power supply contracts with DWR.
On February 7, 2001, Calpine announced the signing of a 10-year, $4.6 billion fixed-price contract with DWR to provide electricity to the State of California. Calpine committed to sell up to 1,000 megawatts of electricity, with initial deliveries of 200 megawatts starting October 1, 2001, which increases to 1,000 megawatts by January 1, 2004. The electricity will be sold directly to DWR on a 24-hour, 7-day-a-week basis.
On February 28, 2001, Calpine announced the signing of two long-term power sales contracts with DWR. Under the terms of the first contract, a $5.2 billion, 10-year, fixed-price contract, Calpine committed to sell up to 1,000 megawatts of generation. Initial deliveries began July 1, 2001, with 200 megawatts and increase to 1,000 megawatts by as early as July 2002. Under the terms of the second contract, a 20-year contract totaling up to $3.1 billion, Calpine will
8

supply DWR with up to 495 megawatts of peaking generation, beginning with 90 megawatts as early as August 2001, and increasing up to 495 megawatts as early as August 2002.
FERC Investigation into California Wholesale Markets. In response to the increase in wholesale energy prices in the California markets, on June 28, 2000, the Board of Governors of the California Independent System Operator (the "ISO"), which controls the long-distance high-voltage power lines that deliver electricity throughout California and the adjoining states, reduced the price cap applicable to the ISO's wholesale energy and ancillary services markets from $750/ MWh to $500/MWh. The ISO subsequently reduced the price cap to $250/MWh effective August 7, 2000. During this period, however, the PX maintained a separate price cap set at a much higher level applicable to the "day-ahead" and "day-of" markets administered by the PX. On August 23, 2000, FERC denied a complaint filed August 2, 2000, by San Diego Gas & Electric Company ("SDG&E") that sought to extend the ISO's $250/MWh price cap to all California energy and ancillary service markets, not just the markets administered by the ISO. However, in its order denying the relief sought by SDG&E, FERC instructed its staff to initiate an investigation of the California power markets and to report its findings to FERC and held further hearing procedures in abeyance pending the outcome of this investigation. Under FERC regulations, QF contracts are exempt from regulation under the Federal Power Act, which is the legislation that provides the authority for FERC to investigate the California power markets and frame equitable relief with respect to the California wholesale markets. Therefore, any such relief will only apply to sales by Calpine in the short-term market. None of Calpine's receivables related to power produced under its long-term QF contracts with PG&E should be affected by any FERC findings pursuant to the proceedings described below. See "Government Regulation -- Federal Energy Regulation -- Federal Power Act Regulation" set forth in Calpine's Annual Report on Form 10-K for the year ended December 31, 2000, which is incorporated by reference in this prospectus.
On November 1, 2000, FERC released a Staff Report detailing the results of the staff investigation, together with an "Order Proposing Remedies for California Wholesale Markets" (the "November 1 Order"). In the November 1 Order, FERC found that the California power market structure and market rules were seriously flawed, and that these flaws, together with short supply relative to demand, resulted in unusually high energy prices. The November 1 Order proposed specific remedies to the identified market flaws, including (a) imposition of a so-called "soft" price cap at $150/MWh to be applied to both the PX and ISO markets, which would allow bids above $150/MWh to be accepted, but would subject such bids to certain reporting obligations requiring sellers to provide cost data and/or identify applicable opportunity costs and specifying that such bids may not set the overall market clearing price; (b) elimination of the requirement that the California utilities sell into and buy from the PX; (c) establishment of independent non-stakeholder governing boards for the ISO and the PX; and (d) establishment of penalty charges for scheduling deviations outside of a prescribed range. In the November 1 Order, FERC established October 2, 2000, the date 60 days after the filing of the SDG&E complaint, as the "refund effective date." Under the November 1 Order, rates charged for service after that date through December 31, 2002, will remain subject to refund if determined by FERC not to be just and reasonable. While FERC concluded that the Federal Power Act and prior court decisions interpreting that act strongly suggested that refunds would not be permissible for charges in the period prior to October 2, 2000, it noted that it was willing to explore proposals for equitable relief with respect to charges made in that period.
On December 15, 2000, FERC issued a subsequent order that affirmed in large measure the November 1 Order (the "December 15 Order"). Various parties have filed requests for administrative rehearing and for judicial review of aspects of FERC's December 15 Order. The outcome of these proceedings, and the extent to which FERC or a reviewing court may revise aspects of the December 15 Order or the extent to which these proceedings may result in a
9

refund of or reduction in the amounts charged by the Company's subsidiaries for power sold in the ISO and PX markets, cannot be determined at this time.
On June 19, 2001, FERC ordered price mitigation in 11 states in the western United States in an attempt to reduce the dependence of the California market on the spot markets in favor of longer-term committed energy supplies. The order provides for price mitigation in the spot market throughout the 11-state western region during "reserve deficiency hours," which is when operating reserves in California fall below 7%. This price will be a single market clearing price based upon the marginal operating cost of the last unit dispatched by the California ISO. In addition, FERC implemented price mitigation in non-reserve deficiency hours, which will be set at 85% of the market clearing price during the last reserve deficiency period. These price mitigation procedures went into effect on June 20, 2001 and will remain in effect until September 30, 2002.
The retention by FERC of a market-based, rather than a cost-of-service -based, rate structure, will enable us to continue to realize benefits from our efficient, modern power plants. We believe that Calpine's marginal costs will continue to be below any price cap imposed by FERC, whether during reserve deficiency hours or at other times. Therefore, we believe that FERC's mitigation plan will not have a material adverse effect on Calpine's financial condition or results of operations.
FERC also ordered all sellers and buyers in wholesale power markets administered by the ISO, as well as representatives of the State of California, to participate in a settlement conference before a FERC administrative judge. The settlement discussions were intended to resolve all issues that remain outstanding to resolve past accounts, including sellers' claims for unpaid invoices, and buyers' claims for refunds of alleged overcharges, for past periods. The settlement discussions began on June 25, 2001 and ended on July 9, 2001. The Chief Administrative Law Judge issued his report and recommendation to FERC on July 12, 2001. On July 25, 2001, FERC ordered an expedited fact-finding hearing to calculate refunds for spot market transactions in California. The hearing has been delayed pending the submission by the ISO and the PX of data for the purpose of developing the factual basis needed to implement the refund methodology and order refunds. The FERC Administrative Law Judge presiding over this hearing recently announced that this information must be submitted not later than December 7, 2001, and the deadline for completion of the hearing is March 8, 2002. While it is not possible to predict the amount of any refunds until the hearings take place, based upon the information available at this time, we do not believe that this proceeding will result in a material adverse effect on Calpine's financial condition or results of operations.
PRINCIPAL EXECUTIVE OFFICES
Our principal executive offices are located at 50 West San Fernando Street, San Jose, California 95113. Our telephone number is (408) 995-5115, and our home page on the world wide web is at http://www.calpine.com. The contents of our website are not part of this prospectus.
10

THE OFFERING
The Debentures being registered were originally issued and sold to Goldman, Sachs & Co. (the "Initial Purchaser"). The Initial Purchaser simultaneously sold the Debentures in transactions exempt from the registration requirements of the Securities Act to persons reasonably believed by them to be qualified institutional buyers as defined in Rule 144A under the Securities Act.

SECURITIES REGISTERED...........   $1,000,000,000 aggregate initial principal
                                   amount of Zero-Coupon Convertible Debentures
                                   Due April 30, 2021 (the "Debentures") and
                                   13,271,400 shares of common stock (subject to
                                   adjustments described in this prospectus).

ISSUE PRICE.....................   Each Debenture was issued at $1,000 per
                                   Debenture.

MATURITY........................   April 30, 2021.

RANKING.........................   The Debentures are senior unsecured
                                   obligations of Calpine and rank equally with
                                   all of our existing and future senior
                                   unsecured indebtedness.

INTEREST ADJUSTMENT.............   An upward interest adjustment to the yield at
                                   maturity on the Debentures equivalent to
                                   7.25% per annum (an "Upward Interest
                                   Adjustment") will be made on April 30, 2004,
                                   2006, 2008, 2011 or 2016 (each an "Upward
                                   Interest Adjustment Date") if the Trading
                                   Price (as defined below) of the Debentures is
                                   less than 98% of the Accreted Value as of
                                   such Upward Interest Adjustment Date for 20
                                   out of the last 30 NYSE trading days ending
                                   90 days prior to such Upward Interest
                                   Adjustment Date. If an Upward Interest
                                   Adjustment is in effect for a particular
                                   semi-annual period, we will pay a portion of
                                   the Upward Interest Adjustment as cash
                                   interest at a rate of 0.25% per annum (0.125%
                                   per semi-annual period) of the Accreted Value
                                   as of the beginning of the applicable
                                   semi-annual period and the remaining interest
                                   (7.0% per annum) will be accrued and payable
                                   at the earlier of maturity or the redemption
                                   or repurchase of the Debentures.

                                   If an Upward Interest Adjustment is in effect
                                   during a semi-annual period (other than a
                                   semi-annual period immediately preceding an
                                   Upward Interest Adjustment Date) and the
                                   Trading Price of the Debentures is greater
                                   than or equal to 98% of the Accreted Value as
                                   of the next following interest payment date
                                   for 20 out of the last 30 NYSE trading days
                                   ending on such interest payment date, the
                                   Upward Interest Adjustment will be adjusted
                                   downward on such interest payment date (such
                                   adjustment, a "Downward Interest
                                   Adjustment"), such that, from and including
                                   such date, the Debentures will cease to
                                   accrue interest unless and until there is a
                                   subsequent Upward Interest Adjustment. If an
                                   Upward Interest Adjustment is in effect
                                   during a semi-annual period immediately
                                   preceding an Upward Interest Adjust-

                                        11	

                                   ment Date, a Downward Interest Adjustment
                                   will be made on the next Upward Interest
                                   Adjustment Date if the Trading Price of the
                                   Debentures is greater than or equal to 98% of
                                   the Accreted Value as of such Upward Interest
                                   Adjustment Date for 20 out of the last 30
                                   NYSE trading days ending 90 days prior to
                                   such Upward Interest Adjustment Date. If a
                                   Downward Interest Adjustment is made in
                                   accordance with the preceding sentence, no
                                   Upward Interest Adjustment may be made until
                                   the next Upward Interest Adjustment Date.
                                   Upward Interest Adjustment Dates may occur on
                                   April 30, 2004, 2006, 2008, 2011 or 2016.

CASH INTEREST PAYMENT...........   We will not pay cash interest on the
                                   Debentures unless an Upward Interest
                                   Adjustment is in effect or we elect to do so
                                   following a Tax Event (as defined below),
                                   each as described below. If an Upward
                                   Interest Adjustment is in effect for a
                                   particular semi-annual period, we will pay a
                                   portion of the Upward Interest Adjustment as
                                   cash interest at a rate of 0.25% per annum
                                   (0.125% per semi-annual period), of the
                                   Accreted Value as of the beginning of the
                                   applicable semi-annual period. If we elect to
                                   pay cash interest upon the occurrence of a
                                   Tax Event, the amount of cash interest
                                   payable for each semi-annual period will be
                                   determined based on the Restated Principal
                                   Amount (as defined below). Cash interest, if
                                   any, will be paid semi-annually in arrears on
                                   each April 30 and October 30 to the holders
                                   of record of the Debentures as of the
                                   preceding April 15 and October 15,
                                   respectively.

CONVERSION RIGHTS...............   For each Debenture surrendered for
                                   conversion, a holder will receive 13.2714
                                   shares of our common stock. This represents
                                   an initial conversion price of $75.35 per
                                   share of common stock. The conversion ratio
                                   and the equivalent conversion price may be
                                   adjusted for certain reasons, but will not be
                                   adjusted for accrued interest. Upon
                                   conversion, holders will not receive any cash
                                   payment representing accrued interest.
                                   Instead, accrued interest will be deemed paid
                                   in full by the common stock received by
                                   holders on conversion.

                                   Holders may surrender Debentures for
                                   conversion into common stock at any time
                                   prior to 5:00 p.m., New York City time, on
                                   April 29, 2021. Debentures called for
                                   redemption may be surrendered for conversion
                                   until the close of business in New York City
                                   on the business day immediately preceding the
                                   redemption date.

REDEMPTION OF THE DEBENTURES AT
OUR OPTION......................   On or after April 30, 2004, we may redeem for
                                   cash all or part of the Debentures at any
                                   time, upon not less than 30 nor more than 60
                                   days notice by mail to holders of Debentures,
                                   for a cash price equal to the issue price
                                   plus any accrued and unpaid interest to the
                                   redemption date or, if we elected to pay cash
                                   interest on the

                                        12	

                                   Debentures following a Tax Event, the
                                   Restated Principal Amount, plus any accrued
                                   and unpaid cash interest through the
                                   redemption date.

PURCHASE OF DEBENTURES AT YOUR
  OPTION........................   You have the right to require us to
                                   repurchase the Debentures on April 30, 2002,
                                   2004, 2006, 2008, 2011 and 2016. In each
                                   case, the repurchase price payable will be
                                   equal to the issue price plus any accrued and
                                   unpaid interest to the repurchase date, or,
                                   if we elected to pay cash interest on the
                                   Debentures following a Tax Event, the
                                   Restated Principal Amount, plus any accrued
                                   and unpaid cash interest through the
                                   repurchase date. We may choose to pay the
                                   repurchase price in cash or shares of our
                                   common stock, or a combination of cash and
                                   shares of our common stock, except on April
                                   30, 2016 when we may only pay the repurchase
                                   price in cash.

TAX EVENT.......................   We have the option, under limited
                                   circumstances, to elect to pay cash interest
                                   at a rate of 7.25% per annum on the
                                   Debentures from and after the date a Tax
                                   Event occurs instead of accruing interest
                                   pursuant to an Upward Interest Adjustment.
                                   Such cash interest would only be payable
                                   during periods in which an Upward Interest
                                   Adjustment is in effect. If we make such an
                                   election, the principal amount on which we
                                   pay interest will be restated (the "Restated
                                   Principal Amount") and will be equal to the
                                   issue price plus accrued and unpaid interest
                                   payable pursuant to an Upward Interest
                                   Adjustment to the date on which we exercise
                                   our option to commence paying cash interest.
                                   See "Description of Debentures -- Tax Event."

CHANGE IN CONTROL...............   If we undergo a change in control, you will
                                   have the option to require us to repurchase
                                   all of your Debentures not previously called
                                   for redemption or any portion thereof for
                                   cash or, at our option, registered shares of
                                   our common stock (which are valued at 95% of
                                   the average closing prices of our common
                                   stock for the five NYSE trading days
                                   immediately preceding and including the third
                                   NYSE trading day prior to the repurchase
                                   date). We will pay a repurchase price equal
                                   to the issue price plus any accrued and
                                   unpaid interest to the repurchase date, or,
                                   if we elected to pay cash interest on the
                                   Debentures following a Tax Event, the
                                   Restated Principal Amount, plus any accrued
                                   and unpaid cash interest through the
                                   repurchase date. See "Description of
                                   Debentures -- Change in Control."

EVENTS OF DEFAULT...............   If there is an event of default on the
                                   Debentures, an amount equal to the issue
                                   price plus any accrued and unpaid interest
                                   may be declared immediately due and payable.
                                   These amounts automatically become due and
                                   payable in some circumstances.

                                        13	

                                   The following are events of default with
                                   respect to the Debentures:

                                   - our failure for 30 days to pay when due any
                                     interest on the Debentures (after any
                                     Upward Interest Adjustment or after our
                                     election to pay cash interest on the
                                     Debentures following a Tax Event);

                                   - our failure to pay principal of the
                                     Debentures (or, if we have elected to pay
                                     cash interest on the Debentures following a
                                     Tax Event, the Restated Principal Amount)
                                     and accrued interest (including any
                                     interest payable pursuant to an Upward
                                     Interest Adjustment) at maturity, upon
                                     redemption, repurchase or following a
                                     change in control, when the same becomes
                                     due and payable;

                                   - our material failure to comply with any of
                                     our covenants or agreements in the
                                     Debentures or the Indenture (as defined in
                                     this prospectus) for 30 days after written
                                     notice is given by the Trustee (as defined
                                     below) or by the holders of at least 25% in
                                     principal amount of all outstanding
                                     Debentures;

                                   - our default under any of our other
                                     instruments of indebtedness with an
                                     outstanding principal amount of $50,000,000
                                     or more, individually or in the aggregate,
                                     which has caused the holders of such
                                     indebtedness to declare such indebtedness
                                     due and payable prior to its stated
                                     maturity;

                                   - our failure to pay when due any portion of
                                     principal under any of our other
                                     instruments of indebtedness, which default
                                     is individually or in an aggregate
                                     principal amount exceeding $50,000,000 and
                                     continues unremedied or unwaived for more
                                     than 30 days; and

                                   - certain events involving the bankruptcy,
                                     insolvency or reorganization of Calpine.

REGISTRATION RIGHTS.............   Pursuant to a registration rights agreement
                                   entered into in connection with the initial
                                   offering of the Debentures to the Initial
                                   Purchaser, we have agreed to use our best
                                   efforts to keep the registration statement,
                                   of which this prospectus is a part,
                                   continuously effective and useable (subject
                                   to certain exceptions) until the earliest of
                                   (1) two years, (2) the expiration of the
                                   period referred to in Rule 144(k) of the
                                   Exchange Act (or any successor provision
                                   thereto) with respect to the Debentures and
                                   common stock issuable upon conversion of the
                                   Debentures that are covered by the
                                   registration statement or (3) the sale of all
                                   of the Debentures and common stock issuable
                                   upon conversion of the Debentures that are
                                   covered by the registration statement.

                                   Additional interest will accrue on the
                                   Debentures if we are not in compliance with
                                   these requirements. See

                                        14	

                                   "Registration Rights" for a further
                                   discussion of our obligations to maintain the
                                   effectiveness of the registration statement
                                   of which this prospectus is a part.

TAX.............................   Each holder agreed in the Indenture, for U.S.
                                   federal income tax purposes, to treat the
                                   Debentures as "contingent payment debt
                                   instruments" and to be bound by our
                                   application of the Treasury regulations that
                                   govern contingent payment debt instruments,
                                   including our determination that the rate at
                                   which interest will be deemed to accrue for
                                   federal income tax purposes will be 9.44% per
                                   annum, which is the rate comparable to the
                                   rate at which we would borrow on a
                                   noncontingent, nonconvertible borrowing.
                                   Based on the agreement (i) each holder will
                                   be required to accrue interest on a constant
                                   yield to maturity basis at that rate, with
                                   the result that a holder will recognize
                                   taxable income significantly in excess of
                                   cash received while the Debentures are
                                   outstanding, and (ii) a holder will recognize
                                   ordinary income upon a conversion of a
                                   Debenture into our stock equal to the excess,
                                   if any, between the value of the stock
                                   received on the conversion and the sum of the
                                   original purchase price of the Holder's
                                   Debenture and accrued but unpaid interest.
                                   Non-U.S. Holders should be aware that special
                                   tax consequences may apply to them due to the
                                   fact that we believe we are likely to be a
                                   "United States real property holding
                                   corporation." See discussion below under
                                   "Certain United States Federal Income Tax
                                   Consequences -- Non-U.S. Holders" and
                                   "-- Foreign Investment in Real Property Tax
                                   Act."

                                   The proper application of the regulations
                                   that govern contingent payment debt
                                   instruments to a holder of a Debenture is
                                   uncertain in a number of respects, and if our
                                   treatment were successfully challenged by the
                                   Internal Revenue Service, it might be
                                   determined that, among other differences, a
                                   holder should have accrued interest income at
                                   a lower rate, should not have recognized
                                   income or gain upon the conversion, and
                                   should not have recognized ordinary income
                                   upon a taxable disposition of its Debenture.
                                   In addition, if the Internal Revenue Service
                                   successfully asserts that the Debentures are
                                   not debt, Non-U.S. Holders would generally be
                                   subject to a 30% United States federal
                                   withholding tax on payments of contingent
                                   interest made in respect of the Debentures.	

See "Certain United States Federal Income Tax Consequences."
HOLDERS SHOULD CONSULT THEIR TAX ADVISORS
REGARDING THE FEDERAL, STATE, LOCAL AND
FOREIGN TAX CONSEQUENCES OF AN INVESTMENT IN
DEBENTURES AND WHETHER AN INVESTMENT IN THE
DEBENTURES IS ADVISABLE IN LIGHT OF THE
15

AGREED UPON TAX TREATMENT AND THE HOLDER'S
PARTICULAR TAX SITUATION.

USE OF PROCEEDS.................   The net proceeds of this offering will be
                                   used to extinguish certain project finance
                                   debt and for working capital and general
                                   corporate purposes.

BOOK-ENTRY FORM.................   The Debentures have been issued in book-entry
                                   form and are represented by permanent global
                                   certificates deposited with, or on behalf of,
                                   DTC and registered in the name of a nominee
                                   of DTC. Beneficial interests in any of the
                                   securities will be shown on, and transfers
                                   will be effected only through, records
                                   maintained by DTC or its nominee and any such
                                   interest may not be exchanged for
                                   certificated securities, except in limited
                                   circumstances. See "Description of
                                   Debentures -- Book-Entry System."

ABSENCE OF MARKET FOR THE
  DEBENTURES....................   The Debentures were initially sold in
                                   transactions exempt from the registration
                                   requirements of the Securities Act. As a
                                   result of the effectiveness of the
                                   registration statement of which this
                                   prospectus is a part, the Debentures are no
                                   longer restricted securities under the
                                   Securities Act. However, there is currently
                                   no market for the Debentures. Although the
                                   Initial Purchaser informed us at the time of
                                   the initial offering and sale of the
                                   Debentures that it planned to make a market
                                   in the Debentures, the Initial Purchaser is
                                   not obligated to do so, and they may
                                   discontinue any such market making at any
                                   time without notice. Accordingly, we cannot
                                   assure you as to the development or liquidity
                                   of any market for the Debentures.

TRADING.........................   Our common stock is listed on The New York
                                   Stock Exchange under the symbol "CPN." The
                                   common stock issuable upon conversion of the
                                   Debentures has been listed on The New York
                                   Stock Exchange.	

16

RISK FACTORS
Investing in these Debentures involves risk. Please see the risk factors described in our Annual Report on Form 10-K for the year ended December 31, 2000, our Quarterly Reports on Form 10-Q for the quarters ended March 31, 2001 and June 30, 2001 and our Current Report on Form 8-K, filed on September 10, 2001, each of which is incorporated by reference in this prospectus. Before making an investment decision, you should carefully consider these risks as well as other information contained or incorporated by reference in this prospectus. The risks and uncertainties described are not the only ones facing us. Additional risks and uncertainties not presently known to us or that we currently deem immaterial may also impair our business operations.
RISKS RELATING TO CALPINE
Please see the risk factors described in Calpine's Annual Report on Form 10-K for the year ended December 31, 2000 for a description of the risks relating to Calpine.
RISKS RELATING TO THE DEBENTURES
WE MAY BE UNABLE TO REPAY THE DEBENTURES WHEN DUE OR REPURCHASE THE DEBENTURES WHEN WE ARE REQUIRED TO DO SO.
At final maturity, the entire outstanding principal amount of the Debentures will become due and payable, plus accrued and unpaid interest, if any. At any accelerated maturity prior to final maturity, the issue price plus any accrued and unpaid interest, if any, will become due and payable. A holder may also require us to repurchase all or a portion of that holder's Debentures at certain times during the term of the Debentures including if a Change of Control (as defined in this prospectus) occurs. At maturity or at any time when a holder may require us to repurchase Debentures, we may not have sufficient funds or may be unable to arrange for additional financing to pay the amount due.
Our borrowing arrangements or agreements relating to indebtedness to which we may become a party may limit our ability to repay or repurchase the Debentures with cash. Our failure to repay or repurchase any tendered Debentures or Debentures due upon maturity would constitute an event of default under the Indenture. Any such default, in turn, may cause a default under the terms of our other indebtedness.
BECAUSE THERE IS NO PUBLIC MARKET FOR THE DEBENTURES, YOU MAY NOT BE ABLE TO RESELL THE DEBENTURES EASILY OR AT A FAVORABLE PRICE.
There is no public market for the Debentures and we are not certain of:
- the liquidity of any market that may develop;
- the ability of the holders to sell their Debentures; or
- the price at which holders would be able to sell their Debentures.
If such a market were to develop, the Debentures could trade at prices that may be higher or lower than the issue price to the public plus any accrued interest, depending on many factors, including prevailing interest rates, the market for similar debentures and our financial performance.
The Initial Purchaser advised us at the time of the initial offering and sale of the Debentures that it planned to make a market in the Debentures. The Initial Purchaser is not obligated, however, to make a market in the Debentures, and the Initial Purchaser may discontinue any such market-making activity at any time at its sole discretion. In addition, such market-making activity will be subject to the limits imposed by the Securities Act of 1933 and the Securities Exchange Act of 1934. Accordingly, no assurance can be given as to the development or liquidity of any market for the Debentures.
17

WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and other information with the SEC. You may obtain any document we file with the SEC at the SEC's public reference rooms in Washington, D.C., Chicago, Illinois and New York, New York. You may obtain information on the operation of the SEC's public reference facilities by calling the SEC at 1-800-SEC-0330. You can request copies of these documents, upon payment of a duplicating fee, by writing to the SEC at its principal office at 450 Fifth Street, N.W., Washington, D.C. 20549- 1004. Our SEC filings are also accessible through the Internet at the SEC's website at http://www.sec.gov.
The SEC permits us to "incorporate by reference" into this prospectus the information in documents we file with it, which means that we can disclose important information to you by referring you to those documents. The information incorporated by reference is considered to be a part of this prospectus, and later information that we file with the SEC will update and supersede this information. We incorporate by reference the documents listed below and any future filings made with the SEC under Section 13(a), 13(c), 14, or 15(d) of the Securities Exchange Act of 1934, as amended, until the offering is completed:
- Calpine's Annual Report on Form 10-K for the year ended December 31, 2000;
- Calpine's Quarterly Reports on Form 10-Q for the quarters ended March 31, 2001 and June 30, 2001;
- Calpine's Current Reports on Form 8-K filed on February 9, 2001, April 10, 2001, April 19, 2001, April 30, 2001, June 26, 2001, July 9, 2001, July 13, 2001, July 17, 2001, July 27, 2001, September 5, 2001, September 10, 2001, September 28, 2001, October 9, 2001 and October 12, 2001;
- the description of Calpine's common stock contained in Calpine's Registration Statement on Form 8-A (File No. 001-12079), filed with the SEC on August 20, 1996, pursuant to Section 12 of the Securities Exchange Act of 1934; and
- the description of Calpine's rights relating to its common stock contained in Calpine's Registration Statement on Form 8-A (File No. 001-12079), filed with the SEC on June 17, 1997 pursuant to Section 12 of the Securities Exchange Act of 1934 and the amendments thereto filed on June 18, 1997, June 24, 1997 and September 28, 2001.
If you request a copy of any or all of the documents incorporated by reference, then we will send to you the copies you requested at no charge. However, we will not send exhibits to such documents, unless such exhibits are specifically incorporated by reference in such documents. You should direct requests for such copies to: Calpine Corporation, 50 West San Fernando Street, San Jose, California 95113, attention: Lisa M. Bodensteiner, Assistant Secretary, telephone: (408) 995-5115.
We have filed with the SEC a registration statement on Form S-3 under the Securities Act, covering the securities described in this prospectus. This prospectus does not contain all of the information included in the registration statement. Any statement made in this prospectus concerning the contents of any contract, agreement or other document is only a summary of the actual contract, agreement or other document. If we have filed any contract, agreement or other document as an exhibit to the registration statement, you should read the exhibit for a more complete understanding of the document or matter involved. Each statement regarding a contract, agreement or other document is qualified in its entirety by reference to the actual document.
18

FORWARD-LOOKING STATEMENTS
Some of the statements contained in this prospectus and incorporated by reference into this prospectus are forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Securities Exchange Act and are subject to the safe harbor created by the Private Securities Litigation Reform Act of 1995. These statements include declarations regarding our or our management's intents, beliefs or current expectations. In some cases, you can identify forward-looking statements by terminology such as "may," "will," "should," "expects," "plans," "anticipates," "believes," "estimates," "predicts," "potential," or "continue" or the negative of such terms or other comparable terminology. Any forward-looking statements are not guarantees of future performance and actual results could differ materially from those indicated by the forward-looking statements. Forward-looking statements involve known and unknown risks, uncertainties, and other factors that may cause our or our industry's actual results, levels of activity, performance, or achievements to be materially different from any future results, levels of activity, performance, or achievements expressed or implied by such forward-looking statements.
Among the important factors that could cause actual results to differ materially from those indicated by such forward-looking statements are the following:
- changes in government regulations, including pending changes in California and anticipated deregulation of the electric energy industry;
- commercial operations of new plants that may be delayed or prevented because of various development and construction risks, such as a failure to obtain financing and the necessary permits to operate or the failure of third-party contractors to perform their contractual obligations;
- cost estimates are preliminary and actual costs may be higher than estimated;
- the risks associated with the assurance that Calpine will develop additional plants;
- a competitor's development of a lower-cost generating gas-fired power plants;
- the risks associated with marketing and selling power from power plants in the newly competitive energy market;
- the risks associated with marketing and selling combustion turbine parts and components in the competitive combustion turbine parts market;
- the risks associated with engineering, designing and manufacturing combustion turbine parts and components;
- delivery and performance risks associated with combustion turbine parts and components attributable to production, quality control, suppliers and transportation;
- the successful exploitation of an oil or gas resource that ultimately depends upon the geology of the resource, the total amount and costs to develop recoverable reserves and operations factors relating to the extraction of natural gas;
- the uncertainty of the California power market. We are working closely with a number of parties to resolve the current uncertainty. This is an ongoing process and, therefore, the outcome cannot be predicted. It is possible that any such outcome will include changes in government regulations, business and contractual relationships or other factors that could materially affect us; however, we believe that a final resolution will not have a material adverse impact on us;
- the direct and indirect effects of the terrorist incidents that occurred on September 11, 2001, and subsequent developments related to those attacks; and
19

- other risks identified from time to time in our reports and registration statements filed with the SEC, including the risk factors identified in "Risk Factors" and in our Annual Report on Form 10-K for the year ended December 31, 2000 and Quarterly Reports on Form 10-Q for the quarters ended March 31, 2001 and June 30, 2001 and our Current Report on Form 8-K, filed on September 10, 2001, each of which is incorporated by reference in this prospectus.
Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Moreover, neither we nor any other person assumes responsibility for the accuracy and completeness of such statements. We are under no duty to update any of the forward-looking statements after the date of this prospectus to conform such statements to actual results.
CONSOLIDATED RATIO OF EARNINGS TO FIXED CHARGES

                                          SIX MONTHS
       YEAR ENDED DECEMBER 31,          ENDED JUNE 30,
-------------------------------------   --------------
1996    1997    1998    1999    2000         2001
-----   -----   -----   -----   -----        ----
1.30x   1.68x   1.52x   1.83x   2.26x       1.51x	

For purposes of computing our consolidated ratio of earnings to fixed charges, earnings consist of pretax income before adjustment for minority interests in our consolidated subsidiaries or income or loss from equity investees, plus fixed charges, amortization of capitalized interest, and distributed income of equity investees, reduced by interest capitalized and the minority interest in pretax income of subsidiaries that have not incurred fixed charges. Fixed charges consist of interest expensed and capitalized (including amortized premiums, discounts and capitalized expenses related to indebtedness), an estimate of the interest within rental expense and the distributions on the company-obligated mandatorily redeemable convertible preferred securities of subsidiary trusts.
USE OF PROCEEDS
The selling holders will receive all of the net proceeds of the resale of the Debentures, and the common stock issuable upon conversion of the Debentures. We will not receive any of the proceeds from the resale of any of those securities.
20

SELLING HOLDERS
The Debentures were originally issued and sold to the Initial Purchaser. The Initial Purchaser immediately sold the Debentures in transactions exempt from the registration requirements of the Securities Act to persons reasonably believed by them to be qualified institutional buyers as defined in Rule 144A under the Securities Act.
The selling holders may from time to time offer and sell pursuant to this prospectus any or all of the Debentures and the common stock issuable upon conversion of the Debentures. Any selling holder may also elect not to sell any Debentures or common stock issuable upon conversion of the Debentures held by it. The term "selling holder" means the holders referred to below and the beneficial owners of the Debentures and their transferees, pledgees, donees or other successors. Only those Debentures and shares of common stock issuable upon conversion of the Debentures listed below may be offered for resale by the selling holders pursuant to this prospectus.
The selling holders may offer and sell any or all of the Debentures and the common stock issuable upon conversion of the Debentures listed below by using this prospectus. Because the selling holders may offer all or only some portion of the Debentures or the common stock issuable upon conversion of the Debentures listed in the table, no estimate can be given as to the amount of those securities that will be held by the selling holders upon termination of any such sales. In addition, the selling holders identified in the table below may have sold, transferred or disposed of all or a portion of their Debentures or shares of common stock issuable upon conversion of the Debentures since the date on which they provided the information regarding their ownership of those securities included in this prospectus.
The following table sets forth recent information with respect to the selling holders of the Debentures and the respective number of Debentures beneficially owned by each selling holder that may be offered for such selling holder's account pursuant to this prospectus. We prepared the table based on information supplied to us by the selling holders.

                                                                                         AGGREGATE PRINCIPAL
                                            AGGREGATE PRINCIPAL    AGGREGATE PRINCIPAL        AMOUNT OF
                                                 AMOUNT OF              AMOUNT OF            DEBENTURES
                                             DEBENTURES OWNED       DEBENTURES BEING     BENEFICIALLY OWNED
SELLING HOLDERS                            PRIOR TO THE OFFERING         OFFERED         AFTER THE OFFERING
---------------                            ---------------------   -------------------   -------------------
Absolute Return Fund, Ltd. ..............         2,005,000              2,005,000                     0
Aftra Health Fund........................            70,000                 70,000                     0
AIG SoundShore Holdings Ltd. ............         4,040,000              4,040,000                     0
AIG SoundShore Strategic Holding Fund
  Ltd. ..................................         1,000,000              1,000,000                     0
Allstate Insurance Company...............         3,225,000              3,225,000                     0
Allstate Life Insurance Company..........           875,000                875,000                     0
Aloha Airlines Non-Pilots Pension
  Trust..................................            95,000                 95,000                     0
Aloha Pilots Retirement Trust............            55,000                 55,000                     0
Arbitex Master Fund L.P..................        16,500,000             16,500,000                     0
Argent Convertible Arbitrage Fund Ltd....         7,500,000              7,500,000                     0
Banc of America Securities LLC...........         6,000,000              6,000,000                     0
BankAmerica Pension Plan.................         3,000,000              3,000,000                     0
Black Diamond Offshore Ltd. .............         2,971,000              2,971,000                     0
Canyon Capital Arbitrage Master Hedge
  Fund, Ltd. ............................         6,000,000              6,000,000                     0	

21

                                                                                         AGGREGATE PRINCIPAL
                                            AGGREGATE PRINCIPAL    AGGREGATE PRINCIPAL        AMOUNT OF
                                                 AMOUNT OF              AMOUNT OF            DEBENTURES
                                             DEBENTURES OWNED       DEBENTURES BEING     BENEFICIALLY OWNED
SELLING HOLDERS                            PRIOR TO THE OFFERING         OFFERED         AFTER THE OFFERING
---------------                            ---------------------   -------------------   -------------------
Canyon Mac 18 Ltd. (RMF).................         4,000,000              4,000,000                     0
Canyon Value Realization Fund, L.P. .....        10,000,000             10,000,000                     0
Canyon Value Realization Fund (Cayman),
  Ltd. ..................................        18,000,000             18,000,000                     0
CF FX, LLC...............................         4,500,000              4,500,000                     0
C&H Sugar Company Inc. ..................           140,000                140,000                     0
Circlet (IMA) Limited....................         2,000,000              2,000,000                     0
Credit Lyonnais Securities (USA) Inc.....         5,000,000              5,000,000                     0
Credit Suisse Asset Management...........           850,000                850,000                     0
Deeprock & Co. ..........................         3,000,000              3,000,000                     0
Delta Air Lines -- High Income...........           330,000                330,000                     0
Deutsche Banc Alex Brown.................        38,500,000             38,500,000                     0
Double Black Diamond Offshore LDC........        13,776,000             13,776,000                     0
Drury University.........................            40,000                 40,000                     0
Duckbill & Co. ..........................         2,000,000              2,000,000                     0
Enron North America Corp. ...............        15,000,000             15,000,000                     0
GM Employees Global Grp Pen Tr (Abs
  Return Portfolio)......................         2,000,000              2,000,000                     0
General Motors Welfare Benefit Trust
  (VEBA).................................         3,000,000              3,000,000                     0
Goldman Sachs and Company................        32,865,000             32,865,000                     0
Granville Capital Corporation............        14,000,000             14,000,000                     0
Hawaiian Airlines Employees Pension
  Plan -- IAM............................            45,000                 45,000                     0
Hawaiian Airlines Pension Plan for
  Salaried Employees.....................            10,000                 10,000                     0
Hawaiian Airlines Pilots Retirement
  Plan...................................            90,000                 90,000                     0
Hawaiian Airlines Pilots Retirement
  Trust..................................            90,000                 90,000                     0
HSBC Tree Zola Managed Trust.............         1,200,000              1,200,000                     0
JMG Convertible Investments, LP..........        72,125,000             72,125,000                     0
JMG Triton Offshore Fund, Ltd............        32,500,000             32,500,000                     0
JP Morgan Securities Inc. ...............       101,420,000            101,420,000                     0
KBC Financial Products USA Inc. .........        12,000,000             12,000,000                     0
Kentfield Trading, Ltd. .................         9,300,000              9,300,000                     0
LDG Limited..............................           750,000                750,000                     0
Lexington (IMA) Limited..................         1,406,000              1,406,000                     0
Lexington Vantage Fund Ltd...............           250,000                250,000                     0
Lincoln National Global Asset Allocation
  Fund, Inc. ............................           130,000                130,000                     0
Lyxor Master Fund........................         4,500,000              4,500,000                     0	

22

                                                                                         AGGREGATE PRINCIPAL
                                            AGGREGATE PRINCIPAL    AGGREGATE PRINCIPAL        AMOUNT OF
                                                 AMOUNT OF              AMOUNT OF            DEBENTURES
                                             DEBENTURES OWNED       DEBENTURES BEING     BENEFICIALLY OWNED
SELLING HOLDERS                            PRIOR TO THE OFFERING         OFFERED         AFTER THE OFFERING
---------------                            ---------------------   -------------------   -------------------
Lyxor Master Fund........................           800,000                800,000                     0
Mainstay Convertible Fund................         1,020,000              1,020,000                     0
Mainstay VP Convertible Portfolio........           270,000                270,000                     0
McMahan Securities Co. L.P. .............         2,500,000              2,500,000                     0
Microsoft Corporation -- High Income.....         1,075,000              1,075,000                     0
Morgan Stanley & Co. ....................        30,000,000             30,000,000                     0
Museum of Fine Arts, Boston..............            25,000                 25,000                     0
New York Life Separate Account #7........           140,000                140,000                     0
The Northwestern Mutual Life Insurance
  Company for its Group Annuity Separate
  Account................................           500,000                500,000                     0
OCM Convertible Limited Partnership --
  High Income............................           430,000                430,000                     0
Onex Industrial Partners Limited.........        10,090,000             10,090,000                     0
Otter Creek International................         1,200,000              1,200,000                     0
Otter Creek Partners.....................         1,000,000              1,000,000                     0
OZ Master Fund, Ltd. ....................        24,589,000             24,589,000                     0
Parker-Hannifin Corporation..............           210,000                210,000                     0
Pebble Capital Inc. .....................         4,210,000              4,210,000                     0
Peoples Benefit Life Insurance Company
  Teamsters..............................         8,500,000              8,500,000                     0
Putnam Asset Allocation Funds -- Balanced
  Portfolio..............................         1,070,000              1,070,000                     0
Putnam Asset Allocation Funds --
  Conservative Portfolio.................           820,000                820,000                     0
Putnam Convertible Income -- Growth
  Trust..................................         8,170,000              8,170,000                     0
Putnam Convertible Opportunities and
  Income Trust...........................           280,000                280,000                     0
Putnam Variable Trust -- Putnam VT Global
  Asset Allocation Fund..................           280,000                280,000                     0
Retail Clerks Pension Trust..............         3,000,000              3,000,000                     0
Retail Clerks Pension Trust #2...........         1,000,000              1,000,000                     0
R2 Investments, LDC......................        15,000,000             15,000,000                     0
Sagamore Hill Hub Fund Ltd. .............        27,000,000             27,000,000                     0
Salomon Smith Barney Inc. ...............        27,930,000             27,930,000                     0
San Diego County Employee's Retirement
  Association -- High Income.............           165,000                165,000                     0
Silvercreek Limited Partnership..........         7,320,000              7,320,000                     0
Silvercreek II Limited...................        23,380,000             23,380,000                     0
St. Albans Partners Ltd..................         7,000,000              7,000,000                     0	

23

                                                                                         AGGREGATE PRINCIPAL
                                            AGGREGATE PRINCIPAL    AGGREGATE PRINCIPAL        AMOUNT OF
                                                 AMOUNT OF              AMOUNT OF            DEBENTURES
                                             DEBENTURES OWNED       DEBENTURES BEING     BENEFICIALLY OWNED
SELLING HOLDERS                            PRIOR TO THE OFFERING         OFFERED         AFTER THE OFFERING
---------------                            ---------------------   -------------------   -------------------
State of Oregon/SAIF Corporation.........         3,225,000              3,225,000                     0
TQA Master Fund, Ltd. ...................         8,000,000              8,000,000                     0
TQA Master Plus Fund, Ltd. ..............         6,500,000              6,500,000                     0
UBS AG London Branch.....................        51,667,000             51,667,000                     0
UBS O'Connor LLC f/b/o O'Connor Global
  Fixed Income Arbitrage Ltd. ...........         2,500,000              2,500,000                     0
UBS O'Connor LLC f/b/o UBS Global
  Convertible Portfolio..................           750,000                750,000                     0
UBS O'Connor LLC f/b/o UBS Global Equity
  Arbitrage Master Ltd...................        19,250,000             19,250,000                     0
Wilmington Trust Company as owner trustee
  for the Forrestal Funding..............        17,500,000             17,500,000                     0
Worldwide Transactions Ltd. .............         1,076,000              1,076,000                     0
Yield Strategies Fund I, LP..............         6,000,000              6,000,000                     0
Yield Strategies Fund II, LP.............         6,000,000              6,000,000                     0
ZCM Asset Holding Company (Bermuda)
  Ltd. ..................................           750,000                750,000                     0
Zola Partners, LP........................         2,000,000              2,000,000                     0
                                                -----------            -----------           -----------

                                                792,345,000            792,345,000                     0	

Based upon a Schedule 13G/A filed with the SEC on February 15, 2001 with respect to Putnam Investments, LLC, Putnam Investment Management, LLC and The Putnam Advisory Company, LLC, such entities, which Calpine believes are affiliates of Putnam Asset Allocation Funds -- Balanced Portfolio, Putnam Asset Allocation Funds -- Conservative Portfolio, Putnam Convertible Income -- Growth Trust, Putnam Convertible Opportunities and Income Trust and Lincoln National Global Asset Allocation Fund, Inc., are reported to be the beneficial owners of 6.2% of the common stock of Calpine.
To our knowledge, other than their ownership of the Debentures described in the above table and their relationships with us described above, none of the selling holders has, or has had within the past three years, any position, office or other material relationship with Calpine or any of its predecessors or affiliates, except that Goldman, Sachs & Co. acted as the Initial Purchaser of the Debentures and acts as an adviser to Calpine from time to time with respect to other matters.
PLAN OF DISTRIBUTION
The Debentures and the common stock issuable upon conversion of the Debentures may be offered and sold from time to time to purchasers directly by the selling holders. Alternatively, the selling holders may from time to time offer those securities to or through underwriters, broker-dealers or agents, who may receive compensation in the form of underwriting discounts, concessions or commissions from the selling holders or the purchasers of the securities for whom they act as agents. The selling holders and any underwriters, broker-dealers or agents that participate in the distribution of the securities may be deemed to be "underwriters" within the meaning of the Securities Act, and any profit on the sale of such securities and any
24

discounts, commissions, concessions or other compensation received by any such underwriter, broker-dealer or agent may be deemed to be underwriting discounts and commissions under the Securities Act.
The securities may be sold from time to time in one or more transactions at fixed prices, at prevailing market prices at the time of sale, at varying prices determined at the time of sale or at negotiated prices. The sale of the securities may be effected in transactions, which may involve crosses or block transactions:
- on any national securities exchange or quotation service on which the securities may be listed or quoted at the time of sale,
- in the over-the-counter market,
- in transactions otherwise than on such exchanges or in the over-the-counter market, or
- through the writing and exercise of options.
At the time a particular offering of the securities is made, if required, a prospectus supplement will be distributed, which will set forth the names of the selling holders, the aggregate amount and type of securities being offered and the terms of the offering, including the name or names of any underwriters, broker-dealers or agents, any discounts, commissions and other terms constituting compensation from the selling holders and any discounts, commissions or concessions allowed or reallowed to paid broker-dealers.
To comply with the securities laws of certain jurisdictions, if applicable, the securities will be offered or sold in such jurisdictions only through registered or licensed brokers or dealers. In addition, in certain jurisdictions the securities may not be offered or sold unless they have been registered or qualified for sale in such jurisdictions or any exemption from registration or qualification is available and is complied with.
The selling securityholders and any other person participating in such distribution will be subject to applicable provisions of the Securities Exchange Act and the rules and regulations thereunder, including, without limitation, Regulation M of the Exchange Act, which may limit the timing of purchases and sales of any of the offered securities by the selling securityholders and any other such person. Furthermore, Regulation M may restrict the ability of any person engaged in the distribution of the offered securities to engage in market-making activities with respect to the particular offered securities being distributed. All of the foregoing may affect the marketability of the offered securities and the ability of any person or entity to engage with respect to the offered securities.
Pursuant to a registration rights agreement, we have borne all fees and expenses incurred in connection with the registration of the securities, except that selling holders will pay all broker's commissions and underwriting discounts and commissions, if any, in connection with any sales effected pursuant to this prospectus. The selling holders will be indemnified by us against certain civil liabilities, including certain liabilities under the Securities Act or the Securities Exchange Act or otherwise, or alternatively will be entitled to contribution in connection with those liabilities.
25

PRICE RANGE OF COMMON STOCK
Our common stock is traded on The New York Stock Exchange under the symbol "CPN." Public trading of the common stock commenced on September 20, 1996. Prior to that, there was no public market for the common stock. The following table sets forth, for the periods indicated, the high and low sale price per share of the common stock on The New York Stock Exchange. The information in the following table reflects the 2 for 1 stock split that became effective on October 7, 1999, the 2 for 1 stock split that became effective on June 8, 2000 and the 2 for 1 stock split that became effective on November 14, 2000.

                                                            HIGH      LOW
                                                           ------    ------
1999
  First Quarter..........................................  $ 4.67    $ 3.16
  Second Quarter.........................................    7.38      4.39
  Third Quarter..........................................   11.97      6.85
  Fourth Quarter.........................................   16.38     10.63
2000
  First Quarter..........................................  $30.75    $16.09
  Second Quarter.........................................   35.22     18.13
  Third Quarter..........................................   52.25     32.25
  Fourth Quarter.........................................   52.97     32.25
2001
  First Quarter..........................................  $58.04    $29.00
  Second Quarter.........................................   57.35     36.20
  Third Quarter..........................................   46.00     18.90
  Fourth Quarter (through October 16, 2001)..............   28.68     21.35	

As of October 16, 2001, there were approximately 986 holders of record of our common stock. On October 16, 2001, the last sale price reported on The New York Stock Exchange for our common stock was $27.58 per share.
DIVIDEND POLICY
We do not anticipate paying any cash dividends on our common stock in the foreseeable future because we intend to retain our earnings to finance the expansion of our business and for general corporate purposes. In addition, our ability to pay cash dividends is restricted under certain of our indentures and our other debt agreements. Future cash dividends, if any, will be at the discretion of our board of directors and will depend upon, among other things, our future operations and earnings, capital requirements, general financial condition, contractual restrictions and such other factors as the board of directors may deem relevant.
26

CAPITALIZATION
The following table sets forth, as of June 30, 2001, (1) Calpine's actual consolidated capitalization and (2) on an estimated basis for the purposes of this registration statement, Calpine's consolidated capitalization as adjusted to reflect the net effect of (a) the amendment on July 26, 2001 of Calpine's Amended and Restated Certificate of Incorporation to increase from 500,000,000 to 1,000,000,000 the number of shares of common stock that Calpine has the authority to issue, (b) Calpine's acquisition of Michael Petroleum Corporation, including the assumption of debt in connection therewith as described above under "The Company -- Recent Developments" and (c) the consummation of concurrent offerings described above under "The Company -- Recent Developments" and the use of proceeds therefrom. The adjustments do not reflect normal day-to-day operations or the potential issuance of securities offered hereby. This table should be read in conjunction with the consolidated financial statements and related notes thereto and the unaudited consolidated condensed financial statements and related notes thereto incorporated by reference in this prospectus. All non-dollar amounts are translated into dollar amounts using recent exchange rates.

                                                                    JUNE 30, 2001
                                                              --------------------------
                                                                ACTUAL       AS ADJUSTED
                                                                ------       -----------
                                                                     (UNAUDITED)
                                                                    (IN THOUSANDS,
                                                                EXCEPT SHARE AMOUNTS)
SHORT-TERM DEBT:
  Notes payable and borrowings under lines of credit,
     current portion........................................  $     1,258    $     1,258
  Project financing, current portion........................        1,396          1,305
  Capital lease obligation, current portion.................        2,251          2,251
  Zero-Coupon Convertible Debentures Due 2021...............    1,000,000      1,000,000
                                                              -----------    -----------
     Total short-term debt..................................  $ 1,004,905    $ 1,004,814
                                                              -----------    -----------
LONG-TERM DEBT:
  Notes payable and borrowings under lines of credit, net of
     current portion........................................       10,587         65,087
  Project financing, net of current portion.................    1,776,435        245,232
  Senior notes..............................................    5,096,750      7,054,000
  Capital lease obligation, net of current portion..........      208,839        208,839
                                                              -----------    -----------
     Total long-term debt...................................    7,092,611      7,573,158
                                                              -----------    -----------
  Company-obligated mandatorily redeemable convertible
     preferred securities of subsidiary trusts..............    1,122,706      1,122,706
Minority interests..........................................       40,733         82,579
                                                              -----------    -----------
STOCKHOLDERS' EQUITY:
  Preferred stock, $.001 par value:
  10,000,000 shares authorized; one share outstanding,
     actual and as adjusted.................................           --             --
                                                              -----------    -----------
  Common stock, $.001 par value: 500,000,000 shares
     authorized, actual, and 1,000,000,000 shares
     authorized, as adjusted; 304,162,586 shares
     outstanding, actual and as adjusted....................          304            304
  Additional paid-in capital................................    1,993,849      1,993,849
  Retained earnings.........................................      775,223        775,223
  Accumulated other comprehensive income....................       78,411         78,411
                                                              -----------    -----------
     Total stockholders' equity.............................    2,847,787      2,847,787
                                                              -----------    -----------
     Total capitalization...................................  $12,108,742    $12,631,044
                                                              ===========    ===========	

27

SECURITIES OFFERED
Using this prospectus, selling holders may offer for sale the Debentures and the common stock into which the Debentures are convertible. We registered all of these securities under the Securities Act using a "shelf" registration statement. This shelf registration statement allows the selling holders to offer and sell any combination of these securities. Each time selling holders offer securities during the period of time that we are required by the Registration Rights Agreement to keep the shelf registration statement effective, such selling holder must provide this prospectus, which names the selling holders and describes the specific securities offered. This prospectus may be amended or supplemented by one or more prospectus supplements, which may provide new information or update the information in this prospectus.
28

DESCRIPTION OF DEBENTURES
We issued the Debentures under an indenture (the "Indenture") between the Company and Wilmington Trust Company, as trustee (the "Trustee").
In this section, references to "Calpine," "we," "our" or "us" refer solely to Calpine Corporation and not its subsidiaries.
GENERAL
The Debentures are senior unsecured obligations of Calpine, are limited to an aggregate initial principal amount of $1,000,000,000, plus accrued interest pursuant to any Upward Interest Adjustments. The Debentures will mature on April 30, 2021. The Debentures rank equally with all of our existing and future senior unsecured indebtedness.
We issued the Debentures at a price to investors of $1,000 per Debenture. We will not pay interest on the Debentures unless an Upward Interest Adjustment becomes payable or we elect to do so following a Tax Event. The maturity value of each Debenture may exceed $1,000 in the event an Upward Interest Adjustment becomes payable on the Debentures. The issue price represents a yield to maturity of 0% per annum unless an Upward Interest Adjustment occurs. The Debentures issued only in denominations of $1,000 principal amount and multiples of $1,000 principal amount.
You have the option, at any time on or prior to 5:00 p.m., New York City time, on April 29, 2021, unless previously redeemed or otherwise repurchased by Calpine, to convert your Debentures into shares of our common stock at a conversion rate of 13.2714 shares of common stock per $1,000 principal amount of the Debentures. This is equivalent to an initial conversion price of $75.35 per share of common stock based on the price to investors of the Debentures. The conversion rate is subject to adjustment if certain events occur. Upon conversion, you will receive only shares of common stock. You will not receive any cash payment for any accrued interest to the conversion date. To calculate earnings per share following this offering, we will be using the as-converted method to account for the potential dilutive effect of the Debentures.
Each holder agreed in the Indenture, for U.S. federal income tax purposes, to treat the Debentures as "contingent payment debt instruments" and to be bound by our application of the Treasury regulations that govern contingent payment debt instruments, including our determination that the rate at which interest will be deemed to accrue for federal income tax purposes will be 9.44% per annum, which is the rate comparable to the rate at which the Issuer would borrow on a noncontingent, nonconvertible borrowing. Based on the agreement, (i) each holder will be required to accrue interest on a constant yield to maturity basis at that rate, with the result that a holder will recognize taxable income significantly in excess of cash received while the Debentures are outstanding, and (ii) a holder will recognize ordinary income upon a conversion of a Debenture into our common stock equal to the excess, if any, between the value of the common stock received on the conversion and the sum of the original purchase price of the holder's Debenture and accrued but unpaid interest. However, the proper application of the regulations that govern contingent payment debt instruments to a holder of a Debenture is uncertain in a number of respects, and if our treatment were successfully challenged by the Internal Revenue Service, it might be determined that, among other differences, a holder should have accrued interest income at a lower rate, should not have recognized income or gain upon the conversion, and should not have recognized ordinary income upon a taxable disposition of its Debenture. In addition, if the Internal Revenue Service successfully asserts that the Debentures are not debt, Non-U.S. Holders would generally be subject to a 30% Unites States federal withholding tax on payments of contingent interest made in respect of the Debentures. See "Certain United States Federal Income Tax Consequences."
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HOLDERS SHOULD CONSULT THEIR TAX ADVISORS REGARDING THE TAX TREATMENT OF THE DEBENTURES AND WHETHER A PURCHASE OF THE DEBENTURES IS ADVISABLE IN LIGHT OF THE AGREED UPON TAX TREATMENT AND THE INVESTOR'S PARTICULAR TAX SITUATION.
INTEREST ADJUSTMENT
An Upward Interest Adjustment (equivalent to 7.25% per annum) may be made on April 30, 2004, 2006, 2008, 2011 or 2016. An Upward Interest Adjustment will be made on each Upward Interest Adjustment Date if the Trading Price of the Debentures is less than 98% of the Accreted Value as of such Upward Interest Adjustment Date for 20 out of the last 30 NYSE trading days ending 90 days prior to such Upward Interest Adjustment Date. If an Upward Interest Adjustment is in effect for a particular semi-annual period, we will pay a portion of the Upward Interest Adjustment as cash interest at a rate of 0.25% per annum (0.125% per semi-annual period) of the Accreted Value as of the beginning of the applicable semi-annual period and the remaining interest (7.0% per annum) will be accrued and payable at the earlier of maturity or the redemption or the repurchase of the Debentures. We will pay cash interest on each April 30 and October 30 for which an Upward Interest Adjustment is in effect, to the holders of record on the preceding April 15 and October 15, respectively. Interest will be determined on the basis of a 360-day year, consisting of twelve 30-day months.
If an Upward Interest Adjustment is in effect during a semi-annual period (other than a semi-annual period immediately preceding an Upward Interest Adjustment Date) and the Trading Price of the Debentures is greater than or equal to 98% of the Accreted Value as of the next following interest payment date for 20 out of the last 30 NYSE trading days ending on such interest payment date, the Upward Interest Adjustment will be subject to a Downward Interest Adjustment on such interest payment date, such that from and including such date the Debentures will cease to accrue interest unless and until there is a subsequent Upward Interest Adjustment. If an Upward Interest Adjustment is in effect during a semi-annual period immediately preceding an Upward Interest Adjustment Date, a Downward Interest Adjustment will be made on the next Upward Interest Adjustment Date if the Trading Price of the Debentures is greater than or equal to 98% of the Accreted Value as of such Upward Interest Adjustment Date for 20 out of the last 30 NYSE trading days ending 90 days prior to such Upward Interest Adjustment Date. If a Downward Interest Adjustment is made, no Upward Interest Adjustment may be made until the next Upward Interest Adjustment Date.
The "Trading Price" of the Debentures on any date of determination means the average of the secondary market bid quotations per Debenture obtained by the bid solicitation agent for $10,000,000 principal amount at maturity of the Debentures at approximately 3:30 p.m., New York City time, on such determination date from three independent nationally recognized securities dealers we select, provided that if at least three such bids are not obtained by the bid solicitation agent, but two such bids are obtained, then the average of the two bids shall be used, and if only one such bid is obtained by the bid solicitation agent, this one bid shall be used. If the bid solicitation agent cannot obtain at least one bid for $10,000,000 principal amount at maturity of the Debentures from a nationally recognized securities dealer or in our reasonable judgment, the bid quotations are not indicative of the secondary market value of the Debentures, then the Trading Price of the Debentures will equal (a) the then-applicable conversion rate of the Debentures multiplied by (b) the closing price on the NYSE of our common stock on such determination date.
The bid solicitation agent will initially be The Bank of New York. We may change the bid solicitation agent, but the bid solicitation agent will not be our affiliate. The bid solicitation agent will solicit bids from securities dealers that are believed by us to be willing to bid for the Debentures.
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In the event of any Upward Interest Adjustment, we will disseminate a press release not later than three business days prior to the relevant Upward Interest Adjustment Date through Dow Jones & Company, Inc. or Bloomberg Business News containing this information and publish the information on our Website on the World Wide Web or through such other public medium as we may use at that time.
TAX EVENT
We have the option, under limited circumstances, to elect to pay cash interest at a rate of 7.25% per annum on the Debentures from and after the date a Tax Event occurs instead of accruing interest pursuant to an Upward Interest Adjustment. Such cash interest would only be payable during periods in which an Upward Interest Adjustment is in effect. If we make such an election, the principal amount on which we pay interest will be restated and will be equal to the issue price plus accrued and unpaid interest payable pursuant to an Upward Interest Adjustment to the date on which we exercise our option to commence paying cash interest. The Restated Principal Amount will be the amount due at maturity. If we elect this option, interest will be based on a 360-day year, consisting of twelve 30-day months. Interest will accrue from the date we exercise our option to declare the occurrence of a Tax Event and will be payable semi-annually in arrears on each April 30 and October 30 to the holders of record on the preceding April 15 and October 15, respectively.
The term "Tax Event" means the receipt by us of an opinion of a nationally recognized independent tax counsel experienced in such matters to the effect that as a result of:
- any amendment to or change (including any announced prospective change (which will not include a proposed change), provided that a Tax Event will not occur more than 90 days before the effective date of any prospective change) in the laws (or any regulations thereunder) of the United States or any political subdivision or taxing authority of the United States or any political subdivision; or
- any judicial decision or official administrative pronouncement, ruling, regulatory procedure, notice or announcement, including any notice or announcement of intent to adopt such procedures or regulations (an "Administrative Action"); or
- any amendment to or change in the administrative position or interpretation of any Administrative Action or judicial decision that differs from the theretofore generally accepted position, in each case, by any legislative body, court, governmental agency or regulatory body, irrespective of the manner in which such amendment or change is made known, which amendment or change is effective or such Administrative Action or decision is announced, in each case, on or after the date of original issuance of the Debenture;
there is more than an insubstantial risk that interest, including original issue discount, payable on the Debentures either:
(1) would not be deductible on a current accrual basis; or
(2) would not be deductible under any other method, in whole or in part, by us for United States federal income tax purposes.
INTEREST
We will not pay cash interest on the Debentures unless there is an Upward Interest Adjustment in effect or if we elect to do so following a Tax Event. Interest will be based on a 360-day year, consisting of twelve 30-day months, and will be payable semi-annually in arrears on each April 30 and October 30. Cash interest as a result of an Upward Interest Adjustment will be paid at the rate of 0.25% per annum (0.125% per semi-annual period). Cash interest following a Tax Event and our election to pay the interest in cash will be paid at a rate of 7.25% per
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annum on the Debentures during any period in which an Upward Interest Adjustment is in effect. The record date for the payment of cash interest to holders will be April 15 and October 15 of each year. We will give notice to the holders of the Debentures, no later than 30 days prior to each record date, of the amount of cash interest to be paid as of the next interest payment date. We will pay interest on the Debentures by check mailed to the address of the registered holders of the Debentures as of the record date relating to each interest payment date.
You should be aware that interest, including any adjustments occurring as a result of an Upward Interest Adjustment, accruing for the period you hold the Debentures must be included in your gross income for federal income tax purposes in accordance with the Treasury Regulations governing debt instruments providing for contingent payments. For more information, see the discussion below in the section captioned "Certain United States Federal Income Tax Consequences."
REDEMPTION RIGHTS
We must repay the Debentures at their stated maturity on April 30, 2021, unless earlier redeemed. The circumstances in which we may, or we are required to, redeem the Debentures prior to their stated maturity are described below.
We have the right to redeem the Debentures in whole or in part, at any time or from time to time, on or after April 30, 2004 upon not less than 30 nor more than 60 days' notice by mail to holders of the Debentures for a cash price equal to the issue price plus any accrued and unpaid interest to the redemption date.
If we decide to redeem fewer than all of the outstanding Debentures, the Trustee will select the Debentures to be redeemed by such method as the Trustee considers fair and appropriate and which may provide for the selection for redemption of portions of the Debentures.
If we have previously exercised our option to pay cash interest instead of accruing interest on the Debentures following a Tax Event, the redemption price will be equal to the Restated Principal Amount plus any accrued and unpaid cash interest through the redemption date. See "-- Tax Event."
If the Trustee selects a portion of your Debentures for partial redemption and you convert a portion of the same Debentures, the converted portion will be deemed to be the portion selected for redemption. Each Debenture selected for redemption will be redeemed in whole.
In the event of any redemption in part, we will not be required to:
- issue, register the transfer of or exchange any Debenture during a period beginning at the opening of business 15 days prior to the mailing of the relevant notice of redemption and ending at the close of business on the day of mailing of the notice, or
- register the transfer of or exchange any Debenture so selected for redemption, in whole or in part, except the unredeemed portion of any Debenture being redeemed in part.
CONVERSION RIGHTS
You may surrender your Debentures for conversion into common stock at any time prior to 5:00 p.m., New York City time, on April 29, 2021. You may convert each Debenture, pursuant to the initial conversion ratio, into 13.2714 shares of our common stock (equivalent to an initial conversion price of $75.35 per share of common stock). The conversion ratio and the equivalent conversion price in effect at any given time are referred to in this prospectus as the applicable conversion ratio and the applicable conversion price, respectively, and will be subject to adjustment as described below. If a Debenture has been called for redemption, you will be entitled to convert the Debenture from the date of notice of the redemption until the close of business on the business day immediately preceding the date of redemption. You may convert
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fewer than all of your Debentures so long as the Debentures converted are a multiple of $1,000 principal amount.
Upon conversion of any Debentures you will not receive any cash payment representing accrued interest with respect to the converted Debentures. Instead, upon conversion we will deliver to you a fixed number of shares of common stock and any cash payment to account for fractional shares. The cash payment for fractional shares will be based on the closing price of our common stock on the NYSE trading day immediately prior to the conversion date. Delivery of shares of common stock will be deemed to satisfy our obligation to pay the principal amount of the Debentures, including accrued interest. Accrued interest will be deemed paid in full rather than canceled, extinguished or forfeited. We will not adjust the conversion ratio to account for the accrued interest.
If you wish to exercise your conversion right, you must deliver an irrevocable conversion notice, together, if the Debentures are in certificated form, with the certificated security, to the conversion agent who will, on your behalf, convert the Debentures into shares of our common stock. You may obtain copies of the required form of the conversion notice from the conversion agent.
Based upon our treatment of the Debentures for U.S. federal income tax purposes, as discussed above, a holder would be required to recognize ordinary income upon a conversion of a Debenture into our common stock equal to the excess, if any, between the value of the stock received on the conversion and the sum of the original purchase price of the holder's Debenture and accrued but unpaid interest. For a more detailed discussion, see "Certain United States Federal Income Tax Consequences."
The conversion rate will be subject to adjustment upon the following events:
- the payment of dividends and other distributions payable exclusively in our common stock on our common stock;
- the issuance to all holders of our common stock of rights or warrants that allow the holders to purchase shares of our common stock at less than the current market price; provided that no adjustment will be made if holders of the Debentures may participate in the transaction on a basis and with notice that our board of directors determines to be fair and appropriate or in some other cases;
- subdivisions or combinations of our common stock;
- the payment of dividends and other distributions to all holders of our common stock, consisting of evidences of our indebtedness, securities or capital stock, cash or assets, except for those rights or warrants referred to in the second bullet point above and dividend and other distributions paid exclusively in cash; provided that no adjustment will be made if all holders of the Debentures may participate in the transactions;
- the payment to holders of our common stock in respect of a tender or exchange offer, other than an odd-lot offer, by us or any of our subsidiaries for our common stock to the extent that the offer involves aggregate consideration that, together with (1) any cash and the fair market value of any other consideration payable in respect of any tender offer by us or any of our subsidiaries for shares of our common stock consummated within the preceding 12 months not triggering a conversion price adjustment and (2) all-cash distributions to all or substantially all stockholders made within the preceding 12 months not triggering a conversion price adjustment, exceeds an amount equal to 12.5% of the market capitalization of our common stock on the expiration date of the tender offer; and
- the distribution to all or substantially all holders of our common stock of all-cash distributions in an aggregate amount that, together with (1) any cash and the fair market value of any other consideration payable in respect of any tender offer by us or any of our
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subsidiaries for shares of our common stock consummated within the preceding 12 months not triggering a conversion price adjustment and (2) all other all-cash distributions to all or substantially all holders of our common stock made within the preceding 12 months not triggering a conversion price adjustment, exceeds an amount equal to 12.5% of the market capitalization of our common stock on the business day immediately preceding the day on which we declare the distribution.
The applicable conversion price will not be adjusted:
- upon the issuance of any shares of our common stock pursuant to any present or future plan providing for the reinvestment of dividends or interest payable on securities of Calpine and the investment of additional optional amounts in shares of our common stock under any plan,
- upon the issuance of any shares of our common stock or options or rights to purchase those shares pursuant to any present or future employee, director or consultant benefit plan or program of Calpine,
- upon the issuance of any shares of our common stock pursuant to any option, warrant, right, or exercisable, exchangeable or convertible security outstanding as of the date the Debentures were first issued, or
- upon the issuance of any rights, any distribution of separate certificates representing the rights, any exercise or redemption of any rights or any termination or invalidation of the rights, pursuant to our stockholders rights plan.
We may increase the conversion rate for at least 20 days, so long as the increase is irrevocable during that 20-day period. No adjustment in the applicable conversion price will be required unless the adjustment would require an increase or decrease of at least 1% of the applicable conversion price. If the adjustment is not made because the adjustment does not change the applicable conversion price by more than 1%, then the adjustment that is not made will be carried forward and taken into account in any future adjustment. Except as specifically described above, the applicable conversion price will not be subject to adjustment in the case of the issuance of any of our common stock, or securities convertible into or exchangeable for our common stock.
If you submit your Debenture for conversion after we have elected to exercise our option to pay cash interest instead of accruing interest following a Tax Event or if we are required to make a cash payment pursuant to an Upward Interest Adjustment, after a record date and prior to the opening of business on the next interest payment date (except for Debentures or portions of Debentures called for redemption on a redemption date on a date in such period), you must pay funds equal to the interest payable on the converted principal amount.
REPURCHASE RIGHT
You have the right to require us to repurchase your Debentures on April 30, 2002, 2004, 2006, 2008, 2011 and 2016. We will be required to repurchase any outstanding Debentures for which you deliver a written repurchase notice to the paying agent. This notice must be delivered during the period beginning at any time from the opening of business on the date that is 20 business days prior to the relevant repurchase date until the close of business on the last business day prior to such repurchase date. If the repurchase notice is given and withdrawn during the period, we will not be obligated to repurchase the related Debentures. Our repurchase obligation will be subject to some additional conditions. Also, our ability to satisfy our repurchase obligations may be affected by the factors described in "Risk Factors" under the caption "We May Be Unable to Repay the Debentures When Due or Repurchase the Debentures When We Are Required to Do So."
The repurchase price payable will be equal to the issue price plus any accrued and unpaid interest to such repurchase date.
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We may choose, in our sole discretion, to pay the repurchase price in cash or shares of our common stock, or a combination of cash and shares of our common stock except on April 30, 2016 when we may only pay the repurchase price in cash. For a discussion of the tax treatment of a holder receiving cash, shares of our common stock or any combination thereof, see "Certain United States Federal Income Tax Consequences."
If we have previously exercised our option to pay cash interest instead of accruing interest on the Debentures following a Tax Event, the repurchase price will be the Restated Principal Amount plus any accrued and unpaid cash interest through the repurchase date. See "-- Tax Event."
If we choose to pay the repurchase price, in whole or in part, in shares of our common stock or a combination of cash and shares of our common stock, we will be required to give notice on a date not less than 20 business days prior to each repurchase date to all holders at their addresses shown in the register of the registrar, and to beneficial owners as required by applicable law (i.e. if no notice is given, we will pay the repurchase price with cash), stating among other things:
- whether we will pay the repurchase price of the Debentures in cash, in shares of our common stock, or any combination thereof, and specifying the percentages of each;
- if we elect to pay with common stock, the method of calculating the price of the common stock; and
- the procedures that holders must follow to require us to repurchase their Debentures.
If we pay with shares of our common stock, they will be valued at 100% of the market price for our common stock.
The "market price" means the average of the sale prices of our common stock on the NYSE for the five NYSE trading day period ending on the third business day prior to the applicable repurchase date (if the third business day prior to the applicable repurchase date is a NYSE trading day, or if not, then on the last NYSE trading day prior to the third business day), appropriately adjusted to take into account the occurrence, during the period commencing on the first of the NYSE trading days during the five NYSE trading day period and ending on the repurchase date, of some events that would result in an adjustment of the conversion rate with respect to our common stock.
The "sale price" of our common stock on any date means the closing per share sale price on the NYSE (or if no closing sale price is reported, the average of the bid and ask prices or, if more than one in either case, the average of the average bid and the average asked prices) on that date as reported on the NYSE.
Your notice electing to require us to repurchase your Debentures must state:
- if certificated Debentures have been issued, the Debentures certificate numbers, or if not certificated, your notice must comply with appropriate DTC procedures;
- the portion of the principal amount of Debentures to be repurchased, in multiples of $1,000;
- that the Debentures are to be repurchased by us pursuant to the applicable provisions of the Debentures; and
- in the event we elect, pursuant to the notice that we are required to give, to pay the repurchase price in shares of common stock, in whole or in part, but the repurchase price is ultimately to be paid to the holder entirely in cash because any of the conditions to payment of the repurchase price or portion of the repurchase price in shares of common
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stock is not satisfied prior to the close of business on the last day prior to the repurchase date, as described below, whether the holder elects:
(1) to withdraw the repurchase notice as to some or all of the Debentures to which it relates, or
(2) to receive cash in respect of the entire repurchase price for all Debentures or portions of Debentures subject to the repurchase notice.
If the holder fails to indicate the holder's choice with respect to the election described in the final bullet point above, the holder will be deemed to have elected to receive cash in respect of the entire repurchase price for all Debentures subject to the repurchase notice in these circumstances. For a discussion of the tax treatment of a holder receiving cash instead of shares of common stock, see "Certain United States Federal Income Tax Consequences."
You may withdraw any repurchase notice by a written notice of withdrawal delivered to the paying agent prior to the close of business on the last day prior to the repurchase date. The notice of withdrawal must state:
- the principal amount of the withdrawn Debentures;
- if certificated Debentures have been issued, the certificate numbers of the withdrawn Debentures, or if not certificated, your notice must comply with appropriate DTC procedures; and
- the principal amount, if any, which remains subject to the repurchase notice.
If we elect to pay the repurchase price, in whole or in part, in shares of common stock, the number of shares to be delivered by us will be equal to the portion of the repurchase price to be paid in common stock divided by the market price of one share of common stock as determined by us in our repurchase notice. We will pay cash based on the market price for all fractional shares.
Because the market price of our common stock is determined prior to the applicable repurchase date, holders of Debentures bear the market risk with respect to the value of the common stock to be received from the date the market price is determined to the repurchase date. We may pay the repurchase price or any portion of the repurchase price in shares of common stock only if the information necessary to calculate the market price is published in a daily newspaper of national circulation or is otherwise publicly available (e.g., by dissemination on the World Wide Web or by other public means).
Upon determination of the actual number of shares of common stock to be paid upon repurchase of the Debentures, we will disseminate a press release not later than three business days prior to the relevant interest payment date through Dow Jones & Company, Inc. or Bloomberg Business News containing this information and publish the information on our Website on the World Wide Web or through such other public medium as we may use at that time.
A holder must either effect book-entry transfer or deliver the Debentures, together with necessary endorsements, to the office of the paying agent after delivery of the repurchase notice to receive payment of the repurchase price. You will receive payment on the later of the repurchase date or the time of book-entry transfer or the delivery of the Debentures. If the paying agent holds money or securities sufficient to pay the repurchase price of the Debentures on the business day following the repurchase date, then:
- the Debentures will cease to be outstanding;
- interest, including any interest payable pursuant to an Upward Interest Adjustment (including any cash interest) will cease to accrue; and
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- all other rights of the holder will terminate.
This will be the case whether or not book-entry transfer of the Debentures is made or whether or not the Debentures are delivered to the paying agent.
We will comply with the provisions of Rule 13e-4 and any other tender offer rules under the Securities Exchange Act which may be applicable at the time. We will file Schedule TO or any other schedule required in connection with any offer by us to repurchase the Debentures at your option.
RANKING
The Debentures constitute senior debt, rank equally with all of our existing and future senior unsecured debt, and rank senior to any future subordinated indebtedness.
We currently conduct substantially all our operations through our subsidiaries, and our subsidiaries generate substantially all of our operating income and cash flow. As a result, distributions or advances from our subsidiaries are the principal source of funds necessary to meet our debt service obligations. Contractual provisions or laws, as well as our subsidiaries' financial condition and operating requirements, may limit our ability to obtain cash from our subsidiaries that we require to pay our debt service obligations, including payments on the Debentures. In addition, holders of the Debentures will have a junior position to the claims of creditors of our subsidiaries on their assets and earnings. As of June 30, 2001, our subsidiaries had approximately $1.8 billion of project finance debt, without giving effect to the anticipated use of proceeds, to which the Debentures would have been structurally subordinated.
CHANGE IN CONTROL
If a Change in Control as defined below occurs, a holder of Debentures will have the right, at its option, to require us to repurchase all of its Debentures not previously called for redemption, or any portion of the principal amount thereof, that is equal to $1,000 or an integral multiple of $1,000. The price we are required to pay is equal to the issue price plus any accrued and unpaid interest to such repurchase date, or, if we elected to pay cash interest on the Debentures following a Tax Event, the Restated Principal Amount plus any accrued and unpaid cash interest through the repurchase date.
At our option, instead of paying the repurchase price in cash, we may pay the repurchase price in registered shares of our common stock valued at 95% of the average of the closing prices of our common stock for the five NYSE trading days immediately preceding and including the third NYSE trading day prior to the repurchase date. We may only pay the repurchase price in our common stock if we satisfy conditions provided in the Indenture.
Within 30 days after the occurrence of a Change in Control, we are obligated to give to the holders of Debentures notice of the Change in Control and of the repurchase right arising as a result of the Change in Control. We must also deliver a copy of this notice to the Trustee. To exercise the repurchase right, a holder of Debentures must deliver on or before the 30th day after the date of our notice irrevocable written notice to the Trustee of the holder's exercise of its repurchase right, together with the Debentures with respect to which the right is being exercised. We are required to repurchase the Debentures on the date that is 45 days after the date of our notice.
A Change in Control will be deemed to have occurred at the time after the Debentures are originally issued that any of the following occurs:
(1) any person, including any syndicate or group deemed to be a "person" under Section 13(d)(3) of the Exchange Act, acquires beneficial ownership, directly or indirectly, through a purchase, merger or other acquisition transaction or series of transactions, of
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shares of our capital stock entitling the person to exercise 50% or more of the total voting power of all shares of our capital stock that is entitled to vote generally in elections of directors, other than an acquisition by us, any of our subsidiaries or any of our employee benefit plans; or
(2) we merge or consolidate with or into any other person, any merger of another person into us, or we convey, sell, transfer or lease all or substantially all of our assets to another person, other than any transaction:
- that does not result in any reclassification, conversion, exchange or cancellation of outstanding shares of our capital stock, or
- pursuant to which the holders of our common stock immediately prior to the transaction have the entitlement to exercise, directly or indirectly, 50% or more of the total voting power of all shares of capital stock entitled to vote generally in the election of directors of the continuing or surviving corporation immediately after the transaction, or
- which is effected solely to change our jurisdiction of incorporation and results in a reclassification, conversion or exchange of outstanding shares of our common stock solely into shares of common stock of the surviving entity.
However, a Change in Control will not be deemed to have occurred if either (A) the closing price per share of our common stock on the NYSE for any five NYSE trading days within the period of 10 consecutive NYSE trading days ending immediately after the later of the Change in Control or the public announcement of the Change in Control, in the case of a Change in Control relating to an acquisition of capital stock, or the period of 10 consecutive NYSE trading days ending immediately before the Change in Control, in the case of Change in Control relating to a merger, consolidation or asset sale, equals or exceeds 105% of the conversion price of the Debentures in effect on each of those NYSE trading days or (B) all of the consideration (excluding cash payments for fractional shares and cash payments made pursuant to dissenters' appraisal rights) in a merger or consolidation otherwise constituting a Change in Control under clause (1) and/or clause (2) above consists of shares of common stock traded on a national securities exchange or quoted on the Nasdaq National Market (or will be so traded or quoted immediately following the merger or consolidation) and as a result of the merger or consolidation the Debentures become convertible into such common stock.
For purposes of these provisions:
- the conversion price is equal to $1,000 divided by the conversion rate;
- whether a person is a "beneficial owner" will be determined in accordance with Rule 13d-3 under the Exchange Act; and
- "person" includes any syndicate or group that would be deemed to be a "person" under Section 13(d)(3) of the Exchange Act.
Rule 13e-4 under the Exchange Act requires the dissemination of prescribed information to security holders in the event of an issuer tender offer and may apply in the event that the repurchase option becomes available to the holders of Debentures. We will comply with this rule to the extent it applies at that time.
The definition of Change in Control includes a phrase relating to the conveyance, transfer, sale, lease or disposition of "all or substantially all" of our assets. There is no precise, established definition of the phrase "substantially all" under applicable law. Accordingly, the ability of a holder of Debentures to require us to repurchase its notes as a result of the conveyance, transfer, sale, lease or other disposition of less than all of our assets may be uncertain.
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The foregoing provisions would not necessarily provide the holders of Debentures with protection if we are involved in a highly leveraged or other transaction that may adversely affect the holders.
If a Change in Control were to occur, we may not have enough funds to pay the Change in Control repurchase price. See "Risk Factors" under the caption "We May Be Unable to Repay the Debentures When Due or Repurchase the Debentures When We Are Required to Do So." In addition, we have, and may in the future incur, other indebtedness with similar change in control provisions permitting its holders to accelerate or to require us to repurchase our indebtedness upon the occurrence of similar events or on some specified dates. If we fail to repurchase the Debentures when required following a Change in Control, we will be in default under the Indenture.
MERGER AND SALES OF ASSETS BY CALPINE
We may not consolidate with or merge with or into any other person or sell, assign, convey, transfer, or lease or otherwise dispose of all or substantially all of our properties and assets as an entirety to any person unless:
- we shall be the surviving corporation;
- the person formed by the consolidation or into which we are merged or the person to which our properties and assets are so sold, assigned, conveyed, transferred, leased or otherwise disposed of, shall be a corporation, organized and existing under the laws of the United States, any State within the United States or the District of Columbia and shall expressly assume, in a form reasonably satisfactory to the Trustee, all of our obligations under the Indenture and the Debentures; and
- immediately after giving effect to the transaction, no event of default with respect to the Debentures will have occurred and be continuing.
EVENTS OF DEFAULT
The following are events of default with respect to the Debentures (each, an "Event of Default"):
- default for 30 days in payment of any interest installment due and payable on the Debentures (after any Upward Interest Adjustment or any election by us to pay cash interest on the Debentures following a Tax Event);
- default in payment of principal of the Debentures (or, if we have elected to pay cash interest on the Debentures following a Tax Event, the Restated Principal Amount) and accrued interest (including any interest payable pursuant to an Upward Interest Adjustment) at maturity, upon redemption, repurchase or following a change in control, when the same becomes due and payable;
- material default in our performance of any other covenants or agreements in the Debentures or the Indenture which default continues for 30 days after the date on which written notice of such default is given to us by the Trustee or to us and Trustee by the holders of at least 25% in principal amount of the then outstanding Debentures;
- default by us under any instrument or instruments under which there is or may be secured or evidenced any of our indebtedness (other than the Debentures) having an outstanding principal amount of $50,000,000 (or its equivalent in any other currency or currencies) or more, individually or in the aggregate, that has caused the holders thereof to declare such indebtedness to be due and payable prior to its stated maturity, unless such declaration has been rescinded within 30 days;
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- default in the payment of the principal of any bond, debenture, note or other evidence of our indebtedness, in each case for money borrowed, or in the payment of principal under any mortgage, indenture, agreement or instrument under which there may be issued or by which there may be secured or evidenced any indebtedness of ours for money borrowed, which default for payment of principal is individually or in an aggregate principal amount exceeding $50,000,000 (or its equivalent in any other currency or currencies) when such indebtedness becomes due and payable (whether at maturity, upon redemption or acceleration or otherwise), if such default shall continue unremedied or unwaived for more than 30 days after the expiration of any grace period or extension of the time for payment applicable thereto; and
- certain events of bankruptcy, insolvency and reorganization.
The Indenture requires that we file annually with the Trustee a certificate describing any default by us in the performance of any conditions or covenants that has occurred under the Indenture and its status. We must give the Trustee, within 30 days after the occurrence thereof, written notice of any event which with the giving of notice or lapse of time or both would become an Event of Default described in the fourth, fifth and sixth bullet points above.
The Indenture provides that if an Event of Default (other than an Event of Default relating to certain events of bankruptcy, insolvency and reorganization) occurs and is continuing with respect to the Debentures, either the Trustee or the registered holders of at least 25% in aggregate principal amount of the Debentures, may declare the issue price plus accrued and unpaid interest on the Debentures to be due and payable immediately. If an Event of Default relating to certain events of bankruptcy, insolvency or reorganization occurs, the issue price plus accrued and unpaid interest on the Debentures will become immediately due and payable without any action on the part of the Trustee or any holder. At any time after a declaration of acceleration, but before a judgment or decree for payment of money has been obtained, if all Events of Default with respect to the Debentures have been cured or waived (other than the nonpayment of the issue price or accrued and unpaid interest on the Debentures which has become due solely by reason of the declaration of acceleration), then the declaration of acceleration shall be automatically annulled and rescinded.
A holder of Debentures may pursue any remedy under the Indenture only if:
- the holder gives the Trustee written notice of a continuing Event of Default for the Debentures;
- the holders of at least 25% in principal amount of the outstanding Debentures make a written request to the Trustee to pursue the remedy;
- the holder offers to the Trustee security and indemnity reasonably satisfactory to the Trustee against any loss, liability or expense;
- the Trustee fails to act for a period of 60 days after receipt of notice, request and offer of security or indemnity; and
- during that 60-day period, the holders of a majority in principal amount of the Debentures do not give the Trustee a direction inconsistent with the request.
This provision does not, however, affect the right of a holder of Debentures to sue for enforcement of payment of the principal of or interest, including Liquidated Damages (as defined below) on the holder's Debenture on or after the respective due dates expressed or provided for in its Debenture or the holder's right to convert its Debenture in accordance with the Indenture.
The Trustee is entitled under the Indenture, subject to the duty of the Trustee during a default to act with the required standard of care, to be indemnified before proceeding to exercise any right or power under the Indenture at the direction of the registered holders of the
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Debentures or which requires the Trustee to expend or risk its own funds or otherwise incur any financial liability. The Indenture also provides that the registered holders of a majority in principal amount of the outstanding Debentures may direct the time, method and place of conducting any proceeding for any remedy available to the Trustee or exercising any trust or power conferred on the Trustee with respect to the Debentures. The Trustee, however, may refuse to follow any such direction that the Trustee determines is unduly prejudicial to the rights of other registered holders of the Debentures, or would involve the Trustee in personal liability; provided that the Trustee may take any other action deemed proper by it that is not inconsistent with such direction.
The Indenture provides that while the Trustee generally must mail notice of a default or Event of Default to the registered holders of the debt securities of any series issued under the Indenture within 90 days of the Trustee's actual knowledge of the occurrence, the Trustee may withhold notice of any default or Event of Default (except in payment on the debt securities) if the Trustee in good faith determines that the withholding of such notice is in the interest of the registered holders of that series of debt securities.
MODIFICATION AND WAIVER
We may amend or supplement the Indenture if the holders of a majority in principal amount of the Debentures consent to it. Without the consent of the holder of each Debenture affected, however, no modification may:
- reduce the amount of Debentures whose holders must consent to an amendment, supplement or waiver;
- reduce the rate of interest or change the time for payment of interest on the Debentures;
- make any change in the method of determining whether an Upward Interest Adjustment shall be made for a semi-annual period;
- reduce the issue price of the Debentures or change its stated maturity;
- make any change in any redemption or repurchase right to the detriment of such holder;
- make payments on the Debentures payable in currency or consideration other than as originally stated in the Debentures;
- impair the holder's right to receive payment of principal and interest on the Debentures or to institute suit for the enforcement of any payment on the Debentures;
- make any change in the percentage of principal amount of Debentures necessary to waive compliance with some provisions of the Indenture or to make any change in this provision for modification; or
- waive a continuing default or Event of Default regarding any payment on the Debentures.
We may amend or supplement the Indenture or waive any provision of it without the consent of any holders of Debentures in some circumstances, including:
- to cure any ambiguity, omission, defect or inconsistency;
- to provide for the assumption of our obligations under the Indenture by a successor upon any merger, consolidation or asset transfer permitted under the Indenture;
- to provide for uncertificated Debentures in addition to or in place of certificated Debentures or to provide for bearer Debentures;
- to provide any security for or guarantees of the Debentures;
- to comply with any requirement to effect or maintain the qualification of the Indenture under the Trust Indenture Act of 1939;
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- to add covenants that would benefit the holders of Debentures or to surrender any rights we have under the Indenture; or
- to make any change that does not adversely affect the rights of any holder of the Debentures, including, without limitation, changing any payment record dates as necessary to conform to the then current market practice.
The holders of a majority in principal amount of the outstanding Debentures may waive any existing or past default or Event of Default. Those holders may not, however, waive any default or Event of Default in any payment of principal or interest on any Debenture or compliance with a provision that cannot be amended or supplemented without the consent of each holder affected.
CALCULATIONS IN RESPECT OF DEBENTURES
We will be responsible for making all calculations called for under the Debentures. These calculations include, but are not limited to, determinations of the market prices of the Debentures and of our common stock, accrued interest payable on the Debentures, the Accreted Value of the Debentures, the Restated Principal Amount of the Debentures and the Accreted Conversion Price of the Debentures. We will make all these calculations in good faith and, absent manifest error, our calculations will be final and binding on holders of Debentures. We will provide a schedule of our calculations to the Trustee, and the Trustee is entitled to rely upon the accuracy of our calculations without independent verification. The Trustee will forward our calculations to any holder of Debentures upon the request of that holder.
LIMITATIONS OF CLAIMS IN BANKRUPTCY
If a bankruptcy proceeding is commenced in respect of us, the claim of a holder of Debentures is, under Title 11 of the United States Code, limited to the issue price of the Debentures plus accrued interest from the date of issue to the commencement of the proceeding.
GOVERNING LAW
The Indenture and the Debentures will be governed by, and construed in accordance with, the laws of the State of New York.
TRUSTEE
Wilmington Trust Company will initially act as Trustee and paying agent for the Debentures. Wilmington Trust Company currently acts as trustee under:
- an indenture with Calpine and Calpine's subsidiary, Calpine Capital Trust III, dated as of August 9, 2000,
- an indenture with Calpine dated as of August 10, 2000, and
- an indenture with Calpine's subsidiary, Calpine Canada Energy Finance ULC, pursuant to which Calpine has guaranteed Senior Notes issued by such subsidiary.
A number of Calpine's series of debt securities are presently outstanding under certain of the above indentures. We may have in the future other relationships with Wilmington Trust Company.
If an Event of Default occurs and is continuing, the Trustee will be required to use the degree of care and skill of a prudent man under the circumstances in the conduct of his own affairs. The Trustee will become obligated to exercise any of its powers under the Indenture at the request of any of the holders of any Debentures only after those holders have offered the Trustee indemnity reasonably satisfactory to it.
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If the Trustee becomes one of our creditors, it will be subject to limitations in the Indenture on its rights to obtain payment of claims or to realize on some property received for any such claim, as security or otherwise. The Trustee is permitted to engage in other transactions with us. If, however, it acquires any conflicting interest, it must eliminate that conflict or resign.
FORM, EXCHANGE, REGISTRATION AND TRANSFER
We issued the Debentures in registered form, without interest coupons. We will not charge a service charge for any registration of transfer or exchange of the Debentures. We may, however, require the payment of any tax or other governmental charge payable for that registration.
Debentures are exchangeable for other Debentures, for the same total principal amount and for the same terms but in different authorized denominations in accordance with the Indenture. Holders may present Debentures for registration of transfer at the office of the security registrar or any transfer agent we designate. The security registrar or transfer agent will effect the transfer or exchange when it is satisfied with the documents of title and identity of the person making the request.
We have appointed the Trustee as security registrar for the Debentures. We may at any time rescind that designation or approve a change in the location through which any registrar acts. We are required to maintain an office or agency for transfers and exchanges in each place of payment. We may at any time designate additional registrars for the Debentures.
In the case of any redemption, the security registrar will not be required to register the transfer or exchange of any Debentures either:
- during a period beginning 15 days prior to the mailing of the relevant notice of redemption and ending on the close of business on the day of mailing of the notice, or
- if the Debentures have been called for redemption, in whole or in part, except the unredeemed portion of any Debentures being redeemed in part.
PAYMENT AND PAYING AGENTS
Payments on the Debentures will be made in U.S. dollars at the office of the Trustee. At our option, however, we may make payments by check mailed to the holder's registered address or, with respect to global Debentures, by wire transfer. We will make interest payments to the person in whose name the Debentures is registered at the close of business on the record date for the interest payment.
The Trustee is designated as our paying agent for payments on Debentures. We may at any time designate additional paying agents or rescind the designation of any paying agent or approve a change in the office through which any paying agent acts.
Subject to the requirements of any applicable abandoned property laws, the Trustee and paying agent shall pay to us upon written request any money held by them for payments on the Debentures that remain unclaimed for two years after the date upon which that payment has become due. After payment to us, holders entitled to the money must look to us for payment. In that case, all liability of the Trustee or paying agent with respect to that money will cease.
NOTICES
Except as otherwise described in this prospectus, notice to registered holders of the Debentures will be given by mail to the holders at the addresses as they appear in the security register. Notices will be deemed to have been given on the date of such mailing.
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REPLACEMENT OF DEBENTURES
We will replace any Debentures that become mutilated, destroyed, stolen or lost at the expense of the holder upon delivery to the Trustee of the mutilated Debentures or evidence of the loss, theft or destruction satisfactory to us and the Trustee. In the case of lost, stolen or destroyed Debentures, indemnity satisfactory to the Trustee and us may be required at the expense of the holder of the Debentures before a replacement note will be issued.
PAYMENT OF STAMP AND OTHER TAXES
We will pay all stamp and other duties, if any, which may be imposed by the United States or any political subdivision thereof or taxing authority thereof or therein with respect to the issuance of the Debentures. We will not be required to make any payment with respect to any other tax, assessment or governmental charge imposed by any government or any political subdivision thereof or taxing authority thereof or therein.
BOOK-ENTRY SYSTEM
The Debentures are represented by one or more Global Securities (each a "Global Security"). Each Global Security is deposited with, or on behalf of, DTC and registered in the name of a nominee of DTC. Except under circumstances described below, the Debentures have been issued in definitive form.
Upon the issuance of a Global Security, DTC will credit on its book-entry registration and transfer system the accounts of persons designated by the underwriter with the respective principal amounts of the Debentures represented by the Global Security. Ownership of beneficial interests in a Global Security will be limited to persons that have accounts with DTC or its nominee ("participants") or persons that may hold interests through participants. Ownership of beneficial interests in a Global Security will be shown on, and the transfer of that ownership will be effected only through, records maintained by DTC or its nominee (with respect to interests of persons other than participants). The laws of some states require that some purchasers of securities take physical delivery of the securities in definitive form. Such limits and such laws may impair the ability to transfer beneficial interests in a Global Security.
So long as DTC or its nominee is the registered owner of a Global Security, DTC or its nominee, as the case may be, will be considered the sole owner or holder of the Debentures represented by that Global Security for all purposes under the Indenture. Except as provided below, owners of beneficial interests in a Global Security will not be entitled to have Debentures represented by that Global Security registered in their names, will not receive or be entitled to receive physical delivery of Debentures in definitive form and will not be considered the owners or holders thereof under the Indenture. Principal and interest payments, if any, on Debentures registered in the name of DTC or its nominee will be made to DTC or its nominee, as the case may be, as the registered owner of the relevant Global Security. Neither our company, the Trustee, any paying agent nor the registrar for the Debentures will have any responsibility or liability for any aspect of the records relating to, or payments made on account of beneficial interests in, a Global Security or for maintaining, supervising or reviewing any records relating to such beneficial interests.
We expect that DTC or its nominee, upon receipt of any payment of principal or interest, if any, will credit immediately participants' accounts with payments in amounts proportionate to their respective beneficial interests in the principal amount of the relevant Global Security as shown on the records of DTC or its nominee. We also expect that payments by participants to owners of beneficial interests in a Global Security held through these participants will be governed by standing instructions and customary practices, as is the case with securities held for the accounts of customers in bearer form or registered in "street name," and will be the responsibility of the participants.
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If DTC is at any time unwilling or unable to continue as a depositary and a successor depositary is not appointed by us within 90 days, we will issue Debentures in definitive form in exchange for each entire Global Security. In addition, we may at any time and in our sole discretion determine not to have Debentures represented by Global Securities and, in such event, will issue Debentures in definitive form in exchange for each entire Global Security relating to the Debentures. In any such instance, an owner of a beneficial interest in a Global Security will be entitled to physical delivery in definitive form of Debentures represented by the Global Security equal in principal amount to such owner's beneficial interest and to have the Debentures registered in its name. Debentures so issued in definitive form will be issued as registered Debentures in denominations of $1,000 and multiples thereof, unless otherwise specified by us.
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REGISTRATION RIGHTS
We entered into a registration rights agreement with the Initial Purchaser (the "Registration Rights Agreement"). In the Registration Rights Agreement we agreed, for the benefit of the holders of the Debentures and the shares of common stock issuable upon conversion of the Debentures (together, the "Registrable Securities") that we would, at our expense:
- file with the SEC, within 90 days after the date the Debentures were originally issued, a shelf registration statement covering resales of the Registrable Securities;
- use our best efforts to cause the shelf registration statement to be declared effective under the Securities Act within 180 days after the date the Debentures were originally issued, subject to our right to postpone having the shelf registration statement declared effective for an additional 90 days in limited circumstances; and
- use our best efforts to keep effective the shelf registration statement until two years after the date the Debentures were issued or, if earlier, until there are no outstanding Registrable Securities (the "Effectiveness Period").
We may suspend the use of the prospectus that is part of the shelf registration statement in connection with the sales of Registrable Securities during prescribed periods of time for reasons relating to the acquisition or divestiture of assets, pending corporate developments, and similar events. We will provide to each holder of Registrable Securities copies of the prospectus that is a part of the shelf registration statement, notify each holder when the shelf registration statement has become effective and take certain other actions required to permit public resales of the Registrable Securities.
We may, upon written notice to all the holders of Registrable Securities, postpone having the shelf registration statement declared effective, for a reasonable period not to exceed 90 days if we possess material non-public information, the disclosure of which would have a material adverse effect on us and our subsidiaries, taken as a whole. Notwithstanding any such postponement, additional interest ("Liquidated Damages") will accrue on the Debentures (or on the common stock into which any Debentures have been converted) if either of the following events ("Registration Defaults") occurs:
- on or prior to 90 days following the date the Debentures were originally issued, a shelf registration statement has not been filed with the SEC; or
- on or prior to 180 days following the date the Debentures were originally issued, the shelf registration statement is not declared effective.
In that case, Liquidated Damages will accrue on the Registrable Securities from and including the day following the Registration Default to but excluding the day on which the Registration Default has been cured. Liquidated Damages will be paid semi-annually in arrears, with the first semi-annual payment due on the first interest payment date following the date of such Registration Default. Liquidated Damages accrue either on the principal amount of the Debentures on the date following the Registration Default or based on the Accreted Conversion Price (as defined below) on the day following the Registration Default (whether or not any Debentures remain outstanding after that date). "Accreted Conversion Price" shall mean, as of any date, the Accreted Value divided by the number of shares of our common stock issuable upon conversion of a Debenture on such date.
The rates at which Liquidated Damages will accrue will be as follows:
- 0.25% of the principal amount of the Debentures (or the Accreted Conversion Price) to and including the 90th day after the Registration Default; and
- 0.50% of the principal amount of the Debentures (or the Accreted Conversion Price) from and after the 91st day after the Registration Default.
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We have agreed in the Registration Rights Agreement to use our best efforts to cause the shares of common stock issuable upon conversion of the Debentures to be listed on the NYSE or other stock exchange or trading system on which our common stock primarily trades on or prior to the Effective Time of the shelf registration statement.
This summary of certain provisions of the Registration Rights Agreement may not contain all the information important to you. You may request from us a copy of the Registration Rights Agreement.
CALCULATIONS IN RESPECT OF DEBENTURES
We will be responsible for making all calculations called for under the Debentures. These calculations include, but are not limited to, determinations of the market prices of the Debentures and of our common stock, accrued interest payable on the Debentures, the Accreted Value of the Debentures, the Restated Principal Amount of the Debentures and the Accreted Conversion Price of the Debentures. We will make all these calculations in good faith and, absent manifest error, our calculations will be final and binding on holders of Debentures. We will provide a schedule of our calculations to the Trustee, and the Trustee is entitled to rely upon the accuracy of our calculations without independent verification. The Trustee will forward our calculations to any holder of Debentures upon the request of that holder.
LIMITATIONS OF CLAIMS IN BANKRUPTCY
If a bankruptcy proceeding is commenced in respect of us, the claim of a holder of Debentures is, under Title 11 of the United States Code, limited to the issue price of the Debentures plus accrued interest from the date of issue to the commencement of the proceeding.
GOVERNING LAW
The Indenture and the Debentures will be governed by, and construed in accordance with, the laws of the State of New York.
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DESCRIPTION OF CAPITAL STOCK
Calpine's authorized capital stock consists of 1,000,000,000 shares of common stock, $.001 par value, and 10,000,000 shares of preferred stock, $.001 par value. The following summary is qualified in its entirety by the provisions of Calpine's amended and restated certificate of incorporation and bylaws, which have been incorporated by reference as exhibits to the Registration Statement of which this prospectus constitutes a part. The information provided below reflects the 2 for 1 split of our common stock that became effective on October 7, 1999, the 2 for 1 split of our common stock that became effective on June 8, 2000 and the 2 for 1 split of our common stock that became effective on November 14, 2000.
COMMON STOCK
The holders of common stock are entitled to one vote per share on all matters to be voted upon by stockholders. Subject to preferences that may be applicable to any outstanding preferred stock, the holders of common stock are entitled to receive ratably such dividends, if any, as may be declared from time to time by the board of directors out of legally available funds. See "-- Dividend Policy." In the event of our liquidation, dissolution or winding up, the holders of common stock are entitled to share ratably in all assets remaining after payment of liabilities, subject to prior liquidation rights of preferred stock, if any, then outstanding. The common stock has no preemptive or conversion rights or other subscription rights. There are no redemption or sinking fund provisions applicable to the common stock. All shares of common stock to be outstanding upon the redemption or exchange of the exchangeable shares will be fully paid and non-assessable. Pursuant to a rights agreement entered into in June of 1997, our shares of common stock outstanding prior to the occurrence of events specified in the rights agreement have certain preferred share purchase rights, which are set forth in more detail in the rights agreement incorporated by reference as an exhibit to the registration statement of which this prospectus constitutes a part." See "-- Anti-Takeover Effects of Provisions of the Certificate of Incorporation, Bylaws, Rights Plan and Delaware Law."
DIVIDEND POLICY
We do not anticipate paying any cash dividends on our common stock in the foreseeable future because we intend to retain our earnings to finance the expansion of our business and for general corporate purposes. In addition, our ability to pay cash dividends is restricted under certain of our indentures and our other debt agreements. Future cash dividends, if any, will be at the discretion of our board of directors and will depend upon, among other things, our future operations and earnings, capital requirements, general financial condition, contractual restrictions and such other factors as the board of directors may deem relevant.
PREFERRED STOCK
As of October 16, 2001, there was one share of preferred stock outstanding (see the discussion of Calpine's special voting preferred stock, below). The board of directors has the authority, without further vote or action by our stockholders, to issue from time to time up to a total of 10,000,000 shares of preferred stock in one or more series, and to fix the rights, preferences, privileges, qualifications, limitations and restrictions granted to or imposed upon any wholly unissued shares of undesignated preferred stock, including without limitation dividend rights, if any, voting rights, if any, and liquidation and conversion rights, if any. The board of directors has the authority to fix the number of shares constituting any series and the designations of such series without any further vote or action by our stockholders. The board of directors, without stockholder approval, can issue preferred stock with voting and conversion rights which could adversely affect the voting power of the holders of our common stock. The issuance of preferred stock may have the effect of delaying, deferring or preventing a change in control of our company, or could delay or prevent a transaction that might otherwise give our
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stockholders an opportunity to realize a premium over the then prevailing market price of the common stock.
Calpine's board of directors has authorized the issuance of up to 1,000,000 shares of Series A Participating Preferred Stock, par value $.001 per share, pursuant to a rights plan adopted by Calpine's board of directors on June 5, 1997, which Calpine amended on September 19, 2001. As of October 16, 2001, no shares of Calpine's participating preferred stock were outstanding. A description of the rights plan and the participating preferred stock is set forth under "-- Anti-Takeover Effects of Provisions of the Certificate of Incorporation, Bylaws, Rights Plan and Delaware Law," below.
Upon consummation of the Encal business combination, a series of preferred stock of Calpine, consisting of one share, was designated as Special Voting Preferred Stock of Calpine, having a par value of $.001 per share, and a liquidation preference of $.001. Except as otherwise required by law or our certificate of incorporation, the one share of special voting preferred stock possesses a number of votes for the election of directors and on all other matters submitted to a vote of our stockholders equal to the number of outstanding Calpine common equivalent shares issued by our wholly-owned subsidiary, Calpine Canada Holdings Ltd., from time to time and not owned by us or any entity controlled by us. The holders of our common stock and the holder of our special voting preferred stock vote together as a single class on all matters on which holders of our common stock are eligible to vote. In the event of our liquidation, dissolution or winding-up, all outstanding Calpine common equivalent shares will automatically be exchanged for shares of our common stock, and the holder of the special voting preferred stock will not be entitled to receive any of our assets available for distribution to our stockholders. The holder of special voting preferred stock will not be entitled to receive dividends. The share of special voting preferred stock was issued to CIBC Mellon Trust Company, as trustee under a voting and exchange trust agreement among us, Calpine Canada Holdings Ltd. and the trustee. At such time as the one share of special voting preferred stock has no votes attached to it because there are no Calpine common equivalent shares outstanding not owned by us or an entity controlled by us, the one share of special voting preferred stock will be canceled.
ANTI-TAKEOVER EFFECTS OF PROVISIONS OF THE CERTIFICATE OF INCORPORATION, BYLAWS, RIGHTS PLAN AND DELAWARE LAW
Certificate of Incorporation and Bylaws
Our amended and restated certificate of incorporation and bylaws provide that our board of directors is classified into three classes of directors serving staggered, three-year terms. The certificate of incorporation also provides that directors may be removed only by the affirmative vote of the holders of two-thirds of the shares of our capital stock entitled to vote, voting together as a single class. Any vacancy on the board of directors may be filled only by vote of the majority of directors then in office. Further, the certificate of incorporation provides that any business combination (as defined therein) requires the affirmative vote of the holders of two-thirds of the shares of our capital stock entitled to vote, voting together as a single class. The certificate of incorporation also provides that all stockholder actions must be effected at a duly called meeting and not by a consent in writing. Our certificate of incorporation provides that a special meeting of stockholders may be called only by the chairman of Calpine's board of directors, or by the chairman or secretary upon the written request of a majority of the total number of directors Calpine would have if there were no vacancies on its board of directors. These provisions of the certificate of incorporation and bylaws could discourage potential acquisition proposals and could delay or prevent a change in control of our company. These provisions are intended to enhance the likelihood of continuity and stability in the composition of the board of directors and in the policies formulated by the board of directors and to discourage certain types of transactions that may involve an actual or threatened change of control of our company. These provisions are designed to reduce our vulnerability to an unsolicited acquisition
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proposal. The provisions also are intended to discourage certain tactics that may be used in proxy fights. However, such provisions could have the effect of discouraging others from making tender offers for our shares and, as a consequence, they also may inhibit fluctuations in the market price of our shares that could result from actual or rumored takeover attempts. Such provisions also may have the effect of preventing changes in our management.
Rights Plan
On June 5, 1997, we adopted a stockholders' rights plan to strengthen our ability to protect our stockholders, which we amended on September 19, 2001. The rights plan is designed to protect against abusive or coercive takeover tactics that are not in the best interests of Calpine or its stockholders. To implement the rights plan, we declared a dividend of one preferred share purchase right for each outstanding share of our common stock held on record as of June 18, 1997, and directed the issuance of one preferred share purchase right with respect to each share of our common stock that shall become outstanding thereafter until the rights become exercisable or they expire as described below. Each right initially represents a contingent right to purchase, under certain circumstances, one one-thousandth of a share, called a "unit," of our Series A Participating Preferred Stock, par value $.001 per share, at a price of $140.00 per unit, subject to adjustment. The rights become exercisable and trade independently from our common stock upon the public announcement of the acquisition by a person or group of 15% or more of our common stock, or ten days after commencement of a tender or exchange offer that would result in the acquisition of 15% or more of our common stock. Each unit purchased upon exercise of the rights will be entitled to a dividend equal to any dividend declared per share of common stock and will have one vote, voting together with the common stock. In the event of our liquidation, each share of the participating preferred stock will be entitled to any payment made per share of common stock.
If we are acquired in a merger or other business combination transaction after a person or group has acquired 15% or more of our common stock, each right will entitle its holder to purchase at the right's exercise price a number of the acquiring company's shares of common stock having a market value of twice the right's exercise price. In addition, if a person or group acquires 15% or more of our common stock, each right will entitle its holder (other than the acquiring person or group) to purchase, at the right's exercise price, a number of fractional shares of our participating preferred stock or shares of our common stock having a market value of twice the right's exercise price.
The rights expire on June 18, 2007, unless redeemed earlier by us. We can redeem the rights at a price of $.01 per right at any time before the rights become exercisable, and thereafter only in limited circumstances.
Delaware Anti-Takeover Statute
We are subject to Section 203 of the Delaware General Corporation Law ("Section 203"), which, subject to certain exceptions, prohibits a Delaware corporation from engaging in any business combination with any interested stockholder for a period of three years following the date that such stockholder became an interested stockholder, unless: (1) prior to such date, the board of directors of the corporation approved either the business combination or the transaction that resulted in the stockholder becoming an interested stockholder;
(2) upon consummation of the transaction that resulted in the stockholder becoming an interested stockholder, the interested stockholder owned at least 85% of the voting stock of the corporation outstanding at the time the transaction commenced, excluding for purposes of determining the number of shares outstanding those shares owned (x) by persons who are directors and also officers and (y) by employee stock plans in which employee participants do not have the right to determine confidentially whether shares held subject to the plan will be tendered in a tender or exchange offer; or (3) on or subsequent to such date, the business combination is approved by the board
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of directors and authorized at an annual or special meeting of stockholders, and not by written consent, by the affirmative vote of at least 66 2/3% of the outstanding voting stock that is not owned by the interested stockholder.
Section 203 defines the term business combination to include: (1) any merger or consolidation involving the corporation or any of its direct or indirect majority-owned subsidiaries and the interested stockholder; (2) any sale, transfer, pledge or other disposition of 10% or more of the assets of the corporation or any of its direct or indirect majority-owned subsidiaries involving the interested stockholder; (3) subject to certain exceptions, any transaction that results in the issuance or transfer by the corporation of any stock of the corporation or that subsidiary to the interested stockholder; (4) any transaction involving the corporation or any of its direct or indirect majority-owned subsidiaries that has the effect of increasing the proportionate share of the stock of any class or series of the corporation or that subsidiary beneficially owned by the interested stockholder; or (5) the receipt by the interested stockholder of the benefit of any loans, advances, guarantees, pledges or other financial benefits provided by or through the corporation or any of its direct or indirect majority-owned subsidiaries. In general, Section 203 defines an interested stockholder as any entity or person beneficially owning 15% or more of the outstanding voting stock of the corporation and any entity or person affiliated with or controlling or controlled by such entity or person.
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CERTAIN UNITED STATES FEDERAL INCOME TAX CONSEQUENCES
The following is a summary of the material United States federal income tax consequences of the purchase, ownership and disposition of the Debentures and Calpine's common stock into which the Debentures may be converted. Unless otherwise stated, this summary deals only with Debentures or common stock held as capital assets by U.S. Holders. As used in this prospectus, "U.S. Holders" are any beneficial owners of the Debentures or common stock, that are, for United States federal income tax purposes: (1) citizens or residents of the United States, (2) corporations created or organized in or under the laws of the United States, any state thereof or the District of Columbia, (3) estates, the income of which is subject to United States federal income taxation regardless of its source, or (4) trusts if (A) a court within the United States is able to exercise primary supervision over the administration of the trust and (B) one or more United States persons have the authority to control all substantial decisions of the trust. As used in this prospectus, "Non-U.S. Holders" are holders of the securities that are, for United States federal income tax purposes (1) nonresident alien individuals; (2) foreign corporations; or (3) foreign estates or trusts that are not subject to United States federal income taxation on their worldwide income. If a partnership (including for this purpose any entity treated as a partnership for United States federal income tax purposes) is a beneficial owner of Debentures or common stock, the treatment of a partner in the partnership will generally depend upon the status of the partner and upon the activities of the partnership. A holder of Debentures or common stock that is a partnership and partners in such partnership should consult their tax advisors about the United States federal income tax consequences of holding and disposing of the Debentures or common stock, as the case may be. This summary does not deal with special classes of holders such as banks, thrifts, real estate investment trusts, regulated investment companies, insurance companies, dealers in securities or currencies, or tax-exempt investors and does not discuss Debentures or common stock held as part of a hedge, straddle, "synthetic security" or other integrated transaction. This summary also does not address the tax consequences to U.S. expatriates, persons who own, directly or indirectly, 10% or more of our voting power or persons that have a functional currency other than the U.S. dollar or the tax consequences to shareholders, partners or beneficiaries of a holder of the Debentures or common stock. Further, it does not include any description of any alternative minimum tax consequences, United States federal estate or gift tax laws or the tax laws of any state or local government or of any foreign government that may be applicable to the Debentures or common stock.
This summary applies only to the Initial Purchaser that purchases Debentures at their "issue price." The "issue price" of the Debentures will equal the first price at which a substantial amount of the Debentures is sold for cash to the public, not including sales to bond houses, brokers or similar persons or organizations acting in the capacity of underwriters, placement agents or wholesalers. This summary is based on the Internal Revenue Code of 1986, as amended, the Treasury regulations promulgated thereunder and administrative and judicial interpretations thereof, all as of the date hereof, and all of which are subject to change and differing interpretations, possibly on a retroactive basis. No statutory, administrative or judicial authority directly addresses the treatment of the Debentures or instruments similar to the Debentures for United States federal income tax purposes. Therefore, there can be no assurance that the Internal Revenue Service (the "IRS") will not challenge one or more of the conclusions described in this prospectus, and Calpine has not obtained, nor does Calpine intend to obtain, a ruling from the IRS with respect to the United States federal income tax consequences of acquiring, holding or disposing of the Debentures or the common stock.
You should consult with your own tax advisor regarding the federal, state, local and foreign income, franchise, personal property, and any other tax consequences of the purchase, ownership and disposition of the Debentures and the common stock.
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CLASSIFICATION OF THE DEBENTURES
Pursuant to the terms of the Indenture, we and each holder of the Debentures agreed, for United States federal income tax purposes, to treat the Debentures as indebtedness for United States federal income tax purposes subject to the regulations governing contingent payment debt instruments and to be bound by our application of those regulations to the Debentures, including our determination of the rate at which interest will be deemed to accrue on the Debentures for United States federal income tax purposes. The remainder of this discussion assumes that the Debentures will be treated in accordance with that agreement and our determinations. However, the proper United States federal income tax treatment of a holder of a Debenture is uncertain in various respects, and no assurance can be given that the IRS will not assert that the Debentures should be treated differently or that such an assertion would not prevail. Such treatment by the IRS and a court could affect the amount, timing and character of income, gain or loss in respect of an investment in Debentures. In particular, it might be determined that a holder should have accrued interest income at a lower rate, should not have recognized income or gain upon the conversion and should have recognized capital gain upon a taxable disposition of its Debenture. In addition, if the IRS successfully asserts that the Debentures are not debt, Non-U.S. Holders would generally be subject to a 30% United States federal withholding tax on payments of contingent interest made in respect of the Debentures.
U.S. HOLDERS
Accrual of Interest on the Debentures
Under the rules governing contingent payment debt obligations, a United States person generally will be required to accrue interest income on the Debentures, in the amounts described below, regardless of whether the U.S. Holder uses the cash or accrual method of tax accounting. Accordingly, U.S. Holders would likely be required to include interest in taxable income in each year in excess of the stated yield to maturity of the Debentures and in excess of any contingent interest payments actually received in that year.
A U.S. Holder must accrue an amount of ordinary income, as original issue discount for United States federal income tax purposes, for each accrual period prior to and including the maturity date of the Debentures that equals:
- the product of (i) the adjusted issue price (as defined below) of the Debentures as of the beginning of the accrual period; and (ii) the comparable yield to maturity (as defined below) of the Debentures, adjusted for the length of the accrual period;
- divided by the number of days in the accrual period; and
- multiplied by the number of days during the accrual period that the U.S.
Holder held the Debentures.
The issue price of a Debenture is the first price at which a substantial amount of the Debentures is sold to the public, excluding bond houses, brokers or similar persons or organizations acting in the capacity of underwriters, placement agents or wholesalers. The adjusted issue price of a Debenture is its issue price at the beginning of the first accrual period, and for any accrual period after the first accrual period will be the sum of the issue price increased by any interest income previously accrued, determined without regard to any positive or negative adjustments to interest accruals described below and decreased by the projected amounts of any payments with respect to the Debentures.
Under the rules governing contingent payment debt obligations, we are required to establish the "comparable yield" for the Debentures. We have determined that the comparable yield for the Debentures is the annual yield we would incur, as of the initial issue date, on a fixed rate nonconvertible debt security with no contingent payments, but with terms and conditions
53

otherwise comparable to those of the Debentures including the level of subordination, term, timing of payments and general market conditions, but excluding any adjustments for liquidity or the riskiness of the contingencies with respect to the Debentures. Accordingly, we have determined the comparable yield to be 9.44% per annum compounded semi-annually.
We are required to provide to U.S. Holders, solely for United States federal income tax purposes, a schedule of the projected amounts of payments on the Debentures. This schedule must produce the comparable yield. Our determination of the projected payment schedule for the Debentures includes estimates for payments of contingent interest and an estimate for a payment at maturity taking into account the conversion feature. The comparable yield and schedule of projected payments is set forth in the Indenture. U.S. Holders may also obtain the projected payment schedule by submitting a written request for it to Rick Barazza, Vice-President, Investor Relations, Calpine Corporation, 50 West San Fernando Street, San Jose, CA 95113.
THE COMPARABLE YIELD AND THE SCHEDULE OF PROJECTED PAYMENTS ARE NOT DETERMINED FOR ANY OTHER PURPOSE OTHER THAN FOR THE DETERMINATION OF A U.S. HOLDER'S INTEREST ACCRUALS AND ADJUSTMENTS THEREOF IN RESPECT OF THE DEBENTURES FOR UNITED STATES FEDERAL INCOME TAX PURPOSES AND DO NOT CONSTITUTE A PROJECTION OR REPRESENTATION REGARDING THE ACTUAL AMOUNTS PAYABLE TO U.S. HOLDERS OF THE DEBENTURES.
Adjustments to Interest Accruals on the Debentures
A U.S. Holder will be required to recognize additional interest income equal to the amount of any net positive adjustment, i.e., the excess of actual payments over projected payments, in respect of the Debentures for a taxable year. If a U.S. Holder incurs a net negative adjustment, i.e., the excess of projected payments over actual payments, in respect of the Debentures for a taxable year, the net negative adjustment will (a) reduce the U.S. Holder's interest income on the Debentures for that taxable year, and (b) to the extent of any excess after the application of (a), give rise to an ordinary loss to the extent of the U.S. Holder's interest income on the Debentures during the prior taxable years, reduced to the extent such interest was offset by prior negative adjustments.
A net negative adjustment is not subject to the two percent floor limitation imposed on miscellaneous itemized deductions under Section 67 of the Internal Revenue Code.
Sale, Exchange, Conversion or Redemption
Generally, the sale, exchange or conversion of Debentures, or the redemption of Debentures for cash, will result in taxable gain or loss to a U.S. Holder. In addition, as described above, our calculation of the comparable yield and the schedule of projected payments for the Debentures includes the receipt of stock upon conversion of Debentures into our common stock as a contingent payment with respect to the Debentures. Accordingly, we intend to treat the receipt of our common stock by a U.S. Holder upon the conversion of Debentures, or upon the redemption of Debentures where we elect to pay in common stock, as a contingent payment under the contingent payment debt rules. As described above, holders are generally bound by our determination of the comparable yield and the schedule of projected payments. Under this treatment, a sale or exchange, or such a redemption, or conversion will also result in taxable gain or loss to the U.S. Holder. The amount of gain or loss on a taxable sale, exchange or redemption will be equal to the difference between (a) the amount of cash plus the fair market value of any other property received by the U.S. Holder, including the fair market value of any common stock received, in the conversion or redemption and (b) the U.S. Holder's adjusted tax basis in the Debentures. A U.S. Holder's adjusted tax basis in Debentures will generally be equal to the U.S. Holder's original purchase price for the Debentures, increased by any interest income previously accrued by the U.S. Holder (determined without regard to any positive or negative
54

adjustments to interest accruals described above), and decreased by the amount of any projected payments on the Debentures to the U.S. Holder. Gain recognized upon a sale, exchange, conversion or redemption of Debentures will generally be treated as ordinary interest income; any loss will be ordinary loss to the extent of interest previously included in income, and thereafter, capital loss (which will be long-term if the Debentures are held for more than one year). The deductibility of net capital losses by individuals and corporations is subject to limitations.
A U.S. Holder's tax basis in our common stock received upon a conversion of Debentures or upon a holder's exercise of a put right that we elect to pay in common stock will equal the then current fair market value of such common stock. The U.S. Holder's holding period for the common stock received will commence on the day immediately following the date of conversion or redemption.
Distributions on Common Stock
If a U.S. Holder converts the Debentures into common stock, in general, distributions on the common stock that are paid out of our current or accumulated earnings and profits, as defined for United States federal income tax purposes, will constitute dividends and will be includible in income by a holder and taxable as ordinary income when received or accrued, in accordance with that holder's method of accounting for United States federal income tax purposes. If a distribution exceeds our current and accumulated earnings and profits, the excess will be treated first as a tax-free return of the U.S. Holder's investment, up to the holder's basis in the common stock. Any remaining excess will be treated as capital gain.
Constructive Dividends
If at any time we make a distribution of property to our stockholders that would be taxable to the stockholders as a dividend for federal income tax purposes and, in accordance with the anti-dilution provisions of the Debentures, the conversion rate of the Debentures is increased, such increase may be deemed to be the payment of a taxable dividend to holders of the Debentures. For example, an increase in the exchange rate in the event of distribution of our evidence of indebtedness or our assets or an increase in the event of an extraordinary cash dividend will generally result in deemed dividend treatment to holders of the Debentures, but generally an increase in the event of stock dividends or the distribution of rights to subscribe for common stock will not.
Sale or Exchange of Common Stock
In general, a U.S. Holder will recognize capital gain or loss upon the sale or exchange of the common stock equal to the difference between the amount realized on such sale or exchange and such holder's adjusted tax basis in such shares. The deductibility of net capital losses by individuals and corporations is subject to limitations. Holders should consult their tax advisors regarding the treatment of capital gains and losses.
NON-U.S. HOLDERS
The rules governing United States federal income taxation of Non-U.S. Holders are complex and no attempt will be made in this prospectus to provide more than a summary of such rules. Non-U.S. Holders should consult with their own tax advisors to determine the effect of federal, state, local and foreign income tax laws, as well as treaties, with regard to an investment in the Debentures and common stock, including any reporting requirements and, in particular, the proper application of the United States federal withholding tax rules.
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Payments Made With Respect to the Debentures
Although the matter is not free from doubt, the 30% United States federal withholding tax will not apply to any payment to a Non-U.S. Holder of principal or interest (including amounts taken into income as interest under the accrual rules described above under "-- U.S. Holders" and amounts attributable to the common stock received upon a conversion of the Debentures) on Debentures, provided that: (i) the Non-U.S. Holder does not own, actually or constructively, 10% or more of the total combined voting power of all classes of our stock entitled to vote; (ii) the Non-U.S. Holder is not a controlled foreign corporation related, directly or indirectly, to us through stock ownership;
(iii) the Non-U.S. Holder is not a bank which acquired the Debentures in consideration for an extension of credit made pursuant to a loan agreement entered into in the ordinary course of business; (iv) the Debentures and our common stock are actively traded within the meaning of Section 871(h)(4)(c)(v)(I) of the Internal Revenue Code and the Non-U.S. Holder's holdings are deemed not to be a United States real property interest within the meaning of Section 897(c)(1) of the Internal Revenue Code (as described below under "-- Foreign Investment in Real Property Tax Act"); and (v) either (A) the beneficial owner of Debentures certifies to us or our paying agent on IRS Form W-8BEN, under penalties of perjury, that it is not a United States person and provides its name, address and certain other information or (B) the beneficial owner holds its Debentures through certain foreign intermediaries or certain foreign partnerships and such holder satisfies certain certification requirements.
If the Non-U.S. Holder cannot satisfy the requirements described above, payments of interest (including amounts taken into income under the accrual rules described above under "-- U.S. Holders" and amounts attributable to the common stock received upon a conversion of the Debentures) will be subject to the 30% United States federal withholding tax unless the Non-U.S. Holder provides us with a properly executed (1) IRS Form W-8BEN (or successor form) claiming an exemption from or reduction in withholding under an applicable tax treaty or (2) IRS Form W-8ECI (or successor form) stating that interest paid on the Debentures is not subject to withholding tax because it is effectively connected with the Non-U.S. Holder's conduct of a trade or business in the United States. In addition, if the Debentures are not actively traded, within the meaning of Section 871(h)(4)(C)(v)(I) of the Internal Revenue Code, any cash interest attributable to an Upward Interest Adjustment will be subject to a 30% United States federal withholding tax, unless the Non-U.S. Holder can satisfy condition (1) or (2) described in the preceding sentence.
If a Non-U.S. Holder of the Debentures is engaged in a trade or business in the United States, and if interest on the Debentures is effectively connected with the conduct of such trade or business, the Non-U.S. Holder, although exempt from the withholding tax discussed in the preceding paragraphs, will generally be subject to regular United States federal income tax on interest and on any gain realized on the sale or exchange of the Debentures in the same manner as if it were a U.S. Holder. Such a Non-U.S. Holder will be required to provide to the withholding agent a properly executed IRS Form W-8ECI (or successor form) in order to claim an exemption from withholding tax. In addition, if such a Non-U.S. Holder is a foreign corporation, such Non-U.S. Holder may be subject to a branch profits tax equal to 30% (or such lower tax rate provided by an applicable treaty) of its effectively connected earnings and profits for the taxable year, subject to certain adjustments.
Sale or Exchange of Debentures or Common Stock
Subject to the discussion below regarding "Foreign Investment in Real Property Tax Act," a Non-U.S. Holder will generally not be subject to United States federal income or withholding tax with respect to gain upon the sale, exchange, or other disposition (other than a conversion) of Debentures or common stock, unless: (1) the income or gain is "U.S. trade or business income," which means income or gain that is effectively connected with the conduct by the Non- U.S. Holder of a trade or business, or, in the case of a treaty resident, attributable to a
56

permanent establishment or a fixed base, in the United States; (2) such Non-U.S. Holder is an individual who is present in the United States for 183 days or more in the taxable year of disposition and certain other conditions are met; (3) such Non-U.S. Holder is subject to tax pursuant to the provisions of the Internal Revenue Code applicable to certain United States expatriates; or (4) in the case of an amount which is attributable to original issue discount, the Non-U.S. Holder does not meet the conditions for exemption from United States federal withholding tax described above.
U.S. trade or business income of a Non-U.S. Holder will generally be subject to regular United States income tax in the same manner as if it were realized by a U.S. Holder. Non-U.S. Holders that realize U.S. trade or business income with respect to the Debentures or common stock should consult their tax advisors as to the treatment of such income or gain. In addition, U.S. trade or business income of a Non-U.S. Holder that is a corporation may be subject to a branch profits tax at a rate of 30%, or such lower rate provided by an applicable income tax treaty.
Distributions on Common Stock
A Non-U.S. Holder of our common stock will generally be subject to United States federal withholding tax at a 30% rate (or lower rate provided under any applicable income tax treaty) on distributions by us with respect to our common stock that are treated as dividends paid (and on dividends deemed paid on the Debentures or common stock, as described above under "U.S.
Holders -- Constructive Dividends"). Except to the extent that an applicable tax treaty otherwise provides, generally a Non-U.S. Holder will be taxed in the same manner as a U.S. Holder on dividends paid (or deemed paid) that are effectively connected with the Non-U.S. Holder's conduct of a trade or business in the United States, and a corporate Non-U.S. Holder may also be subject to a United States branch profits tax at a 30% rate or such lower rate as may be specified in an applicable income tax treaty.
FOREIGN INVESTMENT IN REAL PROPERTY TAX ACT
Under the Foreign Investment in Real Property Tax Act, any person who acquires a "United States real property interest" (as described below) from a foreign person must deduct and withhold a tax equal to 10% of the amount realized by the foreign transferor. In addition, a foreign person who disposes of a United States real property interest generally is required to recognize gain or loss that is subject to United States federal income tax. A "United States real property interest" generally includes any interest (other than an interest solely as a creditor) in a United States corporation unless it is established under specific procedures that the corporation is not (and was not for the prior five-year period) a "United States real property holding corporation." We believe that we are likely to be classified as a "United States real property holding corporation" and we can give no assurance that we will not continue to be classified as a United States real property holding corporation. However, so long as our stock is regularly traded on an established securities market, an exemption should apply to the Debentures and the common stock except
(i) in the case of Debentures, if the Debentures are or become regularly traded, with respect to a Non-U.S. Holder that owns more than 5% of the Debentures, and
(ii) otherwise, and in the case of the common stock, with respect to a Non-U.S. Holder whose beneficial and/or constructive ownership of common stock exceeds 5% of the total fair market value of the common stock.
Any investor that may approach or exceed the 5% ownership threshold discussed above, either alone or in conjunction with related persons, should consult its own tax advisor concerning the United States tax consequences that may result. A Non-U.S. Holder who sells or otherwise disposes of common stock may be required to inform its transferee whether such common stock constitutes a United States real property interest.
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BACKUP WITHHOLDING AND INFORMATION REPORTING
U.S. Holders
Payments of interest or dividends made by us on, or the proceeds of the sale or other disposition of, the Debentures or shares of common stock may be subject to information reporting and U.S. federal backup withholding tax (currently 30.5%) if the recipient of such payment fails to supply an accurate taxpayer identification number or otherwise fails to comply with applicable United States information reporting or certification requirements. Any amount withheld from a payment to a U.S. Holder under the backup withholding rules is allowable as a credit against the holder's U.S. federal income tax, provided that the required information is furnished to the IRS.
Non-U.S. Holders
A Non-U.S. Holder may be required to comply with certification procedures to establish that the holder is not a U.S. person in order to avoid backup withholding tax requirements with respect to our payments of principal and interest, including cash payments in respect of original issue discount, on the Debentures. In addition, we must report annually to the IRS and to each Non-U.S. Holder the amount of any dividends paid to, and the tax withheld with respect to, such holder, regardless of whether any tax was actually withheld. Copies of these information returns may also be made available under the provisions of a specific treaty or agreement to the tax authorities of the country in which the Non-U.S. Holder resides.
TAX EVENT
The modification of the terms of the Debentures by us upon a Tax Event could possibly alter the timing of income recognition by the holders with respect to the payments of interest due after the option exercise date.
THE PROPER TAX TREATMENT OF A HOLDER OF DEBENTURES IS HIGHLY UNCERTAIN IN A NUMBER OF RESPECTS. HOLDERS SHOULD CONSULT THEIR TAX ADVISORS REGARDING THE FEDERAL, STATE, LOCAL AND FOREIGN TAX CONSEQUENCES OF AN INVESTMENT IN THE DEBENTURES AND WHETHER AN INVESTMENT IN THE DEBENTURES IS ADVISABLE IN LIGHT OF THE AGREED UPON TAX TREATMENT AND THE HOLDER'S PARTICULAR TAX SITUATION.
LEGAL MATTERS
The validity of the Debentures and any common stock issuable upon conversion of the Debenture offered hereby will be passed upon for us by Covington & Burling, New York, New York. Hillary Prescott is a member of the Board of Directors of three wholly-owned subsidiaries of Calpine and is also a partner in the law firm of Covington & Burling.
INDEPENDENT AUDITORS
Calpine's audited financial statements incorporated by reference in this prospectus and elsewhere in this registration statement have been audited by Arthur Andersen LLP, independent public accountants, as indicated in their reports with respect thereto, and are included herein in reliance upon the authority of said firm as experts in giving said reports. The report of Ernst and Young LLP, independent public accountants, with respect to the audited financial statements of Encal Energy Ltd., which is incorporated in this prospectus by reference to Calpine's Current Report on Form 8-K, filed on September 10, 2001, is included herein in reliance upon the authority of said firm as experts in giving said report.
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PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the costs and expenses payable by Calpine in connection with resales of the securities being registered. All amounts are estimates subject to future contingencies except the SEC registration statement filing fee.

SEC Registration Statement Filing Fee.......................  $250,000.00
Legal Fees and Expenses.....................................  $ 50,000.00
Accounting Fees and Expenses................................  $  7,500.00
Printing Fees...............................................  $100,000.00
Transfer Agent Fees.........................................  $  5,000.00
Miscellaneous...............................................  $ 10,000.00
                                                              -----------
Total.......................................................  $422,500.00	

ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the General Corporation Law of the State of Delaware (the "Delaware Law") empowers a Delaware corporation to indemnify any persons who are, or are threatened to be made, parties to any threatened, pending or completed legal action, suit or proceedings, whether civil, criminal, administrative or investigative (other than action by or in the right of such corporation), by reason of the fact that such person was an officer or director of such corporation, or is or was serving at the request of such corporation as a director, officer, employee or agent of another corporation or enterprise. The indemnity may include expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by such person in connection with such action, suit or proceeding, provided that such officer or director acted in good faith and in a manner he reasonably believed to be in or not opposed to the corporation's best interests, and, for criminal proceedings, had no reasonable cause to believe his conduct was unlawful. A Delaware corporation may indemnify officers and directors in an action by or in the right of the corporation under the same conditions, except that no indemnification is permitted without judicial approval if the officer or director is adjudged to be liable to the corporation in the performance of his duty. Where an officer or director is successful on the merits or otherwise in the defense of any action referred to above, the corporation must indemnify him against the expenses which such officer or director actually and reasonably incurred.
In accordance with Delaware Law, the certificate of incorporation of Calpine contains a provision to limit the personal liability of the directors of Calpine for violations of their fiduciary duty. This provision eliminates each director's liability to Calpine or its stockholders for monetary damages except
(i) for any breach of the director's duty of loyalty to Calpine or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) under Section 174 of the Delaware Law providing for liability of directors for unlawful payment of dividends or unlawful stock purchases or redemptions, or (iv) for any transaction from which a director derived an improper personal benefit. The effect of this provision is to eliminate the personal liability of directors for monetary damages for actions involving a breach of their fiduciary duty of care, including any such actions involving gross negligence.
Article Ten of the bylaws of Calpine provides for indemnification of the officers and directors of Calpine to the fullest extent permitted by applicable law.
II-1

Calpine has entered into indemnification agreements with its directors and officers. These agreements provide substantially broader indemnity rights than those provided under the Delaware Law and Calpine's bylaws. The indemnification agreements are not intended to deny or otherwise limit third-party or derivative suits against Calpine or its directors or officers, but if a director or officer were entitled to indemnity or contribution under the indemnification agreement, the financial burden of a third-party suit would be borne by Calpine, and Calpine would not benefit from derivative recoveries against the director or officer. Such recoveries would accrue to the benefit of Calpine but would be offset by Calpine's obligations to the director or officer under the indemnification agreement. In addition, the directors of Calpine are insured under officers and directors liability insurance policies.
Reference is made to Section 5 of the Registration Rights Agreement incorporated by reference as Exhibit 4.1 hereto for a description of the indemnification arrangements in connection with the registration of the Debentures under the Securities Act.
ITEM 16. EXHIBITS

EXHIBIT
NUMBER                            DESCRIPTION
-------                           -----------
   3.1    Amended and Restated Certificate of Incorporation of Calpine
          Corporation(a)
   3.2    Certificate of Correction of Calpine Corporation(a)
  +3.3    Certificate of Amendment of Amended and Restated Certificate
          of Incorporation of Calpine Corporation
   3.4    Certificate of Designation of Series A Participating
          Preferred Stock of Calpine Corporation(a)
   3.5    Amended Certificate of Designation of Series A Participating
          Preferred Stock of Calpine Corporation(a)
  +3.6    Amended Certificate of Designation of Series A Participating
          Preferred Stock of Calpine Corporation
   3.7    Certificate of Designation of Special Voting Preferred Stock
          of Calpine Corporation(b)
   3.8    Bylaws of Calpine Corporation(c)
  +4.1    Registration Rights Agreement, dated April 30, 2001, between
          Calpine Corporation and the Initial Purchaser
   4.2    Amended and Restated Rights Agreement, dated as of September
          19, 2001, between Calpine Corporation and EquiServe Trust
          Company, N.A., as Rights Agent(d)
  *4.3    Form of Indenture between the Company and Wilmington Trust
          Company, including form of Note
  *5.1    Opinion of Covington & Burling
  *8.1    Opinion of Thelen Reid & Priest LLP as to certain tax
          matters
 +12.1    Statement Regarding Computation of Ratios
 *23.1    Consent of Arthur Andersen LLP, independent public
          accountants
 *23.2    Consent of Ernst and Young, LLP, independent public
          accountants
 *23.3    Consent of Covington & Burling (included in opinion filed as
          exhibit 5.1)
 *23.4    Consent of Thelen Reid & Priest LLP (included in opinion
          filed as exhibit 8.1)
 +24.1    Power of Attorney of Officers and Directors of Calpine
          Corporation
 +25.1    Statement of Eligibility of Trustee	

* Filed herewith.
+ Previously filed.
(a) Incorporated by reference to Calpine Corporation's Annual Report on Form 10-K dated December 31, 2000, filed with the SEC on March 15, 2001.
II-2

(b) Incorporated by reference to Calpine Corporation's Quarterly Report on Form 10-Q for the quarter ended March 31, 2001, filed with the SEC on May 15, 2001.
(c)Incorporated by reference to Calpine Corporation's Amendment No. 1 to Registration Statement on Form S-3 (Registration No. 333-67446) filed with the SEC on September 19, 2001.
(d) Incorporated by reference to Calpine's Registration Statement on Form 8-A/A filed with the SEC on September 28, 2001.
ITEM 17. UNDERTAKINGS
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement to include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement.
(2) That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering.
(4) If the registrant is a foreign private issuer, to file a post-effective amendment to the registration statement to include any financial statements required by Item 8.A of Form 20-F at the start of any delayed offering or throughout a continuous offering. Financial statements and information otherwise required by Section 10(a)(3) of the Act need not be furnished, provided, that the registrant includes in the prospectus, by means of a post-effective amendment, financial statements required pursuant to this paragraph (a)(4) and other information necessary to ensure that all other information in the prospectus is at least as current as the date of those financial statements. Notwithstanding the foregoing, with respect to registration statements on Form F-3, a post-effective amendment need not be filed to include financial statements and information required by Section 10(a)(3) of the Act or Rule 3-19 of this chapter if such financial statements and information are contained in periodic reports filed with or furnished to the Commission by the registrant pursuant to Section 13 or
Section 15(d) of the Securities Exchange Act of 1934 that are incorporated by reference in the Form F-3.
The undersigned registrant hereby undertakes that, for purposes of determining any liability under the Securities Act of 1933, each filing of the registrant's annual report pursuant to Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934, (and, where applicable, each filing of an employee benefit plan's annual report pursuant to Section 15(d) of the Securities Exchange Act of 1934) that is incorporated by reference in the registration statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.
The undersigned registrant hereby undertakes to deliver or cause to be delivered with the prospectus, to each person to whom the prospectus is sent or given, the latest annual report, to security holders that is incorporated by reference in the prospectus and furnished pursuant to and meeting the requirements of Rule 14a-3 under Rule 14c-3 under the Securities Exchange Act of 1934; and, where interim financial information required to be presented by Article 3 of Regulation S-X is not set forth in the prospectus, to deliver, or cause to be delivered to each
II-3

person to whom the prospectus is sent or given, the latest quarterly report that is specifically incorporated by reference in the prospectus to provide such interim financial information.
Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities Act of 1933 and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by them is against public policy as expressed in the Securities Act of 1933 and will be governed by the final adjudication of such issue.
II-4

SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing this Amendment No. 1 to the Registration Statement on Form S-3 and has duly caused this Amendment No. 1 to the Registration Statement on Form S-3 to be signed on its behalf by the undersigned, thereunto duly authorized in the City of San Jose, State of California, on this 18th day of October, 2001.
CALPINE CORPORATION

By:      /s/ ANN B. CURTIS

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

Ann B. Curtis
Executive Vice President
and Chief Financial Officer
Pursuant to the requirements of the Securities Act of 1933, this Amendment No. 1 to the Registration Statement on Form S-3 has been signed by the following persons in the capacities and on the dates indicated.

                     SIGNATURE                                    TITLE                     DATE
                     ---------                                    -----                     ----
                         *                             Chairman, President, Chief     October 18, 2001
---------------------------------------------------  Executive Officer and Director
                 Peter Cartwright

                 /s/ ANN B. CURTIS                   Executive Vice President, Chief  October 18, 2001
---------------------------------------------------  Financial Officer and Director
                   Ann B. Curtis

                         *                              Senior Vice President and     October 18, 2001
---------------------------------------------------   Controller, Chief Accounting
               Charles B. Clark, Jr.                             Officer

                         *                                      Director              October 18, 2001
---------------------------------------------------
                  Kenneth T. Derr

                         *                                      Director              October 18, 2001
---------------------------------------------------
                 Jeffrey E. Garten

                                                                Director
---------------------------------------------------
                 Gerald Greenwald

                                                                Director
---------------------------------------------------
                  Susan C. Schwab

                         *                                      Director              October 18, 2001
---------------------------------------------------
                George J. Stathakis

                         *                                      Director              October 18, 2001
---------------------------------------------------
                  John O. Wilson

              *By: /s/ ANN B. CURTIS
   ---------------------------------------------
                   Ann B. Curtis

                 Attorney-in-fact	

II-5

EXHIBIT INDEX

EXHIBIT
NUMBER                            DESCRIPTION
-------                           -----------
   3.1    Amended and Restated Certificate of Incorporation of Calpine
          Corporation(a)
   3.2    Certificate of Correction of Calpine Corporation(a)
  +3.3    Certificate of Amendment of Amended and Restated Certificate
          of Incorporation of Calpine Corporation
   3.4    Certificate of Designation of Series A Participating
          Preferred Stock of Calpine Corporation(a)
   3.5    Amended Certificate of Designation of Series A Participating
          Preferred Stock of Calpine Corporation(a)
  +3.6    Amended Certificate of Designation of Series A Participating
          Preferred Stock of Calpine Corporation
   3.7    Certificate of Designation of Special Voting Preferred Stock
          of Calpine Corporation(b)
   3.8    Bylaws of Calpine Corporation(c)
  +4.1    Registration Rights Agreement, dated April 30, 2001, between
          Calpine Corporation and the Initial Purchaser
   4.2    Amended and Restated Rights Agreement, dated as of September
          19, 2001, between Calpine Corporation and EquiServe Trust
          Company, N.A., as Rights Agent(d)
  *4.3    Form of Indenture between the Company and Wilmington Trust
          Company, including form of Note
  *5.1    Opinion of Covington & Burling
  *8.1    Opinion of Thelen Reid & Priest LLP as to certain tax
          matters
 +12.1    Statement Regarding Computation of Ratios
 *23.1    Consent of Arthur Andersen LLP, independent public
          accountants
 *23.2    Consent of Ernst and Young, LLP, independent public
          accountants
 *23.3    Consent of Covington & Burling (included in opinion filed as
          exhibit 5.1)
 *23.4    Consent of Thelen Reid & Priest LLP (included in opinion
          filed as exhibit 8.1)
 +24.1    Power of Attorney of Officers and Directors of Calpine
          Corporation
 +25.1    Statement of Eligibility of Trustee	

* Filed herewith.
+ Previously filed.
(a) Incorporated by reference to Calpine Corporation's Annual Report on Form 10-K dated December 31, 2000, filed with the SEC on March 15, 2001.
(b) Incorporated by reference to Calpine Corporation's Quarterly Report on Form 10-Q for the quarter ended March 31, 2001, filed with the SEC on May 15, 2001.
(c)Incorporated by reference to Calpine Corporation's Amendment No. 1 to Registration Statement on Form S-3 (Registration No. 333-67446) filed with the SEC on September 19, 2001.
(d) Incorporated by reference to Calpine's Registration Statement on Form 8-A/A filed with the SEC on September 28, 2001.

EXHIBIT 4.3
EXECUTION COPY
Calpine Corporation
Zero-Coupon Convertible Debentures due April 30, 2021
INDENTURE
Dated as of April 30, 2001
Wilmington Trust Company
TRUSTEE

TABLE OF CONTENTS

                                                                                                            Page
                                                                                                            ----

Section 1.1   Definitions...............................................................................     1
Section 1.2   Other Definitions.........................................................................     4
Section 1.3   Incorporation by Reference of Trust Indenture Act.........................................     5
Section 1.4   Rules of Construction.....................................................................     6
Section 1.5   Acts of Holders...........................................................................     6

                   ARTICLE II THE SECURITIES

Section 2.1   Form and Dating...........................................................................     7
Section 2.2   Execution and Authentication..............................................................     8
Section 2.3   Registrar, Paying Agent and Conversion Agent..............................................     9
Section 2.4   Paying Agent to Hold Money and Securities in Trust........................................     9
Section 2.5   Securityholder Lists......................................................................    10
Section 2.6   Transfer and Exchange.....................................................................    10
Section 2.7   Replacement Securities....................................................................    11
Section 2.8   Outstanding Securities; Determinations of Holders' Action.................................    12
Section 2.9   Temporary Securities......................................................................    12
Section 2.10  Cancellation..............................................................................    13
Section 2.11  Persons Deemed Owners.....................................................................    13
Section 2.12  Global Securities.........................................................................    13
Section 2.13  CUSIP Numbers.............................................................................    17
Section 2.14  Ranking...................................................................................    17

                   ARTICLE III REDEMPTION AND PURCHASES

Section 3.1   Company's Right to Redeem; Notices to Trustee.............................................    18
Section 3.2   Selection of Securities to Be Redeemed....................................................    18
Section 3.3   Notice of Redemption......................................................................    18
Section 3.4   Effect of Notice of Redemption............................................................    19
Section 3.5   Deposit of Redemption Price...............................................................    19
Section 3.6   Securities Redeemed in Part...............................................................    19
Section 3.7   Purchase of Securities at Option of the Holder............................................    19
Section 3.8   Purchase of Securities at Option of the Holder upon Change in Control.....................    25
Section 3.9   Effect of Purchase Notice or Change in Control Purchase Notice............................    31
Section 3.10  Deposit of Purchase Price or Change in Control Purchase Price.............................    32
Section 3.11  Securities Purchased in Part..............................................................    32
Section 3.12  Covenant to Comply With Securities Laws Upon Purchase of Securities.......................    32
Section 3.13  Repayment to the Company..................................................................    32

                     ARTICLE IV COVENANTS

Section 4.1   Payment of Securities.....................................................................    33
Section 4.2   SEC and Other Reports.....................................................................    33
Section 4.3   Compliance Certificate....................................................................    33
Section 4.4   Further Instruments and Acts..............................................................    34	

Section 4.5   Maintenance of Office or Agency...........................................................    34
Section 4.6   Calculation of Original Issue Discount....................................................    34

                ARTICLE V SUCCESSOR CORPORATION

Section 5.1   When Company May Merge or Transfer Assets.................................................    34

               ARTICLE VI DEFAULTS AND REMEDIES

Section 6.1   Events of Default.........................................................................    35
Section 6.2   Acceleration..............................................................................    36
Section 6.3   Other Remedies............................................................................    37
Section 6.4   Waiver of Past Defaults...................................................................    37
Section 6.5   Control by Majority.......................................................................    37
Section 6.6   Limitation on Suits.......................................................................    38
Section 6.7   Rights of Holders to Receive Payment......................................................    38
Section 6.8   Collection Suit by Trustee................................................................    38
Section 6.9   Trustee May File Proofs of Claim..........................................................    38
Section 6.10  Priorities................................................................................    39
Section 6.11  Undertaking for Costs.....................................................................    39
Section 6.12  Waiver of Stay, Extension or Usury Laws...................................................    40

                      ARTICLE VII TRUSTEE

Section 7.1   Duties of Trustee.........................................................................    40
Section 7.2   Rights of Trustee.........................................................................    41
Section 7.3   Individual Rights of Trustee..............................................................    42
Section 7.4   Trustee's Disclaimer......................................................................    42
Section 7.5   Notice of Defaults........................................................................    42
Section 7.6   Reports by Trustee to Holders.............................................................    43
Section 7.7   Compensation and Indemnity................................................................    43
Section 7.8   Replacement of Trustee....................................................................    44
Section 7.9   Successor Trustee by Merger...............................................................    44
Section 7.10  Eligibility; Disqualification.............................................................    44
Section 7.11  Preferential Collection of Claims Against Company.........................................    45

              ARTICLE VIII DISCHARGE OF INDENTURE

Section 8.1   Discharge of Liability on Securities......................................................    45

                     ARTICLE IX AMENDMENTS

Section 9.1   Without Consent of Holders................................................................    45
Section 9.2   With Consent of Holders...................................................................    46
Section 9.3   Compliance with Trust Indenture Act.......................................................    47
Section 9.4   Revocation and Effect of Consents, Waivers and Actions....................................    47
Section 9.5   Notation on or Exchange of Securities.....................................................    47
Section 9.6   Trustee to Sign Supplemental Indentures...................................................    47
Section 9.7   Effect of Supplemental Indentures.........................................................    47

                     ARTICLE X CONVERSIONS	

ii

Section 10.1   Conversion Privilege.....................................................................    47
Section 10.2   Conversion Procedure.....................................................................    48
Section 10.3   Fractional Shares........................................................................    48
Section 10.4   Taxes on Conversion......................................................................    48
Section 10.5   Company to Provide Stock.................................................................    49
Section 10.6   Conversion Price Adjustments.............................................................    49
Section 10.7   When Adjustment May Be Deferred..........................................................    52
Section 10.8   When No Adjustment Required..............................................................    52
Section 10.9   Notice of Adjustment.....................................................................    53
Section 10.10  Voluntary Increase.......................................................................    53
Section 10.11  Notice of Certain Transactions...........................................................    53
Section 10.12  Reorganization of Company; Special Distributions.........................................    53
Section 10.13  Company Determination Final..............................................................    54
Section 10.14  Trustee's Adjustment Disclaimer..........................................................    54
Section 10.15  Successive Adjustments...................................................................    54

                   ARTICLE XI MISCELLANEOUS

Section 11.1   Trust Indenture Act Controls.............................................................    54
Section 11.2   Notices..................................................................................    54
Section 11.3   Communication by Holders with Other Holders..............................................    55
Section 11.4   Certificate and Opinion as to Conditions Precedent.......................................    55
Section 11.5   Statements Required in Certificate or Opinion............................................    56
Section 11.6   Separability Clause......................................................................    56
Section 11.7   Rules by Trustee, Paying Agent, Conversion Agent and  Registrar..........................    56
Section 11.8   Legal Holidays...........................................................................    56
Section 11.9   GOVERNING LAW............................................................................    56
Section 11.10  No Recourse Against Others...............................................................    56
Section 11.11  Successors...............................................................................    56
Section 11.12  Multiple Originals.......................................................................    56	

iii

INDENTURE dated as of April 30, 2001 between CALPINE CORPORATION, a Delaware corporation ("Company"), and WILMINGTON TRUST COMPANY, a Delaware banking corporation ("Trustee").
Each party agrees as follows for the benefit of the other party and for the equal and ratable benefit of the Holders of the Company's Zero-Coupon Convertible Debentures due April 30, 2021:
DEFINITIONS AND INCORPORATION BY REFERENCE
Section 1.1 Definitions.
"144A Global Security" means a permanent Global Security in the form of the Security attached hereto as Exhibit A-1, and that is deposited with and registered in the name of the Depositary, representing Securities sold in reliance on Rule 144A under the Securities Act.
"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 person. For the purposes of this definition, "control" when used with respect to any specified person means the power to direct or cause the direction of the management and policies of such person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the terms "controlling" and "controlled" have meanings correlative to the foregoing.
"Applicable Procedures" means, with respect to any transfer or transaction involving a Global Security or beneficial interest therein, the rules and procedures of the Depositary for such Security, in each case to the extent applicable to such transaction and as in effect from time to time.
"Board of Directors" means either the board of directors of the Company or any duly authorized committee of such board.
"Board Resolution" means a copy of a resolution certified by the Secretary or an Assistant Secretary of the Company to have been duly adopted by the Board of Directors and to be in full force and effect on the date of such certification, and delivered to the Trustee.
"Business Day" means, with respect to any Security, a day that in the State of New York or in the states in which the principal corporate trust offices of the Trustee or the Paying Agent are located, is not a Saturday, a Sunday or a day on which banking institutions are not required to be open.
"Capital Stock" means any and all shares, interests, participations or other equivalents (however designated) of capital stock of a corporation or any and all equivalent ownership interests in a person (other than a corporation).
"Certificated Securities" means Securities that are in the form of the Securities attached hereto as Exhibit A-2.

"Common Stock" shall mean the common stock, $.001 par value per share, of the Company as in existence on the date of this Indenture or any other shares of Capital Stock of the Company into which such common stock shall be reclassified or changed.
"Company" means the party named as the "Company" in the first paragraph of this Indenture until a successor replaces it pursuant to the applicable provisions of this Indenture and, thereafter, shall mean such successor. The foregoing sentence shall likewise apply to any subsequent such successor or successors.
"Company Request" or "Company Order" means a written request or order signed in the name of the Company by any two Officers.
"Corporate Trust Office" means the principal office of the Trustee at which at any time its corporate trust business shall be administered, which office at the date hereof is located at Rodney Square North, 1100 North Market Street, Wilmington, Delaware 19890, Attention: Corporate Trust Administration, or such other address as the Trustee may designate from time to time by notice to the Holders and the Company, or the principal corporate trust office of any successor Trustee (or such other address as a successor Trustee may designate from time to time by notice to the Holders and the Company).
"Default" means any event which is, or after notice or passage of time or both would be, an Event of Default.
"GAAP" means generally accepted accounting principles in the United States of America as in effect and, to the extent optional, adopted by the Company, on the date of the Indenture, consistently applied.
"Global Securities" means Securities that are in the form of the Securities attached hereto as Exhibit A-1 and that are issued to a Depositary, and to the extent that such Securities are required to bear the Legend required by Section 2.6, such Securities will be in the form of a 144A Global Security.
"Holder" or "Securityholder" means a person in whose name a Security is registered on the Registrar's books.
"Indebtedness" means, without duplication, the principal or face amount of (i) all obligations for borrowed money, (ii) all obligations evidenced by debentures, notes or other similar instruments, (iii) all obligations in respect of letters of credit or bankers acceptances or similar instruments (or reimbursement obligations with respect thereto), (iv) all obligations to pay the deferred purchase price of property or services, except trade accounts payable arising in the ordinary course of business, (v) all obligations as lessee which are capitalized in accordance with GAAP, and (vi) all Indebtedness of others guaranteed by the Company or any of its Subsidiaries or for which the Company or any of its Subsidiaries is legally responsible or liable (whether by agreement to purchase indebtedness of, or to supply funds or to invest in, others).
"Indenture" means this Indenture, as amended or supplemented from time to time in accordance with the terms hereof, including the provisions of the TIA that are deemed to be a part hereof.
"Issue Date" of any Security means the date on which the Security was originally issued or deemed issued as set forth on the face of the Security.
2

"Issue Price" of any Security means, in connection with the original issuance of such Security, the initial issue price at which the Security is sold as set forth on the face of the Security.
"NYSE" means The New York Stock Exchange.
"Officer" means the Chairman of the Board, the President, any Vice President, the Chief Operating Officer, the Chief Financial Officer, the Treasurer, the Secretary, any Assistant Treasurer, any Assistant Secretary or the Controller or Principal Accounting Officer of the Company.
"Officers' Certificate" means a written certificate containing the information specified in Sections 11.4 and 11.5, signed in the name of the Company by any two Officers, and delivered to the Trustee. An Officers' Certificate given pursuant to Section 4.3 shall be signed by the principal executive, financial or accounting Officer of the Company but need not contain the information specified in Sections 11.4 and 11.5.
"Opinion of Counsel" means a written opinion containing the information specified in Sections 11.4 and 11.5, from legal counsel who is acceptable to the Trustee. The counsel may be an employee of, or counsel to, the Company or the Trustee.
"person" means any individual, corporation, limited liability company, partnership, joint venture, association, joint-stock company, trust, unincorporated organization, or government or any agency or political subdivision thereof or any other entity.
"Principal Amount at Maturity" of a Security means the principal amount of a Security (other than the Restated Principal Amount thereof ) due at the Stated Maturity of the principal thereof.
"Redemption Date" shall mean the date specified in a notice of redemption on which the Securities may be redeemed in accordance with the terms of the Securities and this Indenture.
"Redemption Price" shall have the meaning set forth in Paragraph 5 of the Securities.
"Responsible Officer" shall mean, when used with respect to the Trustee, any officer within the corporate trust department of the Trustee, including any vice president, assistant vice president, assistant secretary, assistant treasurer, trust officer or any other officer of the Trustee who customarily performs functions similar to those performed by the persons who at the time shall be such officers, respectively, or to whom any corporate trust matter is referred because of such person's knowledge of and familiarity with the particular subject and who shall have direct responsibility for the administration of this Indenture.
"Restricted Security" means a Security required to bear the restrictive legend set forth in the form of Security set forth in Exhibits A-1 and A-2 of this Indenture.
"Rule 144A" means Rule 144A under the Securities Act (or any successor provision), as it may be amended from time to time.
"SEC" means the Securities and Exchange Commission.
3

"Securities" means any of the Company's Zero-Coupon Convertible Debentures due April 30, 2021, as amended or supplemented from time to time, issued under this Indenture.
"Securityholder" or "Holder" means a person in whose name a Security is registered on the Registrar's books.
"Stated Maturity", when used with respect to any Security, means April 30, 2021.
"Subsidiary" means any person of which at least a majority of the outstanding Voting Stock shall at the time directly or indirectly be owned or controlled by the Company or by one or more Subsidiaries or by the Company and one or more Subsidiaries.
"TIA" means the Trust Indenture Act of 1939 as in effect on the date of this Indenture, provided, however, that in the event the TIA is amended after such date, TIA means, to the extent required by any such amendment, the TIA as so amended.
"trading day" means a day during which trading in securities generally occurs on the NYSE or, if the Common Stock is not listed on the NYSE, on the principal other national or regional securities exchange on which the Common Stock then is listed or, if the Common Stock is not listed on a national or regional securities exchange, on the National Association of Securities Dealers Automated Quotation System or, if the Common Stock is not quoted on the National Association of Securities Dealers Automated Quotation System, on the principal other market on which the Common Stock is then traded.
"Trustee" means the party named as the "Trustee" in the first paragraph of this Indenture until a successor replaces it pursuant to the applicable provisions of this Indenture and, thereafter, shall mean such successor. The foregoing sentence shall likewise apply to any subsequent such successor or successors.
"Voting Stock" of a person means Capital Stock of such person of the class or classes pursuant to which the holders thereof have the general voting power under ordinary circumstances to elect at least a majority of the board of directors, managers or trustees of such person (irrespective of whether or not at the time Capital Stock of any other class or classes shall have or might have voting power by reason of the happening of any contingency).
Section 1.2 Other Definitions.

Term Section:                                                    Defined in:

"Accreted Value"..............................................   Exhibit A-1
"Administrative Action........................................   Exhibit A-1
"Agent Members"...............................................   2.12(e)
"beneficial owner"............................................   3.8(a)
"Bid Solicitation Agent"......................................   Exhibit A-1
"cash"........................................................   3.7(b)
"Change in Control"...........................................   3.8(a)
"Change in Control Notice"....................................   3.8(b)
"Change in Control Notice Date"...............................   3.8(b)
"Change in Control Purchase Date".............................   3.8(a)
"Change in Control Purchase Notice"...........................   3.8(c)	

4

"Change in Control Purchase Price"............................   3.8(a)
"Code"........................................................   4.6
"Company Notice"..............................................   3.7(d)
"Company Notice Date".........................................   3.7(b)
"Conversion Agent"............................................   2.3
"Conversion Date".............................................   10.2
"Conversion Rate".............................................   10.1
"Depositary"..................................................   2.1(a)
"Downward Interest Adjustment"................................   Exhibit A-1
"Event of Default"............................................   6.1
"Exchange Act"................................................   3.7(c)
"ex" date.....................................................   10.6(g)
"Expiration Time".............................................   10.6(e)
"interest payment date".......................................   Exhibit A-1
"Legal Holiday"...............................................   11.8
"Legend"......................................................   2.6(e)
"Market Price"................................................   3.7(c)
"Notice of Default"...........................................   6.1
"Option Exercise Date"........................................   Exhibit A-1
"Paying Agent"................................................   2.3
"Purchase Date"...............................................   3.7(a)
"Purchased Shares"............................................   10.6(e)
"Purchase Notice".............................................   3.7(a)
"Purchase Price"..............................................   3.7(a)
"QIB".........................................................   2.1(a)
"Redemption Price"............................................   Exhibit A-1
"Reference Date"..............................................   10.6(d)
"Registrar"...................................................   2.3
"Restated Principal Amount"...................................   Exhibit A-1
"Sale Price"..................................................   3.7(c)
"Securities Act"..............................................   3.7(c)
"semi-annual period"..........................................   Exhibit A-1
"Tax Event"...................................................   Exhibit A-1
"Trading Price"...............................................   Exhibit A-1
"Upward Interest Adjustment"..................................   Exhibit A-1
"Upward Interest Adjustment Date".............................   Exhibit A-1	

Section 1.3 Incorporation by Reference of Trust Indenture Act. Whenever this Indenture refers to a provision of the TIA, the provision is incorporated by reference in and made a part of this Indenture. The following TIA terms used in this Indenture have the following meanings:
"Commission" means the SEC.
"indenture securities" means the Securities.
"indenture security holder" means a Securityholder.
"indenture to be qualified" means this Indenture.
5

"indenture trustee" or "institutional trustee" means the Trustee.
"obligor" on the indenture securities means the Company or any other obligor on the indenture securities.
All other TIA terms used in this Indenture that are defined by the TIA, defined by TIA reference to another statute or defined by SEC rule have the meanings assigned to them by such definitions.
Section 1.4 Rules of Construction. Unless the context otherwise requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the meaning assigned to it and shall be construed in accordance with GAAP;
(3) "or" is not exclusive;
(4) "including" means including, without limitation; and
(5) words in the singular include the plural, and words in the plural include the singular.
Section 1.5 Acts of Holders. (a) Any request, demand, authorization, direction, notice, consent, waiver or other action provided by this Indenture to be given or taken by Holders may be embodied in and evidenced by one or more instruments of substantially similar tenor signed by such Holders in person or by agent duly appointed in writing; and, except as herein otherwise expressly provided, such action shall become effective when such instrument or instruments are delivered to the Trustee and, where it is hereby expressly required, to the Company. Such instrument or instruments (and the action embodied therein and evidenced thereby) are herein sometimes referred to as the "Act" of Holders signing such instrument or instruments. Proof of execution of any such instrument or of a writing appointing any such agent shall be sufficient for any purpose of this Indenture and conclusive in favor of the Trustee and the Company, if made in the manner provided in this Section.
(b) The fact and date of the execution by any person of any such instrument or writing may be proved by the affidavit of a witness of such execution or by a certificate of a notary public or other officer authorized by law to take acknowledgments of deeds, certifying that the individual signing such instrument or writing acknowledged to such officer the execution thereof. Where such execution is by a signer acting in a capacity other than such signer's individual capacity, such certificate or affidavit shall also constitute sufficient proof of such signer's authority. The fact and date of the execution of any such instrument or writing, or the authority of the person executing the same, may also be proved in any other manner which the Trustee deems sufficient.
(c) The ownership of Securities shall be proved by the register for the Securities.
(d) Any request, demand, authorization, direction, notice, consent, waiver or other Act of the Holder of any Security shall bind every future Holder of the same Security and the holder of every Security issued upon the registration of transfer thereof or in exchange
6

therefor or in lieu thereof in respect of anything done, omitted or suffered to be done by the Trustee or the Company in reliance thereon, whether or not notation of such action is made upon such Security.
(e) If the Company shall solicit from the Holders any request, demand, authorization, direction, notice, consent, waiver or other Act, the Company may, at its option, by or pursuant to a Board Resolution, fix in advance a record date for the determination of Holders entitled to give such request, demand, authorization, direction, notice, consent, waiver or other Act, but the Company shall have no obligation to do so. If such a record date is fixed, such request, demand, authorization, direction, notice, consent, waiver or other Act may be given before or after such record date, but only the Holders of record at the close of business on such record date shall be deemed to be Holders for the purposes of determining whether Holders of the requisite proportion of outstanding Securities have authorized or agreed or consented to such request, demand, authorization, direction, notice, consent, waiver or other Act, and for that purpose the outstanding Securities shall be computed as of such record date; provided that no such authorization, agreement or consent by the Holders on such record date shall be deemed effective unless it shall become effective pursuant to the provisions of this Indenture not later than six months after the record date.
ARTICLE II
THE SECURITIES
Section 2.1 Form and Dating. The Securities and the Trustee's certificate of authentication shall be substantially in the form of Exhibits A-1 and A-2, which are a part of this Indenture. The Securities may have notations, legends or endorsements required by law, stock exchange rule or usage (provided that any such notation, legend or endorsement required by usage is in a form acceptable to the Company). The Company shall provide any such notations, legends or endorsements to the Trustee in writing. Each Security shall be dated the date of its authentication.
(a) 144A Global Securities. Securities offered and sold within the United States to qualified institutional buyers as defined in Rule 144A ("QIBs") in reliance on Rule 144A shall be issued initially in the form of a 144A Global Security, which shall be deposited with the Trustee at its Corporate Trust Office, as custodian for the Depositary (as defined below) and registered in the name of The Depository Trust Company ("DTC") or the nominee thereof (DTC, or any successor thereto, and any such nominee being hereinafter referred to as the "Depositary"), duly executed by the Company and authenticated by the Trustee as hereinafter provided. The aggregate principal amount of the 144A Global Securities may from time to time be increased or decreased by adjustments made on the records of the Trustee and the Depositary as hereinafter provided.
(b) Global Securities in General. Each Global Security shall represent such of the outstanding Securities as shall be specified therein and each shall provide that it shall represent the aggregate amount of outstanding Securities from time to time endorsed thereon and that the aggregate amount of outstanding Securities represented thereby may from time to time be reduced or increased, as appropriate, to reflect exchanges, redemptions and conversions.
Any adjustment of the aggregate principal amount of a Global Security to reflect the amount of any increase or decrease in the amount of outstanding Securities represented
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thereby shall be made by the Trustee in accordance with instructions given by the Holder thereof as required by Section 2.12 hereof and shall be made on the records of the Trustee and the Depositary.
(c) Book-Entry Provisions. This Section 2.1(c) shall apply only to Global Securities deposited with or on behalf of the Depositary.
The Company shall execute and the Trustee shall, in accordance with this Section 2.1(c), authenticate and deliver initially one or more Global Securities that (a) shall be registered in the name of the Depositary, (b) shall be delivered by the Trustee to the Depositary or pursuant to the Depositary's instructions and (c) shall bear legends substantially to the following effect:
"THIS SECURITY IS ISSUED IN GLOBAL FORM AND REGISTERED IN THE NAME OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC") OR A NOMINEE THEREOF. UNLESS THIS SECURITY IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF DTC, TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY SECURITY ISSUED IS REGISTERED IN THE NAME OF CEDE & CO., OR SUCH OTHER NAME AS IS REQUIRED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO., OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR SECURITIES IN DEFINITIVE REGISTERED FORM IN ACCORDANCE WITH THE TERMS OF THE INDENTURE (AS DEFINED BELOW), THIS SECURITY MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY DTC TO A NOMINEE OF DTC OR BY A NOMINEE OF DTC TO DTC OR ANOTHER NOMINEE OF DTC OR BY DTC OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITORY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITORY."
(d) Certificated Securities. Securities not issued as interests in the Global Securities will be issued in certificated form substantially in the form of Exhibit A-2 attached hereto. No Securities are being issued in certificated form on the date hereof.
Section 2.2 Execution and Authentication. The Securities shall be executed on behalf of the Company by any Officer. The signature of the Officer on the Securities may be manual or facsimile.
Securities bearing the manual or facsimile signatures of individuals who were at the time of the execution of the Securities Officers of the Company shall bind the Company, notwithstanding that such individuals or any of them have ceased to hold such offices prior to the authentication and delivery of such Securities or did not hold such offices at the date of authentication of such Securities.
No Security shall be entitled to any benefit under this Indenture or be valid or obligatory for any purpose unless there appears on such Security a certificate of authentication substantially in the form provided for herein duly executed by the Trustee by manual signature of an authorized officer, and such certificate upon any Security shall be conclusive evidence, and the only evidence, that such Security has been duly authenticated and delivered hereunder.
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The Trustee shall authenticate and deliver Securities for original issue in an aggregate Principal Amount at Maturity of up to $1,000,000,000 upon one or more Company Orders without any further action by the Company. The aggregate principal amount of the Securities due at the Stated Maturity thereof outstanding at any time may not exceed the amount set forth in the foregoing sentence, except as provided in Section 2.7 and upon the occurrence of an Upward Interest Adjustment or Tax Event as contemplated in the form of Security attached hereto as Exhibit A-1.
The Securities shall be issued only in registered form without coupons and only in denominations of $1,000 of Principal Amount at Maturity and any integral multiple thereof.
Section 2.3 Registrar, Paying Agent and Conversion Agent. The Company shall maintain an office or agency where Securities may be presented for registration of transfer or for exchange ("Registrar"), an office or agency where Securities may be presented for purchase or payment ("Paying Agent") and an office or agency where Securities may be presented for conversion ("Conversion Agent"). The Registrar shall keep a register of the Securities and of their transfer and exchange. The Company may have one or more co-registrars, one or more additional paying agents and one or more additional conversion agents. The term Paying Agent includes any additional paying agent, including any named pursuant to Section 4.5. The term Conversion Agent includes any additional conversion agent, including any named pursuant to Section 4.5.
The Company shall enter into an appropriate agency agreement with any Registrar, Paying Agent, Bid Solicitation Agent, Conversion Agent or co-registrar (other than the Trustee). The agreement shall implement the provisions of this Indenture that relate to such agent. The Company shall notify the Trustee of the name and address of any such agent. If the Company fails to maintain a Registrar, Paying Agent or Conversion Agent, the Trustee shall act as such and shall be entitled to appropriate compensation therefor pursuant to
Section 7.7. Any agency agreement entered into with the Bid Solicitation Agent shall provide that any resignation or removal of such agent shall not be effective unless a successor to such agent has been appointed. The Company or any Subsidiary or an Affiliate of either of them may act as Paying Agent, Registrar, Conversion Agent or co-registrar.
The Company initially appoints the Trustee as Registrar, Conversion Agent and Paying Agent in connection with the Securities. The Company initially appoints The Bank of New York as Bid Solicitation Agent.
Section 2.4 Paying Agent to Hold Money and Securities in Trust. Except as otherwise provided herein, on or prior to each due date of payments in respect of any Security, the Company shall deposit with the Paying Agent a sum of money (in immediately available funds if deposited on the due date) or shares of Common Stock (if so permitted herein) sufficient to make such payments when so becoming due. The Company shall require each Paying Agent (other than the Trustee) to agree in writing that the Paying Agent shall hold in trust for the benefit of Securityholders or the Trustee all money and Common Stock held by the Paying Agent for the making of payments in respect of the Securities and shall notify the Trustee of any default by the Company in making any such payment. At any time during the continuance of any such default, the Paying Agent shall, upon the written request of the Trustee, forthwith pay to the Trustee all money and Common Stock so held in trust. If the Company, a Subsidiary or an Affiliate of either of them acts as Paying Agent, it shall segregate the money and Common Stock held by it as Paying Agent and hold it as a separate trust fund. The Company at any time may
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require a Paying Agent to pay all money and Common Stock held by it to the Trustee and to account for any funds and Common Stock disbursed by it. Upon doing so, the Paying Agent shall have no further liability for the money or Common Stock.
Section 2.5 Securityholder Lists. The Trustee shall preserve in as current a form as is reasonably practicable the most recent list available to it of the names and addresses of Securityholders. If the Trustee is not the Registrar, the Company shall cause to be furnished to the Trustee at least semiannually on May 1 and November 1 a listing of Securityholders dated within 15 days of the date on which the list is furnished and at such other times as the Trustee may request in writing a list in such form and as of such date as the Trustee may reasonably require of the names and addresses of Securityholders.
Section 2.6 Transfer and Exchange. (a) Subject to Section 2.12, (a) upon surrender for registration of transfer of any Security, together with a written instrument of transfer satisfactory to the Registrar duly executed by the Securityholder or such Securityholder's attorney duly authorized in writing, at the office or agency of the Company designated as Registrar or co-registrar pursuant to Section 2.3, the Company shall execute, and the Trustee shall authenticate and deliver, in the name of the designated transferee or transferees, one or more new Securities of any authorized denomination or denominations, of a like aggregate Principal Amount at Maturity (or Restated Principal Amount, in the event the Company has exercised its option to pay cash interest after a Tax Event). The Company shall not charge a service charge for any registration of transfer or exchange, but the Company may require payment of a sum sufficient to pay all taxes, assessments or other governmental charges that may be imposed in connection with the transfer or exchange of the Securities from the Securityholder requesting such transfer or exchange.
At the option of the Holder, Securities may be exchanged for other Securities of any authorized denomination or denominations, of a like aggregate Principal Amount at Maturity (or Restated Principal Amount, in the event the Company has exercised its option to pay cash interest after a Tax Event), upon surrender of the Securities to be exchanged, together with a written instrument of transfer satisfactory to the Registrar duly executed by the Securityholder or such Securityholder's attorney duly authorized in writing, at such office or agency. Whenever any Securities are so surrendered for exchange, the Company shall execute, and the Trustee shall authenticate and deliver, the Securities which the Holder making the exchange is entitled to receive.
The Company shall not be required to make, and the Registrar need not register, transfers or exchanges of Securities selected for redemption (except, in the case of Securities to be redeemed in part, the portion thereof not to be redeemed) or any Securities in respect of which a Purchase Notice or Change in Control Purchase Notice has been given and not withdrawn by the Holder thereof in accordance with the terms of this Indenture (except, in the case of Securities to be purchased in part, the portion thereof not to be purchased) or any Securities for a period of 15 days before the mailing of a notice of redemption of Securities to be redeemed.
(b) Notwithstanding any provision to the contrary herein, so long as a Global Security remains outstanding and is held by or on behalf of the Depositary, transfers of a Global Security, in whole or in part, shall be made only in accordance with Section 2.12 and this Section 2.6(b). Transfers of a Global Security shall be limited to transfers of such Global Security in whole or in part to the Depositary, to nominees of the Depositary or to a successor of the Depositary or such successor's nominee.
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(c) Successive registrations and registrations of transfers and exchanges as aforesaid may be made from time to time as desired, and each such registration shall be noted on the register for the Securities.
(d) Any Registrar appointed pursuant to Section 2.3 shall provide to the Trustee such information as the Trustee may reasonably require in connection with the delivery by such Registrar of Securities upon transfer or exchange of Securities.
(e) If Securities are issued upon the transfer, exchange or replacement of Securities subject to restrictions on transfer and bearing the legends set forth on the form of Security attached hereto as Exhibits A-1 and A- 2 setting forth such restrictions (collectively, the "Legend"), or if a request is made to remove the Legend on a Security, the Securities so issued shall bear the Legend, or the Legend shall not be removed, as the case may be, unless there is delivered to the Company and the Registrar such satisfactory evidence, which shall include an Opinion of Counsel, as may be reasonably required by the Company that neither the Legend nor the restrictions on transfer set forth therein are required to ensure that transfers thereof comply with the provisions of Rule 144A or Rule 144 under the Securities Act or that such Securities are not "restricted" within the meaning of Rule 144 under the Securities Act. Upon
(i) provision of such satisfactory evidence, or (ii) notification to the Trustee and Registrar of the sale of such Security pursuant to a registration statement that is effective at the time of such sale, the Trustee, at the written direction of the Company, shall authenticate and deliver a Security that does not bear the Legend. If the Legend is removed from the face of a Security and the Security is subsequently held by the Company or an Affiliate of the Company, the Legend shall be reinstated. The Company shall inform the Trustee of the effectiveness of any registration statement registering the Securities under the Securities Act. The Trustee shall not be liable for any action taken or omitted to be taken by it in good faith in accordance with the aforementioned Opinion of Counsel or registration statement.
Section 2.7 Replacement Securities. If (a) any mutilated Security is surrendered to the Trustee, or (b) the Company and the Trustee receive evidence to their satisfaction of the destruction, loss or theft of any Security, and there is delivered to the Company and the Trustee such security or indemnity as may be required by them to save each of them harmless, then, in the absence of notice to the Company or the Trustee that such Security has been acquired by a bona fide purchaser, the Company shall execute and upon its written request the Trustee shall authenticate and deliver, in exchange for any such mutilated Security or in lieu of any such destroyed, lost or stolen Security, a new Security of like tenor and Principal Amount at Maturity, bearing a certificate number not contemporaneously outstanding.
In case any such mutilated, destroyed, lost or stolen Security has become or is about to become due and payable, or is about to be purchased by the Company pursuant to Article 3 hereof, the Company in its discretion may, instead of issuing a new Security, pay or purchase such Security, as the case may be.
Upon the issuance of any new Securities under this Section 2.7, the Company may require the payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in relation thereto and any other expenses (including the fees and expenses of the Trustee) connected therewith.
Every new Security issued pursuant to this Section 2.7 in lieu of any mutilated, destroyed, lost or stolen Security shall constitute an original additional contractual obligation of
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the Company, whether or not the destroyed, lost or stolen Security shall be at any time enforceable by anyone, and shall be entitled to all benefits of this Indenture equally and proportionately with any and all other Securities duly issued hereunder.
The provisions of this Section 2.7 are exclusive and shall preclude (to the extent lawful) all other rights and remedies with respect to the replacement or payment of mutilated, destroyed, lost or stolen Securities.
Section 2.8 Outstanding Securities; Determinations of Holders' Action. Securities outstanding at any time are all the Securities authenticated by the Trustee except for those cancelled by it, those paid pursuant to Section 2.7, delivered to it for cancellation and those described in this Section 2.8 as not outstanding. A Security does not cease to be outstanding because the Company or an Affiliate thereof holds the Security; provided, however, that in determining whether the Holders of the requisite Principal Amount at Maturity of Securities have given or concurred in any request, demand, authorization, direction, notice, consent or waiver hereunder, Securities owned by the Company or any other obligor upon the Securities or any Affiliate of the Company or such other obligor shall be disregarded and deemed not to be outstanding, except that, in determining whether the Trustee shall be protected in relying upon any such request, demand, authorization, direction, notice, consent or waiver, only Securities which a Responsible Officer of the Trustee actually knows to be so owned shall be so disregarded. Subject to the foregoing, only Securities outstanding at the time of such determination shall be considered in any such determination (including, without limitation, determinations pursuant to Articles 6 and 9).
If a Security is replaced pursuant to Section 2.7, it ceases to be outstanding unless the Trustee receives proof satisfactory to it that the replaced Security is held by a bona fide purchaser.
If the Paying Agent holds, in accordance with this Indenture, on a Redemption Date, or on the Business Day following a Purchase Date or a Change in Control Purchase Date, or on Stated Maturity, money or securities, if permitted hereunder, sufficient to pay Securities payable on that date, then immediately after such Redemption Date, Purchase Date, Change in Control Purchase Date or Stated Maturity, as the case may be, such Securities shall cease to be outstanding and interest, if any, on such Securities shall cease to accrue; provided, that if such Securities are to be redeemed, notice of such redemption has been duly given pursuant to this Indenture or provision therefor satisfactory to the Trustee has been made.
If a Security is converted in accordance with Article 10, then from and after the time of conversion on the Conversion Date, such Security shall cease to be outstanding and interest, if any, shall cease to accrue on such Security.
Section 2.9 Temporary Securities. Pending the preparation of definitive Securities, the Company may execute, and upon Company Order the Trustee shall authenticate and deliver, temporary Securities which are printed, lithographed, typewritten, mimeographed or otherwise produced, in any authorized denomination, substantially of the tenor of the definitive Securities in lieu of which they are issued and with such appropriate insertions, omissions, substitutions and other variations as the officers executing such Securities may determine, as conclusively evidenced by their execution of such Securities.
If temporary Securities are issued, the Company will cause definitive Securities to be prepared without unreasonable delay. After the preparation of definitive Securities, the
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temporary Securities shall be exchangeable for definitive Securities upon surrender of the temporary Securities at the office or agency of the Company designated for such purpose pursuant to Section 2.3, without charge to the Holder. Upon surrender for cancellation of any one or more temporary Securities the Company shall execute and the Trustee shall authenticate and deliver in exchange therefor a like Principal Amount at Maturity of definitive Securities of authorized denominations. Until so exchanged the temporary Securities shall in all respects be entitled to the same benefits under this Indenture as definitive Securities.
Section 2.10 Cancellation. All Securities surrendered for payment, purchase by the Company pursuant to Article 3, conversion, redemption or registration of transfer or exchange shall, if surrendered to any person other than the Trustee, be delivered to the Trustee and shall be promptly cancelled by it. The Company may at any time deliver to the Trustee for cancellation any Securities previously authenticated and delivered hereunder which the Company may have acquired in any manner whatsoever, and all Securities so delivered shall be promptly cancelled by the Trustee. The Company may not issue new Securities to replace Securities it has paid or delivered to the Trustee for cancellation or that any Holder has converted pursuant to Article
10. No Securities shall be authenticated in lieu of or in exchange for any Securities cancelled as provided in this Section, except as expressly permitted by this Indenture. All cancelled Securities held by the Trustee shall be disposed of by the Trustee in accordance with the Trustee's customary procedure.
Section 2.11 Persons Deemed Owners. Prior to due presentment of a Security for registration of transfer, the Company, the Trustee and any agent of the Company or the Trustee may treat the person in whose name such Security is registered as the owner of such Security for the purpose of receiving payment of principal of the Security or the payment of any Redemption Price, Purchase Price or Change in Control Purchase Price in respect thereof, and interest thereon (subject to the record date provisions herein), for the purpose of conversion and for all other purposes whatsoever, whether or not such Security be overdue, and neither the Company, the Trustee nor any agent of the Company or the Trustee shall be affected by notice to the contrary.
Section 2.12 Global Securities. (a) Notwithstanding any other provisions of this Indenture or the Securities, (A) transfers of a Global Security, in whole or in part, shall be made only in accordance with Section 2.6 and Section 2.12(a)(i), (B) transfers of a beneficial interest in a Global Security for a Certificated Security shall comply with Section 2.6 and Section 2.12(a)(ii) below, and (C) transfers of a Certificated Security shall comply with Section 2.6 and Sections 2.12(a)(iii) and (iv) below.
(i) Transfer of Global Security. A Global Security may not be transferred, in whole or in part, to any person other than the Depositary or a nominee or any successor thereof, and no such transfer to any such other person may be registered; provided that this clause (i) shall not prohibit any transfer of a Security that is issued in exchange for a Global Security but is not itself a Global Security. No transfer of a Security to any person shall be effective under this Indenture or the Securities unless and until such Security has been registered in the name of such person. Nothing in this Section 2.12(a)(i) shall prohibit or render ineffective any transfer of a beneficial interest in a Global Security effected in accordance with the other provisions of this Section 2.12(a).
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(ii) Restrictions on Transfer of a Beneficial Interest in a Global Security for a Certificated Security. A beneficial interest in a Global Security may not be exchanged for a Certificated Security except upon satisfaction of the requirements set forth below. Upon receipt by the Trustee of a transfer of a beneficial interest in a Global Security in accordance with Applicable Procedures for a Certificated Security in the form satisfactory to the Trustee, together with:
(A) so long as the Securities are Restricted Securities, certification in the form set forth in Exhibit B-1;
(B) written instructions to the Trustee to make, or direct the Registrar to make, an adjustment on its books and records with respect to such Global Security to reflect a decrease in the aggregate Principal Amount at Maturity of the Securities represented by the Global Security, such instructions to contain information regarding the Depositary account to be credited with such decrease; and
(C) if the Company so requests, an opinion of counsel or other evidence reasonably satisfactory to it as to the compliance with the restrictions set forth in the Legend, then the Trustee shall cause, or direct the Registrar to cause, in accordance with the standing instructions and procedures existing between the Depositary and the Registrar, the aggregate Principal Amount at Maturity of Securities represented by the Global Security to be decreased by the aggregate Principal Amount at Maturity of the Certificated Security to be issued, shall issue such Certificated Security and shall debit or cause to be debited to the account of the person specified in such instructions a beneficial interest in the Global Security equal to the Principal Amount at Maturity of the Certificated Security so issued.
(iii) Transfer and Exchange of Certificated Securities. When Certificated Securities are presented to the Registrar with a request:
(y) to register the transfer of such Certificated Securities; or
(z) to exchange such Certificated Securities for an equal Principal Amount at Maturity of Certificated Securities of other authorized denominations,
the Registrar shall register the transfer or make the exchange as requested if its reasonable requirements for such transaction are met; provided, however, that the Certificated Securities surrendered for transfer or exchange:
(1) shall be duly endorsed or accompanied by a written instrument of transfer in form reasonably satisfactory to the Company and the Registrar, duly executed by the Holder thereof or his attorney duly authorized in writing; and
(2) so long as such Securities are Restricted Securities, such Securities are being transferred or exchanged pursuant to an effective registration statement under the Securities Act or pursuant to clause (A), (B) or
(C)
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below, and are accompanied by the following additional information and documents, as applicable:
(A) if such Certificated Securities are being delivered to the Registrar by a Holder for registration in the name of such Holder, without transfer, a certification from such Holder to that effect; or
(B) if such Certificated Securities are being transferred to the Company, a certification to that effect; or
(C) if such Certificated Securities are being transferred pursuant to an exemption from registration, (i) a certification to that effect (in the form set forth in Exhibit B-1, if applicable) and
(ii) if the Company so requests, an opinion of counsel or other evidence reasonably satisfactory to it as to the compliance with the restrictions set forth in the Legend.
(iv) Restrictions on Transfer of a Certificated Security for a Beneficial Interest in a Global Security. A Certificated Security may not be exchanged for a beneficial interest in a Global Security except upon satisfaction of the requirements set forth below.
Upon receipt by the Trustee of a Certificated Security, duly endorsed or accompanied by appropriate instruments of transfer, in form satisfactory to the Trustee, together with:
(I) so long as the Securities are Restricted Securities, certification, in the form set forth in Exhibit B-1, that such Certificated Security is being transferred to a QIB in accordance with Rule 144A; and
(II) written instructions directing the Trustee to make, or to direct the Registrar to make, an adjustment on its books and records with respect to such Global Security to reflect an increase in the aggregate Principal Amount at Maturity of the Securities represented by the Global Security, such instructions to contain information regarding the Depositary account to be credited with such increase, then the Trustee shall cancel such Certificated Security and cause, or direct the Registrar to cause, in accordance with the standing instructions and procedures existing between the Depositary and the Registrar, the aggregate Principal Amount at Maturity of Securities represented by the Global Security to be increased by the aggregate Principal Amount at Maturity of the Certificated Security to be exchanged, and shall credit or cause to be credited to the account of the person specified in such instructions a beneficial interest in the Global Security equal to the Principal Amount at Maturity of the Certificated Security so cancelled. If no Global Securities are then outstanding, the Company shall issue and the Trustee shall authenticate, upon written order of the Company in the form of an Officers' Certificate, a new Global Security in the appropriate Principal Amount at Maturity.
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(b) Subject to the succeeding paragraph (c), every Security shall be subject to the restrictions on transfer provided in the Legend including the delivery of an opinion of counsel, if so provided. Whenever any Restricted Security is presented or surrendered for registration of transfer or for exchange for a Security registered in a name other than that of the Holder, such Security must be accompanied by a certificate in substantially the form set forth in Exhibit B-1, dated the date of such surrender and signed by the Holder of such Security, as to compliance with such restrictions on transfer. The Registrar shall not be required to accept for such registration of transfer or exchange any Security not so accompanied by a properly completed certificate.
(c) The restrictions imposed by the Legend upon the transferability of any Security shall terminate at such times described in and in accordance with the provisions of Section 2.6(d).
(d) As used in the preceding two paragraphs of this Section 2.12, the term "transfer" encompasses any sale, pledge, transfer, loan, hypothecation, hedge or other disposition of any Security.
(e) The provisions of clauses (1), (2), (3) and (4) below shall apply only to Global Securities:
(1) Notwithstanding any other provisions of this Indenture or the Securities, except as provided in
Section 2.12(a)(ii), a Global Security shall not be exchanged in whole or in part for a Security registered in the name of any person other than the Depositary or one or more nominees thereof, provided that a Global Security may be exchanged for Securities registered in the names of any person designated by the Depositary in the event that (i) the Depositary has notified the Company that it is unwilling or unable to continue as Depositary for such Global Security or such Depositary has ceased to be a "clearing agency" registered under the Exchange Act, and a successor Depositary is not appointed by the Company within 90 days or (ii) an Event of Default has occurred and is continuing with respect to the Securities. Any Global Security exchanged pursuant to clause (i) above shall be so exchanged in whole and not in part, and any Global Security exchanged pursuant to clause (ii) above may be exchanged in whole or from time to time in part as directed by the Depositary. Any Security issued in exchange for a Global Security or any portion thereof shall be a Global Security; provided that any such Security so issued that is registered in the name of a person other than the Depositary or a nominee thereof shall not be a Global Security. The Company may, in its sole discretion, determine not to have Securities represented by Global Securities, in which case the Company shall issue Securities in exchange for each Global Security.
(2) Securities issued in exchange for a Global Security or any portion thereof shall be issued in definitive, fully registered form, without interest coupons, shall have an aggregate Principal Amount at Maturity equal to that of such Global Security or portion thereof to be so exchanged, shall be registered in such names and be in such authorized denominations as the Depositary shall designate and shall bear the applicable legends provided for herein. Any Global Security to be exchanged in whole shall be surrendered by the
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Depositary to the Trustee, as Registrar. With regard to any Global Security to be exchanged in part, either such Global Security shall be so surrendered for exchange or, if the Trustee is acting as custodian for the Depositary or its nominee with respect to such Global Security, the Principal Amount at Maturity thereof shall be reduced by an amount equal to the portion thereof to be so exchanged, by means of an appropriate adjustment made on the records of the Trustee. Upon any such surrender or adjustment, the Trustee shall authenticate and deliver the Security issuable on such exchange to or upon the order of the Depositary or an authorized representative thereof.
(3) Subject to the provisions of clause (5) below, the registered Holder may grant proxies and otherwise authorize any person, including Agent Members (as defined below) and persons that may hold interests through Agent Members, to take any action which a holder is entitled to take under this Indenture or the Securities.
(4) In the event of the occurrence of any of the events specified in clause (1) above, the Company will promptly make available to the Trustee a reasonable supply of Certificated Securities in definitive, fully registered form, without interest coupons.
(5) Neither any members of, or participants in, the Depositary (collectively, the "Agent Members") nor any other persons on whose behalf Agent Members may act shall have any rights under this Indenture with respect to any Global Security registered in the name of the Depositary or any nominee thereof, or under any such Global Security, and the Depositary or such nominee, as the case may be, may be treated by the Company, the Trustee and any agent of the Company or the Trustee as the absolute owner and holder of such Global Security for all purposes whatsoever. Notwithstanding the foregoing, nothing herein shall prevent the Company, the Trustee or any agent of the Company or the Trustee from giving effect to any written certification, proxy or other authorization furnished by the Depositary or such nominee, as the case may be, or impair, as between the Depositary, its Agent Members and any other person on whose behalf an Agent Member may act, the operation of customary practices of such persons governing the exercise of the rights of a holder of any Security.
Section 2.13 CUSIP Numbers. The Company may issue the Securities with one or more "CUSIP" numbers (if then generally in use), and, if so, the Trustee shall use "CUSIP" numbers in notices of redemption as a convenience to Holders; provided that any such notice may state that no representation is made as to the correctness of such numbers either as printed on the Securities or as contained in any notice of a redemption and that reliance may be placed only on the other identification numbers printed on the Securities, and any such redemption shall not be affected by any defect in or omission of such numbers. The Company will promptly notify the Trustee of any change in the CUSIP numbers. The initial CUSIP number for the Securities is 131347 AX4.
Section 2.14 Ranking. The Indebtedness of the Company arising under or in connection with this Indenture and every outstanding Security issued under this Indenture from
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time to time constitutes and will constitute a senior unsecured general obligation of the Company, ranking equally with other senior unsecured Indebtedness of the Company.
ARTICLE III
REDEMPTION AND PURCHASES
Section 3.1 Company's Right to Redeem; Notices to Trustee. The Company, at its option, may redeem the Securities in accordance with the provisions of Paragraph 5 of the Securities. If the Company elects to redeem Securities pursuant to Paragraph 5 of the Securities, it shall notify the Trustee in writing of the Redemption Date, the Principal Amount at Maturity of Securities to be redeemed and the Redemption Price.
The Company shall give the notice to the Trustee provided for in this Section 3.1 by a Company Order, at least 40 days before the Redemption Date (unless a shorter notice shall be satisfactory to the Trustee).
Section 3.2 Selection of Securities to Be Redeemed. If less than all the Securities are to be redeemed, unless the procedures of the Depositary provide otherwise, the Trustee shall select the Securities to be redeemed by lot or on a pro rata basis (so long as either such method is not prohibited by the rules of any stock exchange on which the Securities are then listed). The Trustee shall make the selection at least 30 days but not more than 60 days before the Redemption Date from outstanding Securities not previously called for redemption. The Trustee may select for redemption portions of the Principal Amount at Maturity of Securities that have denominations larger than $1,000.
Securities and portions of them the Trustee selects shall be in Principal Amounts at Maturity of $1,000 or an integral multiple of $1,000. Provisions of this Indenture that apply to Securities called for redemption also apply to portions of Securities called for redemption. The Trustee shall notify the Company promptly of the Securities or portions of Securities to be redeemed.
If any Security selected for partial redemption is converted in part before termination of the conversion right with respect to the portion of the Security so selected, the converted portion of such Security shall be deemed (so far as may be) to be the portion selected for redemption. Securities which have been converted during a selection of Securities to be redeemed may be treated by the Trustee as outstanding for the purpose of such selection.
Section 3.3 Notice of Redemption. At least 30 days but not more than 60 days before a Redemption Date, the Company shall mail a notice of redemption by first-class mail, postage prepaid, to each Holder of Securities to be redeemed.
The notice shall identify the Securities to be redeemed and shall state:
(1) the Redemption Date;
(2) the Redemption Price and the amount of accrued and unpaid interest, if any, payable on the Redemption Date;
(3) the Conversion Rate;
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(4) the name and address of the Paying Agent and Conversion Agent;
(5) that Securities called for redemption may be converted at any time before the close of business on the date that is the Business Day prior to the Redemption Date;
(6) that Holders who want to convert Securities must satisfy the requirements set forth in Paragraph 8 of the Securities;
(7) that Securities called for redemption must be surrendered to the Paying Agent to collect the Redemption Price;
(8) if fewer than all the outstanding Securities are to be redeemed, the certificate numbers, if any, and Principal Amounts at Maturity of the particular Securities to be redeemed;
(9) that, unless the Company defaults in making payment of such Redemption Price, interest, if any, on Securities called for redemption will cease to accrue on and after the Redemption Date; and
(10) the CUSIP number(s) of the Securities.
At the Company's request, the Trustee shall give the notice of redemption in the Company's name and at the Company's expense, provided that the Company makes such request at least five Business Days prior to the date by which such notice of redemption must be given to Holders in accordance with this
Section 3.3.
Section 3.4 Effect of Notice of Redemption. Once notice of redemption is given, Securities called for redemption become due and payable on the Redemption Date and at the Redemption Price stated in the notice except for Securities which are converted in accordance with the terms of this Indenture. Upon surrender to the Paying Agent, such Securities shall be paid at the Redemption Price stated in the notice.
Section 3.5 Deposit of Redemption Price. Prior to 10:00 a.m. (New York City time), on the Redemption Date, the Company shall deposit with the Paying Agent (or if the Company or a Subsidiary or an Affiliate of either of them is the Paying Agent, shall segregate and hold in trust) money sufficient to pay the Redemption Price of all Securities to be redeemed on that date other than Securities or portions of Securities called for redemption which on or prior thereto have been delivered by the Company to the Trustee for cancellation or have been converted. The Paying Agent shall as promptly as practicable return to the Company any money not required for that purpose because of conversion of Securities pursuant to Article 10. If such money is then held by the Company or a Subsidiary or Affiliate of the Company in trust and is not required for such purpose it shall be discharged from such trust.
Section 3.6 Securities Redeemed in Part. Upon surrender of a Security that is redeemed in part, the Company shall execute and the Trustee shall authenticate and deliver to the Holder a new Security in an authorized denomination equal in Principal Amount at Maturity to the unredeemed portion of the Security surrendered.
Section 3.7 Purchase of Securities at Option of the Holder.
(a) General. Securities shall be purchased by the Company pursuant to Paragraph 6 of the Securities at the
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option of the Holder as of April 30, 2002, 2004, 2006, 2008, 2011 and 2016 (each, a "Purchase Date"), at the Issue Price plus accrued and unpaid interest, if any, to the Purchase Date (the "Purchase Price"). If, prior to a Purchase Date, the Company has exercised its option to pay cash interest instead of accruing interest on the Securities following a Tax Event, the Purchase Price will be equal to the Restated Principal Amount (as defined in Exhibit A-1 hereto) plus accrued and unpaid cash interest from the date the Company exercised such option to the Purchase Date. Purchases of Securities hereunder shall be made, at the option of the Holder thereof, upon:
(1) delivery to the Paying Agent by the Holder of a written notice of purchase (a "Purchase Notice") at any time from the opening of business on the date that is 20 Business Days prior to a Purchase Date until the close of business on the last Business Day prior to such Purchase Date stating:
(A) the certificate number of the Security which the Holder will deliver to be purchased,
(B) the portion of the Principal Amount at Maturity of the Security which the Holder will deliver to be purchased, which portion must be in principal amounts of maturity of $1,000 or an integral multiple thereof,
(C) that such Security shall be purchased as of the Purchase Date pursuant to the terms and conditions specified in Paragraph 6 of the Securities and in this Indenture, and
(D) in the event the Company elects, pursuant to
Section 3.7(b), to pay the Purchase Price in whole or in part, in shares of Common Stock but such portion of the Purchase Price shall ultimately be payable to such Holder entirely in cash because any of the conditions to payment of the Purchase Price in shares of Common Stock is not satisfied prior to the close of business on the Purchase Date, as set forth in
Section 3.7(c), whether such Holder elects (i) to withdraw such Purchase Notice as to some or all of the Securities to which such Purchase Notice relates (stating the Principal Amount at Maturity and certificate numbers, if any, of the Securities as to which such withdrawal shall relate), or (ii) to receive cash in respect of the entire Purchase Price for all Securities (or portions thereof) to which such Purchase Notice relates; and
(2) delivery of such Security to the Paying Agent prior to, on or after the Purchase Date (together with all necessary endorsements) at the offices of the Paying Agent, such delivery being a condition to receipt by the Holder of the Purchase Price therefor; provided, however, that such Purchase Price shall be so paid pursuant to this Section 3.7 only if the Security so delivered to the Paying Agent shall conform in all respects to the description thereof in the related Purchase Notice, as determined by the Company. If Global Securities are outstanding, such notice must also comply with Applicable Procedures.
If a Holder, in such Holder's Purchase Notice and in any written notice of withdrawal delivered by such Holder pursuant to the terms of
Section 3.9, fails to indicate such Holder's choice with respect to the election set forth in clause (D) of Section 3.7(a)(1), such
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Holder shall be deemed to have elected to receive cash in respect of the Purchase Price for all Securities subject to such Purchase Notice in the circumstances set forth in such clause (D).
The Company shall purchase from the Holder thereof, pursuant to this Section 3.7, a portion of a Security if the Principal Amount at Maturity of such portion is $1,000 or an integral multiple of $1,000. Provisions of this Indenture that apply to the purchase of all of a Security also apply to the purchase of such portion of such Security.
Any purchase by the Company contemplated pursuant to the provisions of this Section 3.7 shall be consummated by the delivery of the consideration to be received by the Holder promptly following the later of the Purchase Date and the time of delivery of the Security.
Notwithstanding anything herein to the contrary, any Holder delivering to the Paying Agent the Purchase Notice contemplated by this Section 3.7(a) shall have the right to withdraw such Purchase Notice at any time prior to the close of business on the Business Day preceding the Purchase Date by delivery of a written notice of withdrawal to the Paying Agent in accordance with Section 3.9.
The Paying Agent shall promptly notify the Company of the receipt by it of any Purchase Notice or written notice of withdrawal thereof.
(b) Company's Right to Elect Manner of Payment of Purchase Price for Payment. The Securities to be purchased on any Purchase Date pursuant to Section 3.7(a) may be paid for, at the election of the Company, in U.S. legal tender ("cash") or shares of Common Stock, or in any combination of cash and shares of Common Stock, subject to the conditions set forth in Sections 3.7(c); provided that on April 30, 2016 the Company may only pay cash. The Company shall designate, in the Company Notice delivered pursuant to Section 3.7(d), which shall be sent to Holders (and to beneficial owners as required by applicable law) not less than 20 Business Days prior to such Purchase Date (the "Company Notice Date"), whether the Company will purchase the Securities for cash or shares of Common Stock, or, if a combination thereof, the percentages of the Purchase Price of Securities in respect of which it will pay in cash or shares of Common Stock; provided that the Company will pay cash for fractional shares of Common Stock. For purposes of determining the existence of potential fractional shares, all Securities subject to purchase by the Company held by a Holder shall be considered together (no matter how many separate certificates are to be presented). Each Holder whose Securities are purchased pursuant to this Section 3.7 shall receive the same percentage of cash or shares of Common Stock in payment of the Purchase Price for such Securities, except (i) as provided in Section 3.7(c) with regard to the payment of cash in lieu of fractional shares of Common Stock and (ii) in the event that the Company is unable to purchase the Securities of a Holder or Holders for shares of Common Stock because any necessary qualifications or registrations of the shares of Common Stock under applicable state securities laws cannot be obtained, the Company may purchase the Securities of such Holder or Holders for cash. The Company may not change its election with respect to the consideration (or components or percentages of components thereof) to be paid once the Company has given its Company Notice to Securityholders except pursuant to this Section 3.7(b) or pursuant to Section 3.7(c) in the event of a failure to satisfy, prior to the close of business on the Purchase Date, any condition to the payment of the Purchase Price, in whole or in part, in Common Stock.
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At least three Business Days before each Company Notice Date, the Company shall deliver an Officers' Certificate to the Trustee specifying:
(i) the manner of payment selected by the Company;
(ii) the information required by Section 3.7(d);
(iii) if the Company elects to pay the Purchase Price, or a specified percentage thereof, in Common Stock, that the conditions to such manner of payment set forth in Section 3.7(c) have been or will be complied with; and
(iv) whether the Company desires the Trustee to give the Company Notice required by Section 3.7(d).
(c) Payment by Issuance of Shares of Common Stock. At the option of the Company, the Purchase Price of Securities in respect of which a Purchase Notice pursuant to Section 3.7(a) has been given, or a specified percentage thereof, may be paid by the Company by the issuance of a number of shares of Common Stock equal to the quotient obtained by dividing (i) the amount of cash to which the Securityholders would have been entitled had the Company elected to pay all or such specified percentage, as the case may be, of the Purchase Price of such Securities in cash by (ii) the Market Price of shares of Common Stock, subject to the next succeeding paragraph; provided that the Purchase Price of Securities purchased on April 30, 2016 shall be paid only in cash.
The Company will not issue a fractional shares of Common Stock in payment of the Purchase Price. Instead the Company will pay cash for the current Market Price of the fractional share. The current Market Price of a fraction of a share shall be determined by multiplying the Market Price by such fraction and rounding the product to the nearest whole cent with one-half cent being rounded upward. It is understood that if a Holder elects to have more than one Security purchased, the number of shares of Common Stock shall be based on the aggregate amount of Securities to be purchased.
If the Company elects to purchase the Securities by the issuance of shares of Common Stock, the Company Notice, as provided in Section 3.7(d), shall be sent to the Holders (and to beneficial owners as required by applicable law) not later than the Company Notice Date.
The Company's right to exercise its election to purchase Securities through the issuance of shares of Common Stock shall be conditioned upon:
(i) the Company's not having given its Company Notice of an election to pay entirely in cash and its giving of timely Company Notice of election to purchase all or a specified percentage of the Securities with shares of Common Stock as provided herein;
(ii) the registration of such shares of Common Stock under the Securities Act of 1933, as amended (the "Securities Act"), or the Securities Exchange Act of 1934, as amended (the "Exchange Act"), in each case, if required;
(iii) such shares of Common Stock shall have been listed on the principal national securities exchange (currently the NYSE) on which the Common Stock is listed;
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(iv) any necessary qualification or registration under applicable state securities laws or the availability of an exemption from such qualification and registration; and
(v) the receipt by the Trustee of an Officers' Certificate and an Opinion of Counsel each stating that (A) the terms of the issuance of the shares of Common Stock are in conformity with this Indenture and (B) the shares of Common Stock to be issued by the Company in payment of the Purchase Price in respect of Securities have been duly authorized and, when issued and delivered pursuant to the terms of this Indenture in payment of the Purchase Price in respect of the Securities, will be validly issued, fully paid and non-assessable and, to the best of such counsel's knowledge, free from preemptive rights, and, in the case of such Officers' Certificate, stating that the conditions above and the condition set forth in the second succeeding sentence have been satisfied and, in the case of such Opinion of Counsel, stating that the conditions above have been satisfied.
Such Officers' Certificate shall also set forth (i) the number of shares of Common Stock to be issued for each $1,000 Principal Amount at Maturity of Securities, (ii) the Sale Price of a share of Common Stock on each trading day during the period commencing on the first trading day of the period during which the Market Price is calculated and ending on the third Business Day prior to the applicable Purchase Date and (iii) the Market Price of the Common Stock. The Company may pay the Purchase Price (or any portion thereof) in shares of Common Stock only if the information necessary to calculate the Market Price is published in a daily newspaper of national circulation or is otherwise publicly available (e.g., by dissemination on the World Wide Web or by other public means). If the foregoing conditions are not satisfied with respect to a Holder or Holders prior to the close of business on the Purchase Date and the Company has elected to purchase the Securities pursuant to this Section 3.7 through the issuance of shares of Common Stock, the Company shall pay the entire Purchase Price of the Securities of such Holder or Holders in cash.
The "Market Price" means the average of the Sale Prices of the shares of Common Stock for the five NYSE trading day period ending on the third Business Day prior to the applicable Purchase Date or Change in Control Purchase Date, as the case may be (if the third Business Day prior to the applicable Purchase Date or Change in Control Purchase Date, as the case may be, is a NYSE trading day, or if not, then on the last NYSE trading day prior to such third Business Day), appropriately adjusted to take into account the occurrence, during the period commencing on the first of the NYSE trading days during such five NYSE trading day period and ending on such Purchase Date or Change in Control Purchase Date, as the case may be, of any event described in Section 10.6; subject, however, to the conditions set forth in Sections 10.7 and 10.8.
The "Sale Price" of the shares of Common Stock on any date means the closing per share sale price on the NYSE (or, if no closing sale price is reported, the average of the bid and ask prices or, if more than one in either case, the average of the average bid and average ask prices) on such date as reported on the NYSE or, if the shares of Common Stock are not listed on the NYSE, as reported by the National Association of Securities Dealers Automated Quotation System. In the absence of such quotations, the Company shall be entitled to determine the Sales Price on any date on the basis of such quotations as it considers appropriate.
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Upon determination of the actual number of shares of Common Stock to be issued for each $1,000 Principal Amount at Maturity of Securities, the Company will publish such determination on the Company's Web site on the World Wide Web and through a press release on Dow Jones & Company, Inc. or Bloomberg Business News not later than the third Business Day prior to the relevant Purchase Date.
(d) Notice of Election. In connection with any purchase of Securities pursuant to the first paragraph of Paragraph 6 of the Securities, the Company shall give notice to Holders setting forth information specified in this
Section 3.7(d) (the "Company Notice").
In the event the Company has elected to pay the Purchase Price (or a specified percentage thereof) with shares of Common Stock, the Company Notice shall:
(1) state that each Holder will receive shares of Common Stock with a Market Price determined as of a specified date prior to the Purchase Date equal to such specified percentage of the Purchase Price of the Securities held by such Holder (except any cash amount to be paid in lieu of fractional shares);
(2) set forth the method of calculating the Market Price of the shares of Common Stock; and
(3) state that because the Market Price of shares of Common Stock will be determined prior to the Purchase Date, Holders will bear the market risk with respect to the value of the shares of Common Stock to be received from the date such Market Price is determined to the Purchase Date.
In any case, each Company Notice shall include a form of Purchase Notice to be completed by a Securityholder and shall state:
(i) the Purchase Price and the Conversion Rate;
(ii) the name and address of the Paying Agent and the Conversion Agent;
(iii) that Securities as to which a Purchase Notice has been given may be converted if they are otherwise convertible only in accordance with Article 10 hereof and Paragraph 8 of the Securities if the applicable Purchase Notice has been withdrawn in accordance with the terms of this Indenture;
(iv) that Securities must be surrendered to the Paying Agent to collect payment;
(v) that the Purchase Price for any security as to which a Purchase Notice has been given and not withdrawn will be paid promptly following the later of the Purchase Date and the time of surrender of such Security as described in (iv);
(vi) the procedures the Holder must follow to exercise its put rights under Section 3.7 and a brief description of those rights;
(vii) briefly, the conversion rights of the Securities;
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(viii) the procedures for withdrawing a Purchase Notice (including, without limitation, for a conditional withdrawal pursuant to the terms of Section 3.7(a)(1)(D) or Section 3.9);
(ix) that, unless the Company defaults in making payment on Securities for which a Purchase Notice has been submitted, interest, if any, on such Securities will cease to accrue on the Purchase Date; and
(x) the CUSIP number of the Securities.
At the Company's request, the Trustee shall give such Company Notice in the Company's name and at the Company's expense; provided, however, that, in all cases, the text of such Company Notice shall be prepared by the Company.
(e) Covenants of the Company. All shares of Common Stock delivered upon purchase of the Securities shall be newly issued shares or treasury shares, shall be duly authorized, validly issued, fully paid and nonassessable, and shall be free from preemptive rights and free of any lien or adverse claim.
(f) Procedure upon Purchase. The Company shall deposit cash (in respect of cash purchases under Section 3.7 or for fractional shares, as applicable) or shares of Common Stock in respect of payment by issuance of shares of Common Stock under Section 3.8(c), except for fractional shares, or a combination thereof, as applicable, at the time and in the manner as provided in
Section 3.10, sufficient to pay the aggregate Purchase Price of all Securities to be purchased pursuant to this Section 3.7. As soon as practicable after the Purchase Date, the Company shall deliver to each Holder entitled to receive shares of Common Stock through the Paying Agent a certificate for the number of full shares of Common Stock issuable in payment of the Purchase Price and cash in lieu of any fractional shares. The person in whose name the certificate for shares of Common Stock is registered shall be treated as a holder of record of Common Stock on the Business Day following the Purchase Date. No payment or adjustment will be made for dividends on the shares of Common Stock the record date for which occurred on or prior to the Purchase Date.
(g) Taxes. If a Holder of a purchased Security (pursuant to this Section 3.7 or Section 3.8) is paid in shares of Common Stock, the Company shall pay any documentary, stamp or similar issue or transfer tax due on such issue of Common Stock. However, the Holder shall pay any such tax which is due because the Holder requests the Common Stock to be issued in a name other than the Holder's name. The Paying Agent may refuse to deliver the certificates representing the shares of Common Stock being issued in a name other than the Holder's name until the Paying Agent receives a sum sufficient to pay any tax which will be due because the shares of Common Stock are to be issued in a name other than the Holder's name. Nothing herein shall preclude any income tax withholding required by law or regulations.
Section 3.8 Purchase of Securities at Option of the Holder upon Change in Control. (a) If a Change in Control occurs, Securities shall be purchased by the Company, at the option of the Holder thereof, at a purchase price specified in Paragraph 6 of the Securities (the "Change in Control Purchase Price"), as of the date that is 45 days after the date of the Change in Control Notice delivered by the Company (the "Change in Control Purchase Date"), subject to satisfaction by or on behalf of the Holder of the requirements set forth in Section 3.8(c).
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A "Change in Control" shall be deemed to have occurred at such time as either of the following events shall occur:
(i) any person, including any syndicate or group deemed to be a "person" under Section 13(d)(3) of the Exchange Act, acquires beneficial ownership, directly or indirectly, through a purchase, merger or other acquisition transaction or series of transactions, of shares of the Company's Capital Stock entitling the person to exercise 50% or more of the total voting power of all shares of the Company's Capital Stock that are entitled to vote generally in elections of directors, other than an acquisition by the Company, any of its Subsidiaries or any of its employee benefit plans; or
(ii) the Company merges or consolidates with or into any other person, any merger of another person into the Company, or the Company conveys, sells, transfers or leases all or substantially all of its assets to another person, other than any transaction: (A) that does not result in any reclassification, conversion, exchange or cancellation of outstanding shares of the Company's Capital Stock, or (B) pursuant to which the holders of Common Stock immediately prior to the transaction have the entitlement to exercise, directly or indirectly, 50% or more of the total voting power of all shares of Capital Stock entitled to vote generally in the election of directors of the continuing or surviving corporation immediately after the transaction, or (C) which is effected solely to change the Company's jurisdiction of incorporation and results in a reclassification, conversion or exchange of outstanding shares of the Company's Common Stock solely into shares of Common Stock of the surviving entity.
Notwithstanding the foregoing provisions of this Section 3.8, a Change in Control shall not be deemed to have occurred if (A) the closing price per share of Common Stock on the NYSE for any five NYSE trading days within the period of 10 consecutive NYSE trading days ending immediately after the later of the Change in Control or the public announcement of the Change in Control, in the case of a Change in Control relating to an acquisition of Capital Stock, or the period of 10 consecutive NYSE trading days ending immediately before the Change in Control, in the case of Change in Control relating to a merger, consolidation or asset sale, equals or exceeds 105% of the conversion price of the Securities in effect on each of those NYSE trading days or (B) all of the consideration (excluding cash payments for fractional shares and cash payments made pursuant to dissenters' appraisal rights) in a merger or consolidation otherwise constituting a Change in Control under clause (i) and/or clause (ii) above consists of shares of common stock traded on a national securities exchange or quoted on the Nasdaq National Market (or will be so traded or quoted immediately following the merger or consolidation) and as a result of the merger or consolidation the Securities become convertible into such common stock. For purposes of this Section 3.8, (x) the conversion price is equal to $1,000 divided by the Conversion Rate, (y) whether a person is a "beneficial owner" shall be determined in accordance with Rule 13d-3 under the Exchange Act and (z) "person" includes any syndicate or group that would be deemed to be a "person" under Section 13(d)(3) of the Exchange Act.
At the option of the Company, the Change in Control Purchase Price of Securities in respect of which a Change in Control Purchase Notice pursuant to Section 3.8(b) has been given may be paid by the Company by the issuance of a number of shares of Common Stock equal to the quotient obtained by dividing (i) the product of (A) the amount of cash to which the Securityholders would have been entitled had the Company elected to pay all of the Change in Control Purchase Price of such Securities in cash and (B) 0.95, by (ii) the Market Price of shares of Common Stock, subject to the next succeeding paragraph.
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The Company will not issue fractional shares of Common Stock in payment of the Change in Control Purchase Price. Instead the Company will pay cash for the current Market Price of the fractional share. The current Market Price of a fraction of a share shall be determined by multiplying the Market Price by such fraction and rounding the product to the nearest whole cent, with one-half cent being rounded upward. It is understood that if a Holder elects to have more than one Security purchased, the number of shares of Common Stock shall be based on the aggregate amount of Securities to be purchased.
In the event that the Company is unable to purchase the Securities of a Holder or Holders for shares of Common Stock because any necessary qualifications or registrations of the shares of Common Stock under applicable state securities laws cannot be obtained, the Company may purchase the Securities of such Holder or Holders for cash. The Company may not change its election with respect to the consideration to be paid once the Company has given its Change in Control Notice to Securityholders except pursuant to this
Section 3.8(a) or pursuant to Section 3.8(b) in the event of a failure to satisfy, prior to the close of business on the Change in Control Purchase Date, any condition to the payment of the Change in Control Purchase Price in Common Stock.
At least three Business Days before the Change in Control Notice Date (as defined below), the Company shall deliver an Officers' Certificate to the Trustee specifying:
(i) the manner of payment selected by the Company;
(ii) the information required by Section 3.8(b);
(iii) if the Company elects to pay the Change in Control Purchase Price in Common Stock, that the conditions to such manner of payment set forth in Section 3.8(a) have been or will be complied with; and
(iv) whether the Company desires the Trustee to give the Change in Control Notice required by Section 3.8(b).
The Company's right to exercise its election to purchase Securities through the issuance of shares of Common Stock shall be conditioned upon:
(i) the Company's giving of timely Change in Control Notice to purchase all of the Securities with shares of Common Stock as provided herein;
(ii) the registration of such shares of Common Stock under the Securities Act or the Exchange Act, in each case, if required;
(iii) such shares of Common Stock shall have been listed on the principal national securities exchange (currently the NYSE) on which the Common Stock is listed;
(iv) any necessary qualification or registration under applicable state securities laws or the availability of an exemption from such qualification and registration; and
(v) the receipt by the Trustee of an Officers' Certificate and an Opinion of Counsel each stating that (A) the terms of the issuance of the shares of Common Stock are in conformity with this Indenture and (B) the shares of Common Stock to be issued by the Company in payment of the Change in Control Purchase Price in respect of Securities have been
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duly authorized and, when issued and delivered pursuant to the terms of this Indenture in payment of the Change in Control Purchase Price in respect of the Securities, will be validly issued, fully paid and non-assessable and, to the best of such counsel's knowledge, free from preemptive rights, and, in the case of such Officers' Certificate, stating that the conditions above and the condition set forth in the second succeeding sentence have been satisfied and, in the case of such Opinion of Counsel, stating that the conditions above have been satisfied.
Such Officers' Certificate shall also set forth (i) the number of shares of Common Stock to be issued for each $1,000 Principal Amount at Maturity of Securities, (ii) the Sale Price of a share of Common Stock on each trading day during the period commencing on the first trading day of the period during which the Market Price is calculated and ending on the third Business Day prior to the Change in Control Purchase Date and (iii) the Market Price of the Common Stock. The Company may pay the Change in Control Purchase Price in shares of Common Stock only if the information necessary to calculate the Market Price is published in a daily newspaper of national circulation or is otherwise publicly available (e.g., by dissemination on the World Wide Web or by other public means). If the foregoing conditions are not satisfied with respect to a Holder or Holders prior to the close of business on the Change in Control Purchase Date and the Company has elected to purchase the Securities pursuant to this Section 3.8 through the issuance of shares of Common Stock, the Company shall pay the entire Purchase Price of the Securities of such Holder or Holders in cash.
Upon determination of the actual number of shares of Common Stock to be issued for each $1,000 Principal Amount at Maturity of Securities (not later than the third Business Day prior to the Change in Control Purchase Date), the Company will publish such determination on the Company's Web site on the World Wide Web and through Dow Jones & Company, Inc. or Bloomberg Business News
(b) No later than 30 days after the occurrence of a Change in Control, the Company shall mail a written notice of the Change in Control (the "Change in Control Notice", the date of such mailing, the "Change in Control Notice Date") by first-class mail to the Trustee and to each Holder (and to beneficial owners to the extent required by applicable law). The notice shall include a form of Change in Control Purchase Notice to be completed by the Holder that wishes to exercise rights under this Section 3.9 and shall state:
(1) briefly, the events causing a Change in Control and the date of such Change in Control;
(2) the date by which the Change in Control Purchase Notice pursuant to this Section 3.8 must be given;
(3) the Change in Control Purchase Date;
(4) the Change in Control Purchase Price;
(5) the name and address of the Paying Agent and the Conversion Agent;
(6) the Conversion Rate and any adjustments thereto;
(7) that Securities as to which a Change in Control Purchase Notice has been given may be converted if they are otherwise convertible pursuant to Article
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10 hereof only if the Change in Control Purchase Notice has been withdrawn in accordance with the terms of this Indenture;
(8) that Securities must be surrendered to the Paying Agent to collect payment;
(9) that the Change in Control Purchase Price for any Security as to which a Change in Control Purchase Notice has been duly given and not withdrawn will be paid promptly following the later of the Change in Control Purchase Date and the time of surrender of such Security as described in (8);
(10) briefly, the procedures the Holder must follow to exercise rights under this Section 3.8;
(11) briefly, the conversion rights, if any, of the Securities;
(12) the procedures for withdrawing a Change in Control Purchase Notice;
(13) that, unless the Company defaults in making payment of such Change in Control Purchase Price, interest, if any, on Securities surrendered for purchase by the Company will cease to accrue on and after the Change in Control Purchase Date; and
(14) the CUSIP numbers of the Securities.
In the event the Company has elected to pay the Change in Control Purchase Price with shares of Common Stock, the Change in Control Notice shall:
(1) state that the Company will pay the Change in Control Purchase Price with shares of Common Stock;
(2) set forth the method of calculating the number of shares of Common Stock to be paid;
(3) state that because the Market Price of shares of Common Stock will be determined prior to the Change in Control Purchase Date, Holders will bear the market risk with respect to the value of the shares of Common Stock to be received from the date such Market Price is determined to the Change in Control Purchase Date.
(c) A Holder may exercise its rights specified in Section 3.8(a) upon delivery of a written notice of purchase (a "Change in Control Purchase Notice") to the Paying Agent at any time on or prior to the 30th day after the Company delivers its Change in Control Purchase Notice, stating:
(1) the certificate number of the Security which the Holder will deliver to be purchased;
(2) the portion of the Principal Amount at Maturity of the Security which the Holder will deliver to be purchased, which portion must be $1,000 or an integral multiple thereof;
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(3) that such Security shall be purchased pursuant to the terms and conditions specified in Paragraph 6 of the Securities; and
(4) in the event the Company elects, pursuant to Section 3.8(b), to pay the Change in Control Purchase Price in shares of Common Stock but the Change in Control Purchase Price shall ultimately be payable to such Holder in cash because any of the conditions to payment of the Change in Control Purchase Price in shares of Common Stock are not satisfied prior to the close of business on the Change in Control Purchase Date, whether such Holder elects (i) to withdraw such Change in Control Purchase Notice as to some or all of the Securities to which such Change in Control Purchase Notice relates (stating the Principal Amount at Maturity and certificate numbers, if any, of the Securities as to which such withdrawal shall relate), or (ii) to receive cash in respect of the entire Change in Control Purchase Price for all Securities (or portions thereof) to which such Change in Control Purchase Notice relates.
If a Holder, in such Holder's Change in Control Purchase Notice and in any written notice of withdrawal delivered by such Holder pursuant to the terms of Section 3.9, fails to indicate such Holder's choice with respect to the election set forth in clause (4) above, such Holder shall be deemed to have elected to receive cash in respect of the Change in Control Purchase Price for all Securities subject to such Change in Control Purchase Notice in the circumstances set forth in such clause (4).
The delivery of such Security to the Paying Agent with the Change in Control Purchase Notice (together with all necessary endorsements) at the offices of the Paying Agent shall be a condition to the receipt by the Holder of the Change in Control Purchase Price therefor; provided, however, that such Change in Control Purchase Price shall be so paid pursuant to this Section 3.8 only if the Security so delivered to the Paying Agent shall conform in all respects to the description thereof set forth in the related Change in Control Purchase Notice.
The Company shall purchase from the Holder thereof, pursuant to this Section 3.8, a portion of a Security if the Principal Amount at Maturity of such portion is $1,000 or an integral multiple of $1,000. Provisions of this Indenture that apply to the purchase of all of a Security also apply to the purchase of such portion of such Security.
Any purchase by the Company contemplated pursuant to the provisions of this Section 3.8 shall be consummated by the delivery of the consideration to be received by the Holder on the Change in Control Purchase Date.
(d) Covenants of the Company. All shares of Common Stock delivered upon purchase of the Securities shall be newly issued shares or treasury shares, shall be duly authorized, validly issued, fully paid and nonassessable, and shall be free from preemptive rights and free of any lien or adverse claim.
(e) Procedure upon Purchase. The Company shall deposit cash (in respect of a cash purchases under Section 3.8 or for fractional shares of Common Stock, as applicable) or shares of Common Stock, or a combination thereof, as applicable, at the time and in the manner as provided in Section 3.10, sufficient to pay the aggregate Change in Control Purchase Price of all Securities to be purchased pursuant to this Section 3.8. As soon as practicable after the Purchase Date, the Company shall deliver to each Holder entitled to receive shares of Common
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Stock through the Paying Agent, a certificate for the number of full shares of Common Stock issuable in payment of the Change in Control Purchase Price and cash in lieu of any fractional shares. The person in whose name the certificate for shares of Common Stock is registered shall be treated as a holder of record of Common Stock on the Business Day following the Change in Control Purchase Date. No payment or adjustment will be made for dividends on the shares of Common Stock the record date for which occurred on or prior to the Change in Control Purchase Date.
Section 3.9 Effect of Purchase Notice or Change in Control Purchase Notice. Upon receipt by the Paying Agent of the Purchase Notice or Change in Control Purchase Notice specified in Section 3.7(a) or Section 3.8(c), as applicable, the Holder of the Security in respect of which such Purchase Notice or Change in Control Purchase Notice, as the case may be, was given shall (unless such Purchase Notice or Change in Control Purchase Notice, as the case may be) is withdrawn as specified in the following two paragraphs) thereafter be entitled to receive solely the Purchase Price or Change in Control Purchase Price, as the case may be, with respect to such Security. Such Purchase Price or Change in Control Purchase Price shall be paid to such Holder, subject to receipts of funds and/or securities by the Paying Agent, promptly following the later of (x) the Purchase Date or the Change in Control Purchase Date, as the case may be, with respect to such Security (provided the conditions in Section 3.7(a) or Section 3.8(c), as applicable, have been satisfied) and (y) the time of delivery of such Security to the Paying Agent by the Holder thereof in the manner required by Section 3.7(a) or Section 3.8(c), as applicable. Securities in respect of which a Purchase Notice or Change in Control Purchase Notice has been given by the Holder thereof may not be converted pursuant to Article 10 hereof on or after the date of the delivery of such Purchase Notice or Change in Control Purchase Notice. unless such Purchase Notice or Change in Control Purchase Notice has first been validly withdrawn as specified in the following two paragraphs.
A Purchase Notice or Change in Control Purchase Notice may be withdrawn by means of a written notice of withdrawal delivered to the office of the Paying Agent in accordance with the Purchase Notice or Change in Control Purchase Notice, as the case may be, at any time prior to the close of business on the last Business Day prior to the Purchase Date or Change in Control Purchase Date, as the case may be, specifying:
(1) the certificate number, if any, of the Security in respect of which such notice of withdrawal is being submitted,
(2) the Principal Amount at Maturity of the Security with respect to which such notice of withdrawal is being submitted, and
(3) the Principal Amount at Maturity, if any, of such Security which remains subject to the original Purchase Notice or Change in Control Purchase Notice, as the case may be, and which has been or will be delivered for purchase by the Company.
A written notice of withdrawal of a Purchase Notice or Change in Control Purchase Notice, as the case may be, may be in the form set forth in the preceding paragraph or may be in the form of (i) a conditional withdrawal contained in a Purchase Notice pursuant to the terms of Section 3.7(a)(1)(D) or a Change in Control Purchase Notice pursuant to the terms of Section 3.8(c)(4), as the case may be, or (ii) a conditional withdrawal containing the information set forth in Section 3.7(a)(1)(D) or 3.8(c)(4), as the case may be, and the preceding paragraph
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and contained in a written notice of withdrawal delivered to the Paying Agent as set forth in the preceding paragraph.
There shall be no purchase of any Securities pursuant to
Section 3.7 or 3.8 if there has occurred (prior to, on or after, as the case may be, the giving, by the Holders of such Securities, of the required Purchase Notice or Change in Control Purchase Notice, as the case may be) and is continuing an Event of Default (other than a default in the payment of the Purchase Price or Change in Control Purchase Price, as the case may be, with respect to such Securities). The Paying Agent will promptly return to the respective Holders thereof any Securities (x) with respect to which a Purchase Notice or Change in Control Purchase Notice, as the case may be, has been withdrawn in compliance with this Indenture, or (y) held by it during the continuance of an Event of Default (other than a default in the payment of the Purchase Price or Change in Control Purchase Price, as the case may be, with respect to such Securities) in which case, upon such return, the Purchase Notice or Change in Control Purchase Notice with respect thereto shall be deemed to have been withdrawn.
Section 3.10 Deposit of Purchase Price or Change in Control Purchase Price. Prior to 10:00 a.m. (local time in the City of New York) on the Purchase Date or the Change in Control Purchase Date, as the case may be, the Company shall deposit with the Trustee or with the Paying Agent (or, if the Company or a Subsidiary or an Affiliate of either of them is acting as the Paying Agent, shall segregate and hold in trust as provided in Section 2.4) an amount of cash (in immediately available funds if deposited on such Business Day) or Common Stock, if permitted hereunder, sufficient to pay the aggregate Purchase Price or Change in Control Purchase Price, as the case may be, of all the Securities or portions thereof which are to be purchased as of the Purchase Date or Change in Control Purchase Date, as the case may be.
Section 3.11 Securities Purchased in Part. Any Certificated Security which is to be purchased only in part shall be surrendered at the office of the Paying Agent (with, if the Company or the Trustee so requires, due endorsement by, or a written instrument of transfer in form satisfactory to the Company and the Trustee duly executed by, the Holder thereof or such Holder's attorney duly authorized in writing) and the Company shall execute and the Trustee shall authenticate and deliver to the Holder of such Security, without service charge, a new Security or Securities, of any authorized denomination as requested by such Holder in aggregate Principal Amount at Maturity equal to, and in exchange for, the portion of the Principal Amount at Maturity of the Security so surrendered which is not purchased.
Section 3.12 Covenant to Comply With Securities Laws Upon Purchase of Securities. When complying with the provisions of Section 3.7 or 3.8 hereof (provided that such offer or purchase constitutes an "issuer tender offer" for purposes of Rule 13e-4 (which term, as used herein, includes any successor provision thereto) under the Exchange Act at the time of such offer or purchase), the Company shall (i) comply with Rule 13e- 4 and Rule 14e-1 (or any successor provision) under the Exchange Act, (ii) file the related Schedule TO
(or any successor schedule, form or report) under the Exchange Act, and (iii)
otherwise comply with all Federal and state securities laws so as to permit the rights and obligations under Sections 3.7 and 3.8 to be exercised in the time and in the manner specified in Sections 3.7 and 3.8.
Section 3.13 Repayment to the Company. The Trustee and the Paying Agent shall return to the Company any cash or shares of Common Stock that remain unclaimed as provided in Paragraph 11 of the Securities, together with interest or dividends, if any, thereon (subject to the provisions of Section 7.1(f)), held by them for the payment of the Purchase Price
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or Change in Control Purchase Price, as the case may be; provided, however, that to the extent that the aggregate amount of cash or shares of Common Stock deposited by the Company pursuant to Section 3.10 exceeds the aggregate Purchase Price or Change in Control Purchase Price, as the case may be, of the Securities or portions thereof which the Company is obligated to purchase as of the Purchase Date or Change in Control Purchase Date, as the case may be, then, unless otherwise agreed in writing with the Company, promptly after the Business Day following the Purchase Date or Change in Control Purchase Date, as the case may be, the Trustee shall return any such excess to the Company together with interest or dividends, if any, thereon (subject to the provisions of Section 7.1(f)).
ARTICLE IV
COVENANTS
Section 4.1 Payment of Securities. The Company shall promptly make all payments in respect of the Securities on the dates and in the manner provided in the Securities or pursuant to this Indenture. Any amounts of cash or shares of Common Stock to be given to the Trustee or Paying Agent, shall be deposited with the Trustee or Paying Agent by 10:00 a.m. New York City time by the Company. Principal Amount at Maturity, Restated Principal Amount, Issue Price plus accrued interest, Redemption Price, Purchase Price, Change in Control Purchase Price and cash interest, if any, shall be considered paid on the applicable date due if on such date the Trustee or the Paying Agent holds, in accordance with this Indenture, cash or securities, if permitted hereunder, sufficient to pay all such amounts then due.
Section 4.2 SEC and Other Reports. The Company shall file with the Trustee, within 15 days after it files such annual and quarterly reports, information, documents and other reports with the SEC, copies of its annual report and of the information, documents and other reports (or copies of such portions of any of the foregoing as the SEC may by rules and regulations prescribe) which the Company is required to file with the SEC pursuant to
Section 13 or 15(d) of the Exchange Act. In the event the Company is at any time no longer subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act, it shall continue to provide the Trustee with reports containing substantially the same information as would have been required to be filed with the SEC had the Company continued to have been subject to such reporting requirements. In such event, such reports shall be provided at the times the Company would have been required to provide reports had it continued to have been subject to such reporting requirements. The Company also shall comply with the other provisions of TIA Section 314(a). Delivery of such reports, information and documents to the Trustee is for informational purposes only and the Trustee's receipt of such shall not constitute constructive notice of any information contained therein or determinable from information contained therein, including the Company's compliance with any of its covenants hereunder (as to which the Trustee is entitled to rely conclusively on Officers' Certificates).
Section 4.3 Compliance Certificate. The Company shall deliver to the Trustee within 120 days after the end of each fiscal year of the Company (beginning with the fiscal year ending on December 31, 2001) an Officers' Certificate stating whether or not, to the best knowledge of the signers thereof, the Company is in default in the performance and observance of any of the terms, provisions and conditions of this Indenture (without regard to any period of grace or requirement of notice provided hereunder) and if the Company shall be in default, specifying all such defaults and the nature and status thereof of which they may have knowledge.
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Section 4.4 Further Instruments and Acts. Upon request of the Trustee, the Company will execute and deliver such further instruments and do such further acts as may be reasonably necessary or proper to carry out more effectively the purposes of this Indenture.
Section 4.5 Maintenance of Office or Agency. The Company will maintain in the Borough of Manhattan, the City of New York, an office or agency of the Trustee, Registrar, Paying Agent and Conversion Agent where Securities may be presented or surrendered for payment, where Securities may be surrendered for registration of transfer, exchange, purchase, redemption or conversion and where notices and demands to or upon the Company in respect of the Securities and this Indenture may be served. The office of Wilmington Trust Company, c/o Computershare Trust Company, 88 Pine Street, Wall Street Plaza, 19th Floor, New York, NY 10005 (Attention: Corporate Trust Administration), shall initially be such office or agency for all of the aforesaid purposes. The Company shall give prompt written notice to the Trustee of the location, and of any change in the location, of any such office or agency (other than a change in the location of the office of the Trustee). If at any time the Company shall fail to maintain any such required office or agency or shall fail to furnish the Trustee with the address thereof, such presentations, surrenders, notices and demands may be made or served at the address of the Trustee set forth in Section 11.2.
The Company may also from time to time designate one or more other offices or agencies where the Securities may be presented or surrendered for any or all such purposes and may from time to time rescind such designations; provided, however, that no such designation or rescission shall in any manner relieve the Company of its obligation to maintain an office or agency in the Borough of Manhattan, the City of New York, for such purposes.
Section 4.6 Calculation of Original Issue Discount. The Company and the Trustee on behalf of the Holders agree (i) that for United States federal income tax purposes the Securities will be treated as indebtedness subject to the Treasury regulations governing contingent payment debt instruments, (ii) that the Holders will report original issue discount and interest on the Securities in accordance with the Company's determination of the "comparable yield" and the "projected payment schedule" as determined by the Company and (iii) to be bound by the Company's application of the Treasury regulations that govern contingent payment debt instruments. For this purpose, the "comparable yield" for the Securities is 9.44% compounded semiannually and the "projected payment schedule" is attached hereto as Exhibit C and may be obtained by submitting a written request for it to Rick Barraza, Senior Vice-President, Investor Relations, Calpine Corporation, 50 West San Fernando Street, San Jose, CA 95113. The Company shall file with the Trustee no later than the end of each calendar year (i) a written notice specifying the amount of original issue discount (including daily rates and accrual periods) accrued on outstanding Securities as of the end of such year and (ii) such other specific information relating to such original issue discount as may then be relevant under the Internal Revenue Code of 1986, as amended from time to time (the "Code").
ARTICLE V
SUCCESSOR CORPORATION
Section 5.1 When Company May Merge or Transfer Assets. The Company shall not consolidate with or merge with or into any other person or convey, transfer or lease its properties and assets substantially as an entirety to any person, unless:
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(a) either (1) the Company shall be the continuing corporation or (2) the person (if other than the Company) formed by such consolidation or into which the Company is merged or the person which acquires by conveyance, transfer or lease the properties and assets of the Company substantially as an entirety (i) shall be organized and validly existing under the laws of the United States or any State thereof or the District of Columbia and (ii) shall expressly assume, by an indenture supplemental hereto, executed and delivered to the Trustee, in form reasonably satisfactory to the Trustee, all of the obligations of the Company under the Securities and this Indenture;
(b) immediately after giving effect to such transaction, no Default shall have occurred and be continuing; and
(c) the Company shall have delivered to the Trustee an Officers' Certificate and an Opinion of Counsel, each stating that such consolidation, merger, conveyance, transfer or lease and, if a supplemental indenture is required in connection with such transaction, such supplemental indenture, comply with this Article 5 and that all conditions precedent herein provided for relating to such transaction have been satisfied.
For purposes of the foregoing, the transfer (by lease, assignment, sale or otherwise) of the properties and assets of one or more Subsidiaries (other than to the Company or another Subsidiary), which, if such assets were owned by the Company, would constitute all or substantially all of the properties and assets of the Company, shall be deemed to be the transfer of all or substantially all of the properties and assets of the Company.
The successor person formed by such consolidation or into which the Company is merged or the successor person to which such conveyance, transfer or lease is made shall succeed to, and be substituted for, and may exercise every right and power of, the Company under this Indenture with the same effect as if such successor had been named as the Company herein; and thereafter, except in the case of a lease and obligations the Company may have under a supplemental indenture pursuant to Section 10.12, the Company shall be discharged from all obligations and covenants under this Indenture and the Securities. Subject to Section 9.6, the Company, the Trustee and the successor person shall enter into a supplemental indenture to evidence the succession and substitution of such successor person and such discharge and release of the Company.
ARTICLE VI
DEFAULTS AND REMEDIES
Section 6.1 Events of Default. An "Event of Default" occurs if:
(1) the Company defaults in the payment of the Issue Price (or, if the Company has elected to pay cash interest on the Securities following a Tax Event, the Restated Principal Amount) plus accrued interest (including any interest payable pursuant to an Upward Interest Adjustment, other than the portion of such interest payable as cash interest), if any, Redemption Price, Purchase Price or Change in Control Purchase Price on any Security when the same becomes due and payable at its Stated Maturity, upon redemption, upon declaration, when due for purchase by the Company or otherwise;
(2) the Company defaults in the payment of any cash interest (after any Upward Interest Adjustment or any election by the Company to pay cash interest on the Securities
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following a Tax Event) when due and payable, and such default continues for a period of 30 days;
(3) the Company materially fails to comply with any of its agreements in the Securities or this Indenture (other than those referred to in clause (1) or (2) above) and such failure continues for 30 days after receipt by the Company of a Notice of Default;
(4) there shall have occurred either (i) a default by the Company under any instrument or instruments under which there is or may be secured or evidenced any Indebtedness of the Company (other than the Securities) having an outstanding principal amount of $50,000,000 (or its foreign currency equivalent) or more, individually or in the aggregate, that has caused the holders thereof to declare such Indebtedness to be due and payable prior to its Stated Maturity, unless such declaration has been rescinded within 30 days or (ii) a default by the Company in the payment when due of the principal of any bond, debenture, note or other evidence of the Company's Indebtedness, in each case for money borrowed, or in the payment of principal under any mortgage, indenture, agreement or instrument under which there may be issued or by which there may be secured or evidenced any Indebtedness of the Company for money borrowed, which default for payment of principal is individually or in an aggregate principal amount exceeding $50,000,000 (or its foreign currency equivalent) when such Indebtedness becomes due and payable (whether at maturity, upon redemption or acceleration or otherwise), if such default shall continue unremedied or unwaived for more than 30 days after the expiration of any grace period or extension of the time for payment applicable thereto;
(5) a court having jurisdiction in the premises shall enter a decree or order for relief in respect of the Company in an involuntary case under any applicable bankruptcy, insolvency or other similar law now or hereafter in effect, or appointing a receiver, liquidator, assignee, custodian, trustee or sequestrator (or similar official) of the Company or for any substantial part of its property or ordering the winding up or liquidation of its affairs and such decree or order shall remain unstayed and in effect for a period of 60 consecutive days; or
(6) the Company shall commence a voluntary case under any applicable bankruptcy, insolvency or other similar law now or hereafter in effect, or consent to the entry of an order for relief in an involuntary case under any such law, or consent to the appointment of or taking possession by a receiver, liquidator, assignee, custodian, trustee or sequestrator (or similar official) of the Company or for any substantial part of its property or make any general assignment for the benefit of creditors.
A Default under clause (3) above is not an Event of Default until the Trustee notifies the Company, or the Holders of at least 25% in aggregate Principal Amount at Maturity of the Securities at the time outstanding notify the Company and the Trustee, of the Default and the Company does not cure such Default (and such Default is not waived) within the time specified in clause (3) above after actual receipt of such notice. Any such notice must specify the Default, demand that it be remedied and state that such notice is a "Notice of Default".
The Company shall deliver to the Trustee, within 30 days after it becomes aware of the occurrence thereof, written notice of any event which with the giving of notice or the lapse of time, or both, would become an Event of Default under clauses (4), (5) or (6) above, its status and what action the Company is taking or proposes to take with respect thereto.
Section 6.2 Acceleration. If an Event of Default (other than an Event of Default specified in Section 6.1(5) or (6)) occurs and is continuing, the Trustee by notice to the
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Company, or the Holders of at least 25% in aggregate Principal Amount at Maturity of the Securities at the time outstanding by notice to the Company and the Trustee, may declare the Issue Price plus accrued and unpaid interest, if any, on all the Securities to be immediately due and payable. Upon such a declaration, such Issue Price plus accrued and unpaid interest, if any, shall be due and payable immediately. If an Event of Default specified in Section 6.1(5) or (6) occurs and is continuing, the Issue Price plus accrued and unpaid interest, if any, on all the Securities shall become and be immediately due and payable without any declaration or other act on the part of the Trustee or any Securityholders. The Holders of a majority in aggregate Principal Amount at Maturity of the Securities at the time outstanding, by notice to the Trustee (and without notice to any other Securityholder) may rescind an acceleration and its consequences if the rescission would not conflict with any judgment or decree and if all existing Events of Default have been cured or waived except nonpayment of the Issue Price plus accrued and unpaid interest, if any, that have become due solely as a result of acceleration and if all amounts due to the Trustee under Section 7.7 have been paid. No such rescission shall affect any subsequent Default or impair any right consequent thereto.
If the Company has elected to pay cash interest on the Securities after a Tax Event as provided in Paragraph 1 of the Securities, the amount due upon any acceleration will be the Restated Principal Amount thereof together with accrued and unpaid cash interest, if any, thereon.
Section 6.3 Other Remedies. If an Event of Default occurs and is continuing, the Trustee may pursue any available remedy to collect the payment of the Issue Price plus accrued and unpaid interest, if any, on the Securities or to enforce the performance of any provision of the Securities or this Indenture.
The Trustee may maintain a proceeding even if the Trustee does not possess any of the Securities or does not produce any of the Securities in the proceeding. A delay or omission by the Trustee or any Securityholder 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. No remedy is exclusive of any other remedy. All available remedies are cumulative.
Section 6.4 Waiver of Past Defaults. The Holders of a majority in aggregate Principal Amount at Maturity of the Securities at the time outstanding, by notice to the Trustee (and without notice to any other Securityholder), may waive an existing Default and its consequences except (1) an Event of Default described in Section 6.1(1) or (2), (2) a Default in respect of a provision that under Section 9.2 cannot be amended without the consent of each Securityholder affected or (3) a Default which constitutes a failure to convert any Security in accordance with the terms of Article 10. When a Default is waived, it is deemed cured, but no such waiver shall extend to any subsequent or other Default or impair any consequent right. This Section 6.4 shall be in lieu of Section 316(a)1(B) of the TIA and such Section 316(a)1(B) is hereby expressly excluded from this Indenture, as permitted by the TIA.
Section 6.5 Control by Majority. The Holders of a majority in aggregate Principal Amount at Maturity of the Securities at the time outstanding may direct the time, method and place of conducting any proceeding for any remedy available to the Trustee or of exercising any trust or power conferred on the Trustee. However, the Trustee may refuse to follow any direction that conflicts with law or this Indenture or that the Trustee determines in good faith is unduly prejudicial to the rights of other Securityholders or would involve the
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Trustee in personal liability unless the Trustee is offered indemnity satisfactory to it, provided that the Trustee may take any other action deemed proper by it that is not inconsistent with such direction. This Section 6.5 shall be in lieu of Section 316(a)1(A) of the TIA and such Section 316(a)1(A) is hereby expressly excluded from this Indenture, as permitted by the TIA.
Section 6.6 Limitation on Suits. A Securityholder may not pursue any remedy with respect to this Indenture or the Securities unless:
(1) the Holder gives to the Trustee written notice stating that an Event of Default is continuing;
(2) the Holders of at least 25% in aggregate Principal Amount at Maturity of the Securities at the time outstanding make a written request to the Trustee to pursue the remedy;
(3) such Holder or Holders offer to the Trustee security or indemnity satisfactory to the Trustee against any loss, liability or expense;
(4) the Trustee does not comply with the request within 60 days after receipt of such notice, request and offer of security or indemnity; and
(5) the Holders of a majority in aggregate Principal Amount at Maturity of the Securities at the time outstanding do not give the Trustee a direction inconsistent with the request during such 60-day period.
A Securityholder may not use this Indenture to prejudice the rights of any other Securityholder or to obtain a preference or priority over any other Securityholder.
Section 6.7 Rights of Holders to Receive Payment. Notwithstanding any other provision of this Indenture, the right of any Holder to receive payment of the Principal Amount at Maturity, Restated Principal Amount, Redemption Price, Purchase Price, Change in Control Purchase Price or interest, if any, in respect of the Securities held by such Holder, on or after the respective due dates expressed in the Securities or any Redemption Date, and to convert the Securities in accordance with Article 10, or to bring suit for the enforcement of any such payment on or after such respective dates or the right to convert, shall not be impaired or affected adversely without the consent of such Holder.
Section 6.8 Collection Suit by Trustee. If an Event of Default described in Section 6.1(1) or (2) occurs and is continuing, the Trustee may recover judgment in its own name and as trustee of an express trust against the Company for the whole amount owing with respect to the Securities and the amounts provided for in Section 7.7.
Section 6.9 Trustee May File Proofs of Claim. In case of the pendency of any receivership, insolvency, liquidation, bankruptcy, reorganization, arrangement, adjustment, composition or other judicial proceeding relative to the Company or any other obligor upon the Securities or the property of the Company or of such other obligor or their creditors, the Trustee (irrespective of whether the Principal Amount at Maturity, Restated Principal Amount, Redemption Price, Purchase Price, Change in Control Purchase Price or interest, if any, in respect of the Securities shall then be due and payable as therein expressed or by declaration or otherwise and irrespective of whether the Trustee shall have made any demand on the Company for the payment of any such amount) shall be entitled and empowered, by intervention in such proceeding or otherwise,
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(a) to file and prove a claim for the whole amount of the Principal Amount at Maturity, Restated Principal Amount, Redemption Price, Purchase Price, Change in Control Purchase Price, or interest, if any, and to file such other papers or documents as may be necessary or advisable in order to have the claims of the Trustee (including any claim for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel or any other amounts due the Trustee under Section 7.7) and of the Holders allowed in such judicial proceeding, and
(b) to collect and receive any moneys or other property payable or deliverable on any such claims and to distribute the same; and any custodian, receiver, assignee, trustee, liquidator, sequestrator or similar official in any such judicial proceeding is hereby authorized by each Holder to make such payments to the Trustee and, in the event that the Trustee shall consent to the making of such payments directly to the Holders, to pay the Trustee any amount due it for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, and any other amounts due the Trustee under Section 7.7.
Nothing herein contained shall be deemed to authorize the Trustee to authorize or consent to or accept or adopt on behalf of any Holder any plan of reorganization, arrangement, adjustment or composition affecting the Securities or the rights of any Holder thereof, or to authorize the Trustee to vote in respect of the claim of any Holder in any such proceeding.
Section 6.10 Priorities. If the Trustee collects any money pursuant to this Article 6, it shall pay out the money in the following order:
FIRST: to the Trustee for amounts due under Section 7.7;
SECOND: to Securityholders for amounts due and unpaid on the Securities for the Principal Amount at Maturity, Restated Principal Amount, Redemption Price, Purchase Price, Change in Control Purchase Price or interest, if any, as the case may be, ratably, without preference or priority of any kind, according to such amounts due and payable on the Securities; and
THIRD: the balance, if any, to the Company.
The Trustee may fix a record date and payment date for any payment to Securityholders pursuant to this Section 6.10. At least 15 days before such record date, the Trustee shall mail to each Securityholder and the Company a notice that states the record date, the payment date and the amount to be paid.
Section 6.11 Undertaking for Costs. In any suit for the enforcement of any right or remedy under this Indenture or in any suit against the Trustee for any action taken or omitted by it as Trustee, a court in its discretion may require the filing by any party litigant (other than the Trustee) in the suit of an undertaking to pay the costs of the suit, and the court in its discretion may assess reasonable costs, including reasonable attorneys' fees and expenses, against any party litigant in the suit, having due regard to the merits and good faith of the claims or defenses made by the party litigant. This
Section 6.11 does not apply to a suit by the Trustee, a suit by a Holder pursuant to Section 6.7 or a suit by Holders of more than 10% in aggregate Principal Amount at Maturity of the Securities at the time outstanding. This
Section 6.11 shall be in lieu of Section 315(e) of the TIA and such Section 315(e) is hereby expressly excluded from this Indenture, as permitted by the TIA.
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Section 6.12 Waiver of Stay, Extension or Usury Laws. The Company covenants (to the extent that it may lawfully do so) that it will not at any time insist upon, or plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay or extension law or any usury or other law wherever enacted, now or at any time hereafter in force, which would prohibit or forgive the Company from paying all or any portion of the Principal Amount at Maturity, Restated Principal Amount, Redemption Price, Purchase Price or Change in Control Purchase Price in respect of Securities, or any interest on such amounts, as contemplated herein, or which may affect the covenants or the performance of this Indenture; and the Company (to the extent that it may lawfully do so) hereby expressly waives all benefit or advantage of any such law, and covenants that it will not hinder, delay or impede the execution of any power herein granted to the Trustee, but will suffer and permit the execution of every such power as though no such law had been enacted.
ARTICLE VII
TRUSTEE
Section 7.1 Duties of Trustee. (a) If an Event of Default has occurred and is continuing, the Trustee shall exercise the rights and powers vested in it by this Indenture and use the same degree of care and skill in its exercise as a prudent person would exercise or use under the circumstances in the conduct of such person's own affairs.
(b) Except during the continuance of an Event of Default:
(1) the Trustee need perform only those duties that are specifically set forth in this Indenture and no others; and
(2) in the absence of bad faith on its part, the Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates or opinions furnished to the Trustee and conforming to the requirements of this Indenture, but in case of any such certificates or opinions which by any provision hereof are specifically required to be furnished to the Trustee, the Trustee shall examine the certificates and opinions to determine whether or not they conform to the requirements of this Indenture, but need not confirm or investigate the accuracy of mathematical calculations or other facts stated therein. This Section 7.1(b) shall be in lieu of
Section 3.15(a) of the TIA and such Section 315(a) is hereby expressly excluded from this Indenture, as permitted by the TIA.
(c) The Trustee may not be relieved from liability for its own negligent action, its own negligent failure to act or its own willful misconduct, except that:
(1) this paragraph (c) does not limit the effect of paragraph (b) of this Section 7.1;
(2) the Trustee shall not be liable for any error of judgment made in good faith by a Responsible Officer unless it is proved that the Trustee was negligent in ascertaining the pertinent facts; and
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(3) the Trustee shall not be liable with respect to any action it takes or omits to take in good faith in accordance with a direction received by it pursuant to Section 6.5.
Subparagraphs (c)(1), (2) and (3) shall be in lieu of Sections 315(d)(1), 315(d)(2) and 315(d)(3) of the TIA and such Sections 315(d)(1), 315(d)(2) and 315(d)(3) are hereby expressly excluded from this Indenture, as permitted by the TIA.
(d) Every provision of this Indenture that in any way relates to the Trustee is subject to paragraphs (a), (b), (c) and (e) of this Section 7.1.
(e) The Trustee may refuse to perform any duty or exercise any right or power or extend or risk its own funds or otherwise incur any financial liability unless it receives indemnity satisfactory to it against any loss, liability or expense.
(f) Money held by the Trustee in trust hereunder need not be segregated from other funds except to the extent required by law. The Trustee (acting in any capacity hereunder) shall be under no liability for interest on any money received by it hereunder unless otherwise agreed in writing with the Company.
Section 7.2 Rights of Trustee. Subject to its duties and responsibilities under the TIA,
(a) the Trustee may conclusively rely and shall be protected in acting or refraining from acting upon any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, note, other evidence of indebtedness or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or parties;
(b) whenever in the administration of this Indenture the Trustee shall deem it desirable that a matter be proved or established prior to taking, suffering or omitting any action hereunder, the Trustee (unless other evidence be herein specifically prescribed) may, in the absence of bad faith on its part, conclusively rely upon an Officers' Certificate;
(c) the Trustee may execute any of the trusts or powers hereunder or perform any duties hereunder either directly or by or through agents or attorneys and the Trustee shall not be responsible for any misconduct or negligence on the part of any agent or attorney appointed with due care by it hereunder;
(d) The Trustee shall not be liable for any action taken, suffered, or omitted to be taken by it in good faith which it believes to be authorized or within its rights or powers conferred under this Indenture;
(e) The Trustee may consult with counsel selected by it and any advice or Opinion of Counsel shall be full and complete authorization and protection in respect of any action taken or suffered or omitted by it hereunder in good faith and in accordance with such advice or Opinion of Counsel.
(f) the Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Indenture at the request, order or direction of any of the Holders, pursuant to the provisions of this Indenture, unless such Holders shall have offered to the Trustee
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security or indemnity satisfactory to it against the costs, expenses and liabilities which may be incurred therein or thereby.
(g) any request or direction of the Company mentioned herein shall be sufficiently evidenced by a Company Request or Company Order and any resolution of the Board of Directors may be sufficiently evidenced by a Board Resolution;
(h) the Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, note, other evidence of indebtedness or other paper or document, but the Trustee, in its discretion, may make such further inquiry or investigation into such facts or matters as it may see fit, and, if the Trustee shall determine to make such further inquiry or investigation, it shall be entitled to examine the books, records and premises of the Company, personally or by agent or attorney at the sole cost of the Company and shall incur no liability or additional liability of any kind by reason of such inquiry or investigation;
(i) the Trustee shall not be deemed to have notice of any Default or Event of Default unless a Responsible Officer of the Trustee has actual knowledge thereof or unless written notice of any event which is in fact such a default is received by the Trustee at the Corporate Trust Office of the Trustee, and such notice references the Securities and this Indenture;
(j) the rights, privileges, protections, immunities and benefits given to the Trustee, including, without limitation, its right to be indemnified, are extended to, and shall be enforceable by, the Trustee in each of its capacities hereunder, and to each agent, custodian and other person employed to act hereunder; and
(k) the Trustee may request that the Company deliver an Officers' Certificate setting forth the names of individuals and/or titles of officers authorized at such time to take specified actions pursuant to this Indenture, which Officers' Certificate may be signed by any person authorized to sign an Officers' Certificate, including any person specified as so authorized in any such certificate previously delivered and not superseded.
Section 7.3 Individual Rights of Trustee. The Trustee in its individual or any other capacity may become the owner or pledgee of Securities and may otherwise deal with the Company or its Affiliates with the same rights it would have if it were not Trustee. Any Paying Agent, Registrar, Conversion Agent or co-registrar may do the same with like rights. However, the Trustee must comply with Sections 7.10 and 7.11.
Section 7.4 Trustee's Disclaimer. The Trustee makes no representation as to the validity or adequacy of this Indenture or the Securities, it shall not be accountable for the Company's use or application of the proceeds from the Securities, it shall not be responsible for any statement in the registration statement for the Securities under the Securities Act or in any offering document for the Securities, the Indenture or the Securities (other than its certificate of authentication), or the determination as to which beneficial owners are entitled to receive any notices hereunder.
Section 7.5 Notice of Defaults. If a Default occurs and if it is known to the Trustee, the Trustee shall give to each Securityholder notice of the Default within 90 days after it occurs or, if later, within 15 days after it is known to the Trustee, unless such Default shall have
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been cured or waived before the giving of such notice. Notwithstanding the preceding sentence, except in the case of a Default described in Section 6.1(1) or (2), the Trustee may withhold the notice if and so long as a committee of its Responsible Officers in good faith determines that withholding the notice is in the interests of Securityholders. The second sentence of this Section 7.5 shall be in lieu of the proviso to Section 315(b) of the TIA and such proviso is hereby expressly excluded from this Indenture, as permitted by the TIA. The Trustee shall not be deemed to have knowledge of a Default unless a Responsible Officer of the Trustee has received written notice of such Default.
Section 7.6 Reports by Trustee to Holders. Within 60 days after each April 15 beginning with the April 15 following the date of this Indenture, the Trustee shall mail to each Securityholder a brief report dated as of such April 15 that complies with TIA Section 313(a), if required by such
Section 313(a). The Trustee also shall comply with TIA Section 313(b).
A copy of each report at the time of its mailing to Securityholders shall be filed with the SEC and each securities exchange, if any, on which the Securities are listed. The Company agrees to notify the Trustee promptly whenever the Securities become listed on any securities exchange and of any delisting thereof.
Section 7.7 Compensation and Indemnity. The Company agrees:
(a) to pay to the Trustee from time to time such compensation as the Company and the Trustee shall from time to time agree in writing for all services rendered by it hereunder (which compensation shall not be limited (to the extent permitted by law) by any provision of law in regard to the compensation of a trustee of an express trust);
(b) to reimburse the Trustee upon its request for all reasonable expenses, disbursements and advances incurred or made by the Trustee in accordance with any provision of this Indenture (including the reasonable compensation and the expenses, advances and disbursements of its agents and counsel), except any such expense, disbursement or advance as may be attributable to its negligence or bad faith; and
(c) to indemnify the Trustee or any predecessor, Trustee and their agents for, and to hold them harmless against, any loss, damage, claim, liability, cost or expense (including attorney's fees and expenses, and taxes (other than taxes based upon, measured by or determined by the income of the Trustee)) incurred without negligence or bad faith on its part, arising out of or in connection with the acceptance or administration of this trust, including the costs and expenses of defending itself against any claim (whether asserted by the Company or any Holder or any other person) or liability in connection with the exercise or performance of any of its powers or duties hereunder.
To secure the Company's payment obligations in this Section 7.7, the Trustee shall have a lien prior to the Securities on all money or property held or collected by the Trustee, except that held in trust to pay the Principal Amount at Maturity, Restated Principal Amount, Redemption Price, Purchase Price, Change in Control Purchase Price or interest, if any, as the case may be, on particular Securities.
The Company's payment obligations pursuant to this Section 7.7 shall survive the discharge of this Indenture and the resignation or removal of the Trustee. Without prejudice to any other rights available to the Trustee under applicable law, when the Trustee incurs expenses after the occurrence of a Default specified in Section 6.1(5) or (6), the expenses including the
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reasonable charges and expenses of its counsel, are intended to constitute expenses of administration under any Bankruptcy Law.
Section 7.8 Replacement of Trustee. The Trustee may resign by so notifying the Company; provided, however, no such resignation shall be effective until a successor Trustee has accepted its appointment pursuant to this Section 7.8. The Holders of a majority in aggregate Principal Amount at Maturity of the Securities at the time outstanding may remove the Trustee by so notifying the Trustee and the Company. The Company shall remove the Trustee if:
(1) the Trustee fails to comply with Section 7.10;
(2) the Trustee is adjudged bankrupt or insolvent;
(3) a receiver or public officer takes charge of the Trustee or its property; or
(4) the Trustee otherwise becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in the office of Trustee for any reason, the Company shall promptly appoint, by resolution of its Board of Directors, a successor Trustee.
A successor Trustee shall deliver a written acceptance of its appointment to the retiring Trustee and to the Company satisfactory in form and substance to the retiring Trustee and the Company. Thereupon the resignation or removal of the retiring Trustee shall become effective, and the successor Trustee shall have all the rights, powers and duties of the Trustee under this Indenture. The successor Trustee shall mail a notice of its succession to Securityholders. The retiring Trustee shall promptly transfer all property held by it as Trustee to the successor Trustee, subject to the lien provided for in
Section 7.7.
If a successor Trustee does not take office within 30 days after the retiring Trustee resigns or is removed, the retiring Trustee, the Company or the Holders of a majority in aggregate Principal Amount at Maturity of the Securities at the time outstanding may petition any court of competent jurisdiction at the expense of the Company for the appointment of a successor Trustee.
If the Trustee fails to comply with Section 7.10, any Securityholder may petition any court of competent jurisdiction for the removal of the Trustee and the appointment of a successor Trustee.
Section 7.9 Successor Trustee by Merger. If the Trustee consolidates with, merges or converts into, or transfers all or substantially all its corporate trust business or assets to, another corporation, the resulting, surviving or transferee corporation without any further act shall be the successor Trustee.
Section 7.10 Eligibility; Disqualification. The Trustee shall at all times satisfy the requirements of TIA Sections 310(a)(1) and 310(b). The Trustee (or its parent holding company) shall have a combined capital and surplus of at least $50,000,000 as set forth in its most recent published annual report of condition. Nothing herein contained shall prevent the Trustee from filing with the Commission the application referred to in the penultimate paragraph of TIA Section 310(b). The Trustee shall not be deemed to have a conflicting interest under the TIA by virtue of being a trustee under the Indenture dated as of August 10, 2000 between the
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Company and the Trustee and the Indenture dated as of April 25, 2001 between Calpine Canada Energy Finance ULC and the Trustee, with respect to which the Company is the guarantor.
Section 7.11 Preferential Collection of Claims Against Company. The Trustee shall comply with TIA Section 311(a), excluding any creditor relationship listed in TIA Section 311(b). A Trustee who has resigned or been removed shall be subject to TIA Section 311(a) to the extent indicated therein.
ARTICLE VIII
DISCHARGE OF INDENTURE
Section 8.1 Discharge of Liability on Securities. When (i) the Company delivers to the Trustee all outstanding Securities (other than Securities replaced or paid pursuant to Section 2.7 or Securities for whose payment money has theretofore been deposited in trust by the Company with the Trustee or a Paying Agent and thereafter repaid to the Company as provided in Paragraph 11 of the Securities) for cancellation or (ii) all outstanding Securities have become due and payable and the Company deposits with the Trustee cash and/or, if permitted by the terms of this Indenture, shares of Common Stock, sufficient to pay all amounts due and owing on all outstanding Securities (other than Securities replaced pursuant to Section 2.7 or Securities for whose payment money has theretofore been deposited in trust by the Company with the Trustee or a Paying Agent and thereafter repaid to the Company as provided in Paragraph 11 of the Securities), and if in either case the Company pays all other sums payable hereunder by the Company, then this Indenture shall, subject to Section 7.7, cease to be of further effect. The Trustee shall join in the execution of a document prepared by the Company acknowledging satisfaction and discharge of this Indenture on demand of the Company accompanied by an Officers' Certificate and Opinion of Counsel and at the cost and expense of the Company.
ARTICLE IX
AMENDMENTS
Section 9.1 Without Consent of Holders. The Company and the Trustee may amend this Indenture or the Securities without the consent of any Securityholder, so long as such changes, other than those in clause (2), do not materially and adversely affect the interests of the Securityholder:
(1) to cure any ambiguity, omission, defect or inconsistency provided that such modification or amendment does not, in the good faith opinion of the Board of Directors and the Trustee, adversely affect the interests of the holders of the Securities in any material respect;
(2) to comply with Article 5 or Section 10.12;
(3) to secure the Company's obligations or add any guarantee under the Securities and this Indenture;
(4) to add to the Company's covenants for the benefit of the Securityholders or to surrender any right or power conferred upon the Company;
(5) to make any change necessary for the registration of the Securities under the Securities Act or to comply with the TIA, or any amendment thereto, or to comply with any
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requirement of the SEC in connection with the qualification of the Indenture under the TIA, provided that such modification or amendment does not, in the good faith opinion of the Board of Directors and the Trustee, adversely affect the interests of the holders of the Securities in any material respect;
(6) to provide for uncertificated Securities in addition to or in place of certificated Securities or to provide for bearer securities; provided, however, that such uncertificated Securities are issued in registered form for purposes of Section 163(f) of the Code or in a manner such that such uncertificated Securities are described in Section 163(f)(2)(B) of the Code;
(7) to modify the restrictions on resales and other transfers of the Securities and any shares of Common Stock issuable upon conversion of the Securities to reflect any change in applicable law or regulation (or interpretation thereof) or in practices relating to the resale or transfer of restricted securities generally; or
(8) to make any change that does not adversely affect the rights of any Securityholder.
Section 9.2 With Consent of Holders. With the written consent of the Holders of at least a majority in aggregate Principal Amount at Maturity of the Securities at the time outstanding, the Company and the Trustee may amend this Indenture or the Securities. However, without the consent of each Securityholder affected, an amendment to this Indenture or the Securities may not:
(1) reduce the amount of Securities the Holders of which must consent to an amendment or supplement or waiver pursuant to Section 6.4, 6.7 or this
Section 9.2
(2) reduce the rate of interest or change the time for payment of interest on the Securities;
(3) make any change in the method of determining whether an Upward Interest Adjustment shall be made for a semi-annual period;
(4) reduce the Principal Amount at Maturity or the Issue Price of or change the Stated Maturity of any Security;
(5) make any change in any redemption or repurchase right to the detriment of a Holder;
(6) make the Securities payable in currency or consideration other than that stated in the Security;
(7) impair the Holder's right to receive payment of principal and interest on the Securities or to institute suit for the enforcement of any payment on the Securities; or
(8) waive a continuing Event of Default regarding any payment on the Securities.
It shall not be necessary for the consent of the Holders under this Section 9.2 to approve the particular form of any proposed amendment, but it shall be sufficient if such consent approves the substance thereof.
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After an amendment under this Section 9.2 becomes effective, the Company shall mail to each Holder a notice briefly describing the amendment.
Section 9.3 Compliance with Trust Indenture Act. Every supplemental indenture executed pursuant to this Article shall comply with the TIA.
Section 9.4 Revocation and Effect of Consents, Waivers and Actions. Until an amendment, waiver or other action by Holders becomes effective, a consent thereto by a Holder of a Security hereunder is a continuing consent by the Holder and every subsequent Holder of that Security or portion of the Security that evidences the same obligation as the consenting Holder's Security, even if notation of the consent, waiver or action is not made on the Security. However, any such Holder or subsequent Holder may revoke the consent, waiver or action as to such Holder's Security or portion of the Security if the Trustee receives the notice of revocation before the date the amendment, waiver or action becomes effective. After an amendment, waiver or action becomes effective, it shall bind every Securityholder.
Section 9.5 Notation on or Exchange of Securities. Securities authenticated and delivered after the execution of any supplemental indenture pursuant to this Article may, and shall if required by the Trustee, bear a notation in form approved by the Trustee as to any matter provided for in such supplemental indenture. If the Company shall so determine, new Securities so modified as to conform, in the opinion of the Trustee and the Board of Directors, to any such supplemental indenture may be prepared and executed by the Company and authenticated and delivered by the Trustee in exchange for outstanding Securities.
Section 9.6 Trustee to Sign Supplemental Indentures. The Trustee shall sign any supplemental indenture authorized pursuant to this Article 9 if the amendment contained therein does not adversely affect the rights, duties, liabilities or immunities of the Trustee. If it does, the Trustee may, but need not, sign such supplemental indenture. In signing such supplemental indenture the Trustee shall receive, and (subject to the provisions of Section 7.1) shall be fully protected in relying upon, an Officers' Certificate and an Opinion of Counsel stating that such amendment is authorized or permitted by this Indenture.
Section 9.7 Effect of Supplemental Indentures. Upon the execution of any supplemental indenture under this Article, this Indenture shall be modified in accordance therewith, and such supplemental indenture shall form a part of this Indenture for all purposes; and every Holder of Securities theretofore or thereafter authenticated and delivered hereunder shall be bound thereby.
ARTICLE X
CONVERSIONS
Section 10.1 Conversion Privilege. A Holder of a Security may convert such Security into shares of Common Stock at any time during the period stated in Paragraph 8 of the Securities. The number of shares of Common Stock issuable upon conversion of a Security per $1,000 Principal Amount at Maturity thereof (the "Conversion Rate") shall be that set forth in Paragraph 8 in the Securities, subject to adjustment as herein set forth.
A Holder may convert a portion of the Principal Amount at Maturity of a Security if the portion is $1,000 or an integral multiple of $1,000. Provisions of this Indenture that apply to conversion of all of a Security also apply to conversion of a portion of a Security.
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Section 10.2 Conversion Procedure. To convert a Security a Holder must satisfy the requirements in Paragraph 8 of the Securities. The first Business Day on which the Holder satisfies all those requirements is the conversion date (the "Conversion Date").
As soon as practicable after the Conversion Date, the Company shall deliver to the Holder, through the Conversion Agent, a certificate for the number of full shares of Common Stock issuable upon the conversion or exchange and cash in lieu of any fractional share determined pursuant to Section 10.3. The person in whose name the certificate is registered shall be treated as a shareholder of record as of the close of business on the Conversion Date. Upon conversion of a Security, such person shall no longer be a Holder of such Security.
No payment or adjustment will be made for dividends on, or other distributions with respect to, any Common Stock except as provided in this Article 10. On conversion of a Security, that portion of accrued interest, if any, attributable to the period from the Issue Date of the Security through the Conversion Date with respect to the converted Security shall not be cancelled, extinguished or forfeited, but rather shall be deemed to be paid in full to the Holder thereof through delivery of the shares of Common Stock (together with the cash payment, if any, in lieu of fractional shares) for the Security being converted pursuant to the provisions hereof; and the fair market value of such shares of Common Stock (together with any such cash payment in lieu of fractional shares) shall be treated as issued, to the extent thereof, first in exchange for interest, if any, accrued through the Conversion Date, and the balance, if any, of such fair market value of such shares of Common Stock (and any such cash payment) shall be treated as issued for the Issue Price of the Security being converted pursuant to the provisions hereof. If the Holder converts more than one Security at the same time, the number of shares of Common Stock issuable upon the conversion shall be based on the total Principal Amount at Maturity of the Securities converted.
If the last day on which a Security may be converted is a Legal Holiday, the Security may be surrendered on the next succeeding day that is not a Legal Holiday.
Upon surrender of a Security that is converted in part, the Company shall execute, and the Trustee shall authenticate and deliver to the Holder, a new Security in an authorized denomination equal in Principal Amount at Maturity to the unconverted portion of the Security surrendered.
Section 10.3 Fractional Shares. Securityholders will not receive a fractional share upon conversion of a Security. Instead, the Holder will receive cash for the current market value of the fractional share. The current market value of a fractional share shall be determined, to the nearest 1/1,000th of a share, by multiplying the Sale Price, on the last trading day prior to the Conversion Date, of a full share by the fractional amount and rounding the product to the nearest whole cent, with one-half cent being rounded upward.
Section 10.4 Taxes on Conversion. If a Holder submits a Security for conversion, the Company shall pay any documentary, stamp or similar issue or transfer tax due on the issue of shares of Common Stock upon the conversion. However, the Holder shall pay any such tax which is due because the Holder requests the shares to be issued in a name other than the Holder's name. The Conversion Agent may refuse to deliver the certificates representing the shares of Common Stock being issued in a name other than the Holder's name until the Conversion Agent receives a sum sufficient to pay any tax which will be due because
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the shares are to be issued in a name other than the Holder's name. Nothing herein shall preclude any income tax withholding required by law or regulations.
Section 10.5 Company to Provide Stock. The Company has, and from time to time as may be necessary shall, reserve out of its authorized but unissued shares of Common Stock a sufficient number of shares of Common Stock to permit the conversion of the Securities in full.
All shares of Common Stock delivered upon conversion of the Securities shall be newly issued shares or treasury shares, shall be duly and validly issued and fully paid and nonassessable, and shall be free from preemptive rights and free of any lien or adverse claim. The Company will endeavor promptly to comply with all federal and state securities laws regulating the offer and delivery of shares of Common Stock upon conversion of Securities, if any, and will list or cause to have quoted such shares of Common Stock on each national securities exchange or in the over-the-counter market or such other market on which the shares of Common Stock are then listed or quoted.
Section 10.6 Conversion Price Adjustments. The Conversion Rate shall be subject to adjustment (without duplication) from time to time as follows:
(a) In case the Company shall pay a dividend or make a distribution on the Common Stock exclusively in Common Stock, the Conversion Rate in effect at the opening of business on the day following the date fixed for the determination of stockholders entitled to receive such dividend or other distribution shall be increased by multiplying such Conversion Rate by a fraction of which the denominator shall be the number of shares of Common Stock outstanding at the close of business on the date fixed for such determination and the numerator shall be the sum of (i) such number of shares and (ii) the total number of shares constituting such dividend or other distribution, such increase to become effective immediately after the opening of business on the day following the date fixed for such determination. For the purposes of this paragraph (a), the number of shares of Common Stock at any time outstanding shall not include shares held in the treasury of the Company. In the event that such dividend or distribution is not so paid or made, the Conversion Rate shall again be adjusted to be the Conversion Rate which would then be in effect if such dividend or distribution had not occurred.
(b) In case the Company shall pay or make a dividend or other distribution on its Common Stock consisting exclusively of, or shall otherwise issue to all holders of its Common Stock, rights or warrants, in each case entitling the holders thereof to subscribe for or purchase shares of Common Stock at a price per share less than the current market value per share (determined as provided in paragraph (g)) of the Common Stock on the date fixed for the determination of stockholders entitled to receive such rights or warrants, the Conversion Rate in effect at the opening of business on the day following the date fixed for such determination shall be increased by multiplying such Conversion Rate by a fraction of which the denominator shall be the sum of (i) the number of shares of Common Stock outstanding at the close of business on the date fixed for such determination plus (ii) the number of shares of Common Stock which the aggregate of the offering price of the total number of shares of Common Stock so offered for subscription or purchase would purchase at such current market value and the numerator shall be the sum of (i) the number of shares of Common Stock outstanding at the close of business on the date fixed for such determination plus (ii) the number of shares of Common Stock so offered for subscription or purchase, such increase to become effective immediately after the opening of business on the day following the date fixed for such determination. To the extent that rights are
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not so issued or shares of Common Stock are not so delivered after the expiration of such rights or warrants, the Conversion Rate shall be readjusted to the Conversion Rate which would then be in effect if such date fixed for the determination of stockholders entitled to receive such rights or warrants had not been fixed. For the purposes of this paragraph (b), the number of shares of Common Stock at any time outstanding shall not include shares held in the treasury of the Company.
(c) In case outstanding shares of Common Stock shall be subdivided into a greater number of shares of Common Stock, the Conversion Rate in effect at the opening of business on the day following the day upon which such subdivision becomes effective shall be proportionately increased and, conversely, in case outstanding shares of Common Stock shall each be combined into a smaller number of shares of Common Stock, the Conversion Rate in effect at the opening of business on the day following the day upon which such combination becomes effective shall be proportionately reduced, such increase or reduction, as the case may be, to become effective immediately after the opening of business on the day following the day upon which such subdivision or combination becomes effective.
(d) Subject to the last sentence of this paragraph (d), in case the Company shall, by dividend or otherwise, distribute to all holders of its Common Stock evidences of its indebtedness, shares of any class or series of Capital Stock, cash or assets (including securities, but excluding any rights or warrants referred to in paragraph (b) of this Section 10.6, any dividend or distribution paid exclusively in cash and any dividend or distribution referred to in paragraph (a) of this Section 10.6), the Conversion Rate shall be increased so that the same shall equal the price determined by multiplying the Conversion Rate in effect immediately prior to the effectiveness of the Conversion Rate increase contemplated by this paragraph (d) by a fraction of which the denominator shall be the current market value per share (determined as provided in paragraph (g) of this Section 10.6) of the Common Stock on the date fixed for the determination of stockholders entitled to receive such distribution (the "Reference Date") less the fair market value (as determined in good faith by the Board of Directors, whose determination shall be conclusive and described in a resolution of the Board of Directors), on the Reference Date, of the portion of the evidences of indebtedness, shares of capital stock, cash and/or assets so distributed applicable to one share of Common Stock and the numerator shall be such current market value per share of the Common Stock, such increase to become effective immediately prior to the opening of business on the day following the Reference Date. In the event that such dividend or distribution is not so paid or made, the Conversion Rate shall again be adjusted to be the Conversion Rate which would then be in effect if such dividend or distribution had not occurred. For purposes of this paragraph (d), any dividend or distribution that includes shares of Common Stock or rights or warrants to subscribe for or purchase shares of Common Stock shall be deemed instead to be
(1) a dividend or distribution of the evidences of indebtedness, shares of Capital Stock, cash and/or assets other than such shares of Common Stock or such rights or warrants (making any Conversion Rate increase required by this paragraph (d)) immediately followed by (2) a dividend or distribution of such shares of Common Stock or such rights or warrants (making any further Conversion Rate increase required by paragraph (a) or (b) of this Section 10.6), except any shares of Common Stock included in such dividend or distribution shall not be deemed "outstanding at the close of business on the date fixed for such determination" within the meaning of paragraph (a) of this Section 10.6.
(e) In case the Company pays to holders of Common Stock in respect of a tender or exchange offer, other than an odd-lot offer, by the Company or any of its Subsidiaries for Common Stock to the extent that the offer involves aggregate consideration that, together with
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(1) any cash and the fair market value of any other consideration payable in respect of any tender offer by the Company or any of its Subsidiaries for shares of Common Stock consummated within the preceding 12 months not triggering a Conversion Rate adjustment and (2) all-cash distributions to all or substantially all holders of Common Stock made within the preceding 12 months not triggering a Conversion Rate adjustment, exceeds an amount equal to 12.5% of the market capitalization of Common Stock on the expiration date of the tender offer, the Conversion Rate shall be increased so that the same shall equal the price determined by multiplying the Conversion Rate in effect immediately prior to the effectiveness of the Conversion Rate increase contemplated by this paragraph (e) by a fraction of which the denominator shall be the number of shares of Common Stock outstanding (including any tendered or exchanged shares) at the last time tenders of exchanges may be made pursuant to such tender or exchange offer (the "Expiration Time") multiplied by the current market value per share (determined as provided in paragraph (g) of this Section 10.6) of the Common Stock on the trading day on the NYSE next succeeding the Expiration Time and the numerator shall be the sum of (x) the fair market value (determined as aforesaid) of the aggregate consideration payable to stockholders based on the acceptance (up to any maximum specified in the terms of the tender or exchange offer) of all shares validly tendered or exchanged and not withdrawn as of the Expiration Time (the shares deemed so accepted, up to any such maximum, being referred to as the "Purchased Shares") and (y) the product of the number of shares of Common Stock outstanding (less any Purchased Shares) at the Expiration Time and the current market value per share (determined as provided in paragraph
(g) of this Section 10.6) of the Common Stock on the trading day on the NYSE next succeeding the Expiration Time, such increase to become effective immediately prior to the opening of business on the day following the Expiration Time.
(f) In case the Company distributes to all or substantially all holders of Common Stock all-cash distributions in an aggregate amount that, together with (1) any cash and the fair market value of any other consideration payable in respect of any tender offer by the Company or any of its Subsidiaries for shares of Common Stock consummated within the preceding 12 months not triggering a Conversion Rate adjustment and (2) all other all-cash distributions to all or substantially all holders of Common Stock made within the preceding 12 months not triggering a Conversion Rate adjustment, exceeds an amount equal to 12.5% of the market capitalization of the Common Stock on the Business Day immediately preceding the day on which the Company declares the distribution, the Conversion Rate shall be increased so that the same shall equal the price determined by multiplying the Conversion Rate in effect immediately prior to the effectiveness of the Conversion Rate increase contemplated by this paragraph (f) by a fraction of which the denominator shall be the current market value per share (determined as provided in paragraph (g) of this Section 10.6) of the Common Stock on the date fixed for the payment of such distribution less the amount of cash so distributed and not excluded as provided below applicable to one share of Common Stock and the numerator shall be such current market value per share of the Common Stock, such increase to become effective immediately prior to the opening of business on the day following the date fixed for the payment of such distribution; provided, however, that in the event the portion of the cash so distributed applicable to one share of Common Stock is equal to or greater than the current market value per share (as defined in paragraph (g) of this Section 10.6) of the Common Stock on the record date mentioned above, in lieu of the foregoing adjustment, adequate provision shall be made so that each Holder of Securities shall have the right to receive upon conversion the amount of cash such Holder would have received had such Holder converted each Security immediately prior to the record date for the distribution of the cash. In the event that such dividend or distribution is not so paid or made, the Conversion Rate shall again be adjusted to be the Conversion Rate which would then be in effect if such record date had not been fixed.
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(g) For the purpose of any computation under paragraphs (b),
(d), (e) and (f) of this Section 10.6, the current market value per share of Common Stock on any date in question shall be deemed to be the average of the daily closing prices on the NYSE for the ten consecutive trading days prior to the earlier of the day in question and, if applicable, the day before the "ex" date (as hereinafter defined) with respect to the issuance or distribution requiring such computation; provided, however, that if the day in question or the "ex" date for any event (other than the issuance or distribution requiring such computation) that requires an adjustment to the Conversion Rate pursuant to
Section 10.6 (b), (d), (e) or (f) occurs during such 10 consecutive NYSE trading days, the closing price on the NYSE for each trading day prior to such date for such other event shall be adjusted by dividing such closing price by the same fraction by which the Conversion Rate is so required to be adjusted as a result of such other event. For purposes of this paragraph (g), the term "ex" date (I) when used with respect to any issuance or distribution, means the first date on which the Common Stock trades regular way on the relevant exchange or in the relevant market from which the closing price was obtained without the right to receive such issuance or distribution, (II) when used with respect to any subdivision or combination of shares of Common Stock, means the first date on which the Common Stock trades regular way on such exchange or in such market after the time at which such subdivision or combination becomes effective and
(III) when used with respect to any tender or exchange offer means the first date on which the Common Stock trades regular way on such exchange or in such market after the Expiration Time of such offer. Notwithstanding the foregoing, whenever successive adjustments to the Conversion Rate are called for pursuant to this Section 10.6, such adjustments shall be made to the current market price as may be necessary or appropriate to effectuate the intent of this Section 10.6 and to avoid unjust or inequitable results, as determined in good faith by the Board of Directors.
(h) No adjustment of the Conversion Rate shall be made (i) upon the issuance of any shares of Common Stock pursuant to any present or future plan providing for the reinvestment of dividends or interest payable on securities of the Company and the investment of additional optional amounts in shares of Common Stock under any plan, (ii) upon the issuance of any shares of Common Stock or options or rights to purchase those shares pursuant to any present or future employee, director or consultant benefit plan or program of the Company, (iii) upon the issuance of any shares of Common Stock pursuant to any option, warrant, right or exercisable, exchangeable or convertible security outstanding as of the date hereof or (iv) upon the issuance of any rights, any distribution of separate certificates representing the rights, any exercise or redemption of any rights or any termination or invalidation of the rights, pursuant to the Company's stockholders rights plan. There shall also be no adjustment of the Conversion Rate in case of the issuance of any Common Stock (or securities convertible into or exchangeable for Common Stock), except as specifically described above.
Section 10.7 When Adjustment May Be Deferred. No adjustment in the Conversion Rate need be made unless the adjustment would require an increase or decrease of at least 1% in the Conversion Rate. Any adjustments that are not made shall be carried forward and taken into account in any subsequent adjustment.
All calculations under this Article 10 shall be made to the nearest cent, with one-half cent rounded up, or to the nearest 1/1,000th of a share, as the case may be.
Section 10.8 When No Adjustment Required. No adjustment need be made for a transaction referred to in Section 10.6(b) or (d) if Securityholders are to participate in the transaction without conversion on a basis and with notice that the Board of Directors determines
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to be fair and appropriate in light of the basis and notice on which holders of shares of Common Stock participate in the transaction.
No adjustment need be made for a change in the par value or no par value of the shares of Common Stock.
To the extent the Securities become convertible pursuant to this Article 10 in whole or in part into cash, no adjustment need be made thereafter as to the cash. Interest will not accrue on the cash.
Section 10.9 Notice of Adjustment. Whenever the Conversion Rate is adjusted, the Company shall promptly mail to Securityholders a notice of the adjustment. The Company shall file with the Trustee and the Conversion Agent such notice and a certificate from the Company's independent public accountants briefly stating the facts requiring the adjustment and the manner of computing it. The certificate shall be conclusive evidence that the adjustment is correct. Neither the Trustee nor any Conversion Agent shall be under any duty or responsibility with respect to any such certificate except to exhibit the same to any Holder desiring inspection thereof.
Section 10.10 Voluntary Increase. The Company from time to time may increase the Conversion Rate by any amount at any time for at least 20 days, so long as the increase is irrevocable during such period. Whenever the Conversion Rate is increased, the Company shall mail to Securityholders and file with the Trustee and the Conversion Agent a notice of the increase. The Company shall mail the notice at least 15 days before the date the increased Conversion Rate takes effect. The notice shall state the increased Conversion Rate and the period it will be in effect. A voluntary increase of the Conversion Rate does not change or adjust the Conversion Rate otherwise in effect for purposes of
Section 10.6.
Section 10.11 Notice of Certain Transactions. If:
(1) the Company takes any action that would require an adjustment in the Conversion Rate pursuant to Section 10.6 (unless no adjustment is to occur pursuant to Section 10.8); or
(2) the Company takes any action that would require a supplemental indenture pursuant to Section 10.12; or
(3) there is a liquidation or dissolution of the Company;
then the Company shall mail to Securityholders and file with the Trustee and the Conversion Agent a notice stating the proposed record date for a dividend or distribution or the proposed effective date of a subdivision, combination, reclassification, consolidation, merger, binding share exchange, transfer, liquidation or dissolution. The Company shall file and mail the notice at least 15 days before such date. Failure to file or mail the notice or any defect in it shall not affect the validity of the transaction.
Section 10.12 Reorganization of Company; Special Distributions. If the Company is a party to a transaction subject to Section 5.1 (other than a sale of all or substantially all of the assets of the Company in a transaction in which the holders of shares of Common Stock immediately prior to such transaction do not receive securities, cash
53

or other assets of the Company or any other person) or a merger or binding share exchange which reclassifies or changes its outstanding shares of Common Stock, the person obligated to deliver securities, cash or other assets upon conversion of Securities shall enter into a supplemental indenture. If the issuer of securities deliverable upon conversion of Securities is an Affiliate of the successor Company, that issuer shall join in the supplemental indenture.
The supplemental indenture shall provide that the Holder of a Security may convert it into the kind and amount of securities, cash or other assets which such Holder would have received immediately after the consolidation, merger, binding share exchange or transfer if such Holder had converted the Security immediately before the effective date of the transaction, assuming (to the extent applicable) that such Holder (i) was not a constituent person or an Affiliate of a constituent person to such transaction; (ii) made no election with respect thereto; and (iii) was treated alike with the plurality of non- electing Holders. The supplemental indenture shall provide for adjustments which shall be as nearly equivalent as may be practical to the adjustments provided for in this Article 10. The successor Company shall mail to Securityholders a notice briefly describing the supplemental indenture.
If this Section applies, Section 10.6 does not apply.
Section 10.13 Company Determination Final. Any determination that the Company or the Board of Directors must make pursuant to Section 10.3, 10.6, 10.7, 10.8, 10.12 or 10.15 is conclusive, absent manifest error.
Section 10.14 Trustee's Adjustment Disclaimer. The Trustee has no duty to determine when an adjustment under this Article 10 should be made, how it should be made or what it should be. The Trustee has no duty to determine whether a supplemental indenture under Section 10.12 need be entered into or whether any provisions of any supplemental indenture are correct. The Trustee shall not be accountable for and makes no representation as to the validity or value of any securities or assets issued upon conversion of Securities. The Trustee shall not be responsible for the Company's failure to comply with this Article 10. Each Conversion Agent shall have the same protection under this
Section 10.14 as the Trustee.
Section 10.15 Successive Adjustments. After an adjustment to the Conversion Rate under this Article 10, any subsequent event requiring an adjustment under this Article 10 shall cause an adjustment to the Conversion Rate as so adjusted.
ARTICLE XI
MISCELLANEOUS
Section 11.1 Trust Indenture Act Controls. If any provision of this Indenture limits, qualifies, or conflicts with another provision which is required to be included in this Indenture by the TIA, the required provision shall control, except any TIA provision expressly overridden by any provision hereunder.
Section 11.2 Notices. Any request, demand, authorization, notice, waiver, consent or communication shall be in writing and delivered in person or mailed by first-class mail, postage prepaid, addressed as follows or transmitted by facsimile transmission (confirmed by guaranteed overnight courier) to the following facsimile numbers:
if to the Company:
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Calpine Corporation
50 West San Fernando Street
San Jose, California 95113
Attn: Corporate Secretary
Facsimile No. 408-975-4648
if to the Trustee:
Wilmington Trust Company
Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890
Telephone No. 302-651-8584
Facsimile No. 302-651-8882
Attention: Corporate Trust Administration
The Company or the Trustee by notice given to the other in the manner provided above may designate additional or different addresses for subsequent notices or communications.
Any notice or communication given to a Securityholder shall be mailed to the Securityholder, by first-class mail, postage prepaid, at the Securityholder's address as it appears on the registration books of the Registrar and shall be sufficiently given if so mailed within the time prescribed.
Failure to mail a notice or communication to a Securityholder or any defect in it shall not affect its sufficiency with respect to other Securityholders. If a notice or communication is mailed in the manner provided above, it is duly given, whether or not received by the addressee.
If the Company mails a notice or communication to the Securityholders, it shall mail a copy to the Trustee and each Registrar, Paying Agent, Conversion Agent or co-registrar.
Section 11.3 Communication by Holders with Other Holders. Securityholders may communicate pursuant to TIA Section 312(b) with other Securityholders with respect to their rights under this Indenture or the Securities. The Company, the Trustee, the Registrar, the Paying Agent, the Conversion Agent and anyone else shall have the protection of TIA Section 312(c).
Section 11.4 Certificate and Opinion as to Conditions Precedent. Upon any request or application by the Company to the Trustee to take any action under this Indenture, the Company shall furnish to the Trustee:
(1) an Officers' Certificate stating that, in the opinion of the signers, all conditions precedent, if any, provided for in this Indenture relating to the proposed action have been complied with; and
(2) an Opinion of Counsel stating that, in the opinion of such counsel, all such conditions precedent have been complied with.
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Section 11.5 Statements Required in Certificate or Opinion. Each Officers' Certificate or Opinion of Counsel with respect to compliance with a covenant or condition provided for in this Indenture (other than Officers' Certificates provided pursuant to Section 4.3) shall include:
(1) a statement that each person making such Officers' Certificate or Opinion of Counsel has read such covenant or condition;
(2) a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such Officers' Certificate or Opinion of Counsel are based;
(3) a statement that, in the opinion of each such person, he has made such examination or investigation as is necessary to enable such person to express an informed opinion as to whether or not such covenant or condition has been complied with; and
(4) a statement that, in the opinion of such person, such covenant or condition has been complied with.
Section 11.6 Separability Clause. In case any provision in this Indenture or in the Securities shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby.
Section 11.7 Rules by Trustee, Paying Agent, Conversion Agent and Registrar. The Trustee may make reasonable rules for action by or a meeting of Securityholders. The Registrar, the Conversion Agent and the Paying Agent may make reasonable rules for their functions.
Section 11.8 Legal Holidays. A "Legal Holiday" is any day other than a Business Day. If any specified date (including a date for giving notice) is a Legal Holiday, the action shall be taken on the next succeeding day that is not a Legal Holiday, and, if the action to be taken on such date is a payment in respect of the Securities, no interest, if any, shall accrue for the intervening period.
Section 11.9 GOVERNING LAW. THE LAWS OF THE STATE OF NEW YORK SHALL GOVERN THIS INDENTURE AND THE SECURITIES.
Section 11.10 No Recourse Against Others. A director, officer, employee or stockholder, as such, of the Company shall not have any liability for any obligations of the Company under the Securities or this Indenture or for any claim based on, in respect of or by reason of such obligations or their creation. By accepting a Security, each Securityholder shall waive and release all such liability. The waiver and release shall be part of the consideration for the issue of the Securities.
Section 11.11 Successors. All agreements of the Company in this Indenture and the Securities shall bind its successor. All agreements of the Trustee in this Indenture shall bind its successor.
Section 11.12 Multiple Originals. The parties may sign any number of copies of this Indenture. Each signed copy shall be an original, but all of them together represent the same agreement. One signed copy is enough to prove this Indenture.
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IN WITNESS WHEREOF, the undersigned, being duly authorized, have executed this Indenture on behalf of the respective parties hereto as of the date first above written.
CALPINE CORPORATION
By: ___________________________________
Name:
Title:
WILMINGTON TRUST COMPANY
By: ___________________________________
Name:
Title:
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EXHIBIT A-1
[FORM OF FACE OF GLOBAL SECURITY]
THIS SECURITY IS ISSUED WITH AN INDETERMINATE AMOUNT OF ORIGINAL ISSUE DISCOUNT AND WILL BE SUBJECT TO THE REGULATIONS GOVERNING CONTINGENT PAYMENT DEBT INSTRUMENTS FOR UNITED STATES FEDERAL INCOME TAX PURPOSES. AS REQUIRED UNDER APPLICABLE TREASURY REGULATIONS, THE COMPANY HAS SET FORTH THE "COMPARABLE YIELD" IN SECTION 4.6 OF THE INDENTURE PURSUANT TO WHICH THIS SECURITY IS BEING ISSUED.
THIS SECURITY IS ISSUED IN GLOBAL FORM AND REGISTERED IN THE NAME OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC") OR A NOMINEE THEREOF. UNLESS THIS SECURITY IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF DTC, TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY SECURITY ISSUED IS REGISTERED IN THE NAME OF CEDE & CO., OR SUCH OTHER NAME AS IS REQUIRED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO., OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR SECURITIES IN DEFINITIVE REGISTERED FORM IN ACCORDANCE WITH THE TERMS OF THE INDENTURE (AS DEFINED BELOW), THIS SECURITY MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY DTC TO A NOMINEE OF DTC OR BY A NOMINEE OF DTC TO DTC OR ANOTHER NOMINEE OF DTC OR BY DTC OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITORY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITORY.
THIS SECURITY AND ANY COMMON STOCK ISSUABLE UPON THE CONVERSION OF THIS SECURITY HAVE NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND MAY NOT BE SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. EACH PURCHASER OF THIS SECURITY IS HEREBY NOTIFIED THAT THE SELLER OF THIS SECURITY MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER.
THE HOLDER OF THIS SECURITY AGREES FOR THE BENEFIT OF CALPINE CORPORATION THAT THIS SECURITY AND ANY COMMON STOCK ISSUABLE UPON CONVERSION OF THIS SECURITY MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT (A) (1)TO A PERSON WHO THE TRANSFEROR REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A UNDER THE SECURITIES ACT ACQUIRING FOR ITS OWN ACCOUNT OR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (2) PURSUANT TO

THE EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER (IF AVAILABLE), (3) TO AN INSTITUTIONAL INVESTOR THAT IS AN "ACCREDITED INVESTOR" WITHIN THE MEANING OF RULE 501(A)(1), (2), (3) OR (7) OF REGULATION D UNDER THE SECURITIES ACT PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT (IF AVAILABLE) OR (4) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, AND (B) IN ACCORDANCE WITH ALL APPLICABLE SECURITIES LAWS OF THE STATES OF THE UNITED STATES AND OTHER JURISDICTIONS.
THIS SECURITY, ANY SHARES OF COMMON STOCK ISSUABLE UPON ITS CONVERSION AND ANY RELATED DOCUMENTATION MAY BE AMENDED OR SUPPLEMENTED FROM TIME TO TIME TO MODIFY THE RESTRICTIONS ON RESALES AND OTHER TRANSFERS OF THIS SECURITY AND ANY SUCH SHARES TO REFLECT ANY CHANGE IN APPLICABLE LAW OR REGULATION (OR INTERPRETATION THEREOF) OR IN PRACTICES RELATING TO THE RESALE OR TRANSFER OF RESTRICTED SECURITIES GENERALLY. THE HOLDER OF THIS SECURITY AND SUCH SHARES SHALL BE DEEMED BY THE ACCEPTANCE OF THIS SECURITY AND ANY SUCH SHARES TO HAVE AGREED TO ANY SUCH AMENDMENT OR SUPPLEMENT.
The foregoing legend may be removed from this Security on satisfaction of the conditions specified in the Indenture.
2

CALPINE CORPORATION
Zero-Coupon Convertible Debenture Due April 30, 2021
No. CUSIP: 131347 AX4
Issue Date: April 30, 2001
Issue Price: $1,000
CALPINE CORPORATION, a Delaware corporation, promises to pay to Cede & Co. or registered assigns, the Principal Amount at Maturity indicated on the Schedule of Increases and Decreases of Global Security attached hereto on April 30, 2021.
This Security shall not bear interest except as specified on the other side of this Security. This Security is convertible as specified on the other side of this Security.
Additional provisions of this Security are set forth on the other side of this Security.

Dated:                                    CALPINE CORPORATION

                                          By: __________________________________
                                          Title: _______________________________

TRUSTEE'S CERTIFICATE OF  AUTHENTICATION	

WILMINGTON TRUST COMPANY, as Trustee, certifies that this is one of the Securities referred to in the within-mentioned Indenture.
By __________________________________ Authorized Signatory
Dated:
3

[FORM OF REVERSE SIDE OF SECURITY]
Zero-Coupon Convertible
Debenture Due April 30, 2021
1. Interest.
Except as provided below, this Security shall not bear interest.
Interest Adjustment. An upward interest adjustment to the yield to maturity on this Security equivalent to 7.25% per annum (an "Upward Interest Adjustment") will be made on April 30, 2004, 2006, 2008, 2011 or 2016 (each, an "Upward Interest Adjustment Date") if the following conditions are met. An Upward Interest Adjustment shall be effective for the semi-annual period from and including any such Upward Interest Adjustment Date to and excluding the following interest payment date (as defined below) (a "semi-annual period") and for each subsequent semi-annual period until the semi-annual period with respect to which a Downward Interest Adjustment (as defined below) occurs. An Upward Interest Adjustment will be made on each Upward Interest Adjustment Date if the Trading Price (as defined below) of the Securities is less than 98% of the Accreted Value (as defined below) as of such Upward Interest Adjustment Date for 20 out of the last 30 NYSE trading days ending 90 days prior to such Upward Interest Adjustment Date. If an Upward Interest Adjustment is in effect for a particular semi-annual period, the Company will pay a portion of the Upward Interest Adjustment as cash interest at a rate of 0.25% per annum (0.125% per semi-annual period) of the Accreted Value as of the beginning of the applicable semi-annual period and the remaining interest (7.0% per annum) (based on the Accreted Value as of the beginning of the applicable semi-annual period) will be accrued and payable at the earlier of maturity or the redemption or the repurchase of the Securities.
If an Upward Interest Adjustment is in effect during a semi-annual period (other than a semi-annual period immediately preceding an Upward Interest Adjustment Date) and the Trading Price of the Securities is greater than or equal to 98% of the Accreted Value as of the next following interest payment date for 20 out of the last 30 NYSE trading days ending on such interest payment date, the Upward Interest Adjustment will adjusted downward on such interest payment date (such adjustment, a "Downward Interest Adjustment"), such that from and including such date the Securities will cease to accrue interest unless and until there is a subsequent Upward Interest Adjustment. If an Upward Interest Adjustment is in effect during a semi-annual period immediately preceding an Upward Interest Adjustment Date, a Downward Interest Adjustment will be made on such Upward Interest Adjustment Date if the Trading Price of the Securities is greater than or equal to 98% of the Accreted Value as of such Upward Interest Adjustment Date for 20 out of the last 30 NYSE trading days ending 90 days prior to such Upward Interest Adjustment Date. If a Downward Interest Adjustment is made, no Upward Interest Adjustment may be made until the next Upward Interest Adjustment Date.
"Accreted Value" means, as of any date, the sum of the Issue Price of the Securities and the accrued and unpaid interest as of such date (excluding any accrued and unpaid interest which will be paid as cash interest).

The "Trading Price" of the Securities on any date of determination means the average of the secondary market bid quotations per Security obtained by the bid solicitation agent selected by the Company (the "Bid Solicitation Agent") for $10,000,000 Principal Amount at Maturity of the Securities at approximately 3:30 p.m., New York City time, on such determination date from three independent nationally recognized securities dealers selected by the Company, provided that if at least three such bids are not obtained by the Bid Solicitation Agent, but two such bids are obtained, then the average of the two bids shall be used, and if only one such bid is obtained by the Bid Solicitation Agent, this one bid shall be used. If the Bid Solicitation Agent cannot obtain at least one bid for $10,000,000 Principal Amount at Maturity of the Securities from a nationally recognized securities dealer or in the Company's reasonable judgment, the bid quotations are not indicative of the secondary market value of the Securities, then the Trading Price of the Securities will equal, as determined by the Bid Solicitation Agent, (a) the then-applicable Conversion Rate of the Securities multiplied by (b) the closing price on the NYSE of the Company's Common Stock on such determination date.
The Bid Solicitation Agent will initially be The Bank of New York. The Company may change the Bid Solicitation Agent, but the Bid Solicitation Agent will not be an Affiliate of the Company. The Bid Solicitation Agent will solicit bids from securities dealers that are believed by the Company to be willing to bid for the Securities.
In the event of any Upward Interest Adjustment, the Company will give notice thereof by disseminating a press release not later than three Business Days prior to the relevant Upward Interest Adjustment Date through Dow Jones & Company, Inc. or Bloomberg Business News and will publish such information on the Company's Website on the World Wide Web or through such other public medium as the Company may use at that time. Not later than three Business Days prior to any Upward Interest Adjustment and promptly after a Downward Interest Adjustment occurs or is determined to occur, whichever is earlier, the Company shall give the Trustee notice thereof. The Trustee shall have no responsibility for determining whether any facts exist that would cause an Upward Interest Adjustment or a Downward Interest Adjustment to occur.
Tax Event. From and after the date of the occurrence of a Tax Event, the Company will have the option to elect (by notice to the Trustee) to pay cash interest at a rate of 7.25% per annum on the Securities instead of accruing interest pursuant to an Upward Interest Adjustment. Such cash interest would only accrue and be payable during periods in which an Upward Interest Adjustment is in effect. If the Company makes such an election, the principal amount on which the Company pays interest will be restated (the "Restated Principal Amount") and will be equal to the Issue Price plus accrued and unpaid interest (other than cash interest payable on the interest payment date immediately following the Option Exercise Date) payable pursuant to an Upward Interest Adjustment to the date on which the Company exercises its option to commence paying cash interest (the "Option Exercise Date"). Following the Company's election to pay cash interest following a Tax Event, interest will be payable on the Restated Principal Amount of the Securities.
Such interest shall accrue from the Option Exercise Date and will be payable semiannually on interest payment dates of April 30 and October 30 of each year to Holders of record at the close of business on April 15 or October
15 (whether or not a Business Day) immediately preceding the interest payment date.
A "Tax Event" means that the Company shall have received an opinion from a nationally
2

recognized independent tax counsel experienced in such matters to the effect that as a result of:
(i) any amendment to or change (including any announced prospective change (which will not include a proposed change), provided that a Tax Event will not occur more than 90 days before the effective date of any prospective change) in the laws (or any regulations thereunder) of the United States or any political subdivision or taxing authority of the United States or any political subdivision; or
(ii) any judicial decision or official administrative pronouncement, ruling, regulatory procedure, notice or announcement, including any notice or announcement of intent to adopt such procedures or regulations (an "Administrative Action"); or
(iii) any amendment to or change in the administrative position or interpretation of any Administrative Action or judicial decision that differs from the theretofore generally accepted position, in each case, by any legislative body, court, governmental agency or regulatory body, irrespective of the manner in which such amendment or change is made known, which amendment or change is effective or such Administrative Action or decision is announced, in each case, on or after the Issue Date;
there is more than an insubstantial risk that interest, including original issue discount, payable on the Securities either:
(i) would not be deductible on a current accrual basis; or
(ii) would not be deductible under any other method, in either case in whole or in part, by the Company for United States federal income tax purposes.
General. If this Security is redeemed on a date that is after the record date and prior to the corresponding interest payment date, interest, if any, accrued and unpaid hereon to but not including the applicable Redemption Date will be paid to the same Holder to whom the Company pays the principal of this Security.
Cash interest on Securities converted after a record date but prior to the corresponding interest payment date will be paid to the Holder of the Securities on the record date but, upon conversion the Holder must pay the Company the interest which has accrued and will be paid on such interest payment date. No such payment need be made with respect to Securities which will be redeemed after a record date and prior to the corresponding interest payment date.
Except as provided below, interest will be paid (i) on the Global Securities to DTC in immediately available funds, (ii) on the definitive Securities having an aggregate Principal Amount at Maturity of $5,000,000 or less, by check mailed to the Holders of such Securities; and (iii) on the definitive Securities having an aggregate Principal Amount at Maturity of more than $5,000,000, by wire transfer in immediately available funds at the election of the Holders of these Securities, which election shall be provided to the Paying Agent in writing at least ten days prior to the applicable payment date.
Any Interest payable hereunder will be computed based on a 360-day year of twelve 30-day months, and will be payable semi-annually in arrears on each April 30 and October 30 (each an "interest payment date"). The record date for the payment of cash interest to Holders will be the close of business on April 15 and October 15 of each year (whether or not a Business Day);
3

provided, that interest payable at Stated Maturity or upon redemption or repurchase will be payable to the person to whom principal is payable. The Company will give notice to the Holders, no later than 30 days prior to each record date, of the amount of cash interest to be paid as of the next interest payment date.
2. Method of Payment.
Subject to the terms and conditions of the Indenture, the Company will make payments in cash and/or Common Stock, as the case may be, in respect of Redemption Prices, Purchase Prices, Change in Control Purchase Prices and at Stated Maturity to Holders who surrender Securities to a Paying Agent to collect such payments in respect of the Securities. The Company will pay cash amounts in money of the United States that at the time of payment is legal tender for payment of public and private debts. However, the Company may make such cash payments by check payable in such money, except as otherwise provided herein.
3. Paying Agent, Conversion Agent and Registrar.
Initially, Wilmington Trust Company (the "Trustee") will act as Paying Agent, Conversion Agent and Registrar. The Company may appoint and change any Paying Agent, Conversion Agent or Registrar without notice, other than notice to the Trustee; provided that the Company will maintain at least one Paying Agent in the State of New York, City of New York, Borough of Manhattan, which shall initially be an office or agency of the Trustee. The Company or any of its Subsidiaries or any of their Affiliates may act as Paying Agent, Conversion Agent or Registrar.
4. Indenture.
The Company issued the Securities under an Indenture, dated as of April 30, 2001 (the "Indenture"), between the Company and the Trustee. The terms of the Securities include those stated in the Indenture and those made part of the Indenture by reference to the Trust Indenture Act of 1939, as in effect from time to time (the "TIA"). Capitalized terms used herein and not defined herein have the meanings ascribed thereto in the Indenture. The Securities are subject to all such terms, and Securityholders are referred to the Indenture and the TIA for a statement of those terms.
The Securities are general unsecured obligations of the Company limited to $1,000,000,000 aggregate Principal Amount at Maturity (subject to Section 2.7 of the Indenture, Upward Interest Adjustments and the Company exercising is option to pay cash interest upon a Tax Event). The Indenture does not limit other Indebtedness of the Company, secured or unsecured.
5. Redemption at the Option of the Company.
No sinking fund is provided for the Securities. The Securities are redeemable at the option of the Company in whole, or in part, at any time or from time to time, on or after April 30, 2004 upon not less than 30 nor more than 60 days' notice for a cash price equal to the Issue Price plus any accrued and unpaid interest to, but excluding, the Redemption Date (the "Redemption Price").
If the Company has previously exercised its option to pay cash interest instead of
4

accruing interest on the Securities following a Tax Event, the Redemption Price will be equal to the Restated Principal Amount plus any accrued and unpaid cash interest from the Option Exercise Date to the Redemption Date.
6. Purchase By the Company at the Option of the Holder.
Subject to the terms and conditions of the Indenture, the Company shall become obligated to purchase, at the option of the Holder, all or any portion of the Securities held by such Holder on April 30, 2002, 2004, 2006, 2008, 2011 and 2016 in integral multiples of $1,000 Principal Amount at Maturity at the Issue Price plus any accrued and unpaid interest to the Purchase Date upon delivery of a Purchase Notice containing the information set forth in the Indenture, at any time from the opening of business on the date that is 20 Business Days prior to such Purchase Date until the close of business on the last Business Day prior to such Purchase Date, and upon delivery of the Securities to the Paying Agent by the Holder as set forth in the Indenture.
If the Company has previously exercised its option to pay cash interest instead of accruing interest on the Securities following a Tax Event, the Purchase Price will be equal to the Restated Principal Amount plus accrued and unpaid cash interest from the Option Exercise Date to the Purchase Date.
The Purchase Price may be paid, at the option of the Company, in cash or by the issuance and delivery of shares of Common Stock, or in any combination thereof, provided that on April 30, 2016, the Company may only pay cash.
At the option of the Holder and subject to the terms and conditions of the Indenture, the Company shall become obligated to offer to purchase the Securities held by such Holder within 30 days (which purchase shall occur 45 days after the date of such offer) after the occurrence of a Change in Control of the Company for a Change in Control Purchase Price equal to the Issue Price plus accrued and unpaid interest to the Change in Control Purchase Date, which Change in Control Purchase Price shall be paid in cash (or Common Stock, subject to the terms of the Indenture); provided that if the Company previously exercised its option to pay cash interest on the Securities following a Tax Event, the Change in Control Purchase Price shall equal the Restated Principal Amount plus any accrued and unpaid cash interest from the Option Exercise Date to the Change in Control Purchase Date.
At the Company's option, subject to the terms of the Indenture, instead of paying the Change in Control Purchase Price in cash, the Company may pay the Change in Control Purchase Price in registered shares of Common Stock valued at 95% of the average of the closing prices on the NYSE of the Company's Common Stock for the five NYSE trading days immediately preceding and including the third NYSE trading day prior to the Change in Control Purchase Date.
If cash (and/or securities if permitted under the Indenture) sufficient to pay the Purchase Price or Change in Control Purchase Price, as the case may be, of all Securities or portions thereof to be purchased as of the Purchase Date or the Change in Control Purchase Date, as the case may be, is deposited with the Paying Agent on the Business Day following the Purchase Date or the Change in Control Purchase Date, interest ceases to accrue on such Securities (or portions thereof) immediately after such Purchase Date or Change in Control Purchase Date, and
5

the Holder thereof shall have no other rights as such other than the right to receive the Purchase Price or Change in Control Purchase Price upon surrender of such Security.
Holders have the right to withdraw any Purchase Notice or Change in Control Purchase Notice by delivering to the Paying Agent a written notice of withdrawal in accordance with the provisions of the Indenture.
7. Notice of Redemption.
Notice of redemption pursuant to Paragraph 5 of this Security will be mailed at least 30 days but not more than 60 days before the Redemption Date to each Holder of Securities to be redeemed at the Holder's registered address. If money sufficient to pay the Redemption Price of all Securities (or portions thereof) to be redeemed on the Redemption Date is deposited with the Paying Agent prior to or on the Redemption Date, immediately after such Redemption Date interest ceases to accrue on such Securities or portions thereof. Securities in denominations larger than $1,000 of Principal Amount at Maturity may be redeemed in part but only in integral multiples of $1,000 of Principal Amount at Maturity.
8. Conversion.
Holders may surrender Securities for conversion into shares of Common Stock at any time prior to 5:00 p.m., New York City time, on April 29, 2021. A Holder may also surrender for conversion a Security or portion of a Security which has been called for redemption pursuant to Paragraph 5 hereof and such Securities may be surrendered for conversion until the close of business on the day that is one Business Day prior to the Redemption Date.
A Security in respect of which a Holder has delivered a Purchase Notice or Change in Control Purchase Notice exercising the option of such Holder to require the Company to purchase such Security may be converted only if such notice of exercise is withdrawn in accordance with the terms of the Indenture.
The initial Conversion Rate is 13.2714 shares of Common Stock per $1,000 Principal Amount at Maturity, subject to adjustment in certain events described in the Indenture. A Holder which surrenders Securities for conversion will receive cash or a check in lieu of any fractional share of Common Stock.
To surrender a Security for conversion, a Holder must (1) complete and manually sign the irrevocable conversion notice below (or complete and manually sign a facsimile of such notice) and deliver such notice to the Conversion Agent, (2) surrender the Security to the Conversion Agent, (3) furnish appropriate endorsements and transfer documents and (4) pay any transfer or similar tax, if required.
A Holder may convert a portion of a Security if the Principal Amount at Maturity of such portion is $1,000 or an integral multiple of $1,000. No payment or adjustment will be made for dividends on the shares of Common Stock except as provided in the Indenture. On conversion of a Security, the Holder will not receive any cash payment representing accrued interest with respect to the converted Securities. Instead, upon conversion the Company will deliver to the Holder a fixed number of shares of Common Stock and any cash payment to account for fractional shares. Accrued interest will be deemed paid in full rather than canceled, extinguished or forfeited. The Company will not adjust the Conversion Rate to account for accrued interest.
6

The Conversion Rate will be adjusted as provided in Article 10 of the Indenture. The Company may increase the Conversion Rate for at least 20 days, so long as the increase is irrevocable during such period.
If the Company is a party to a consolidation, merger or binding share exchange or a transfer of all or substantially all of its assets, or upon certain distributions described in the Indenture, the right to convert a Security into shares of Common Stock may be changed into a right to convert it into securities, cash or other assets of the Company or another person.
9. Denominations; Transfer; Exchange.
The Securities are in fully registered form, without coupons, in denominations of $1,000 of Principal Amount at Maturity and integral multiples of $1,000. A Holder may transfer or exchange Securities in accordance with the Indenture. The Registrar may require a Holder, among other things, to furnish appropriate endorsements and transfer documents and to pay any taxes and fees required by law or permitted by the Indenture. The Registrar need not transfer or exchange any Securities selected for redemption (except, in the case of a Security to be redeemed in part, the portion of the Security not to be redeemed) or any Securities in respect of which a Purchase Notice or Change in Control Purchase Notice has been given and not withdrawn (except, in the case of a Security to be purchased in part, the portion of the Security not to be purchased) or any Securities for a period of 15 days before the mailing of a notice of redemption of Securities to be redeemed.
10. Persons Deemed Owners.
The registered Holder of this Security may be treated as the owner of this Security for all purposes.
11. Unclaimed Money or Securities.
The Trustee and the Paying Agent shall return to the Company upon written request any money or securities held by them for the payment of any amount with respect to the Securities that remains unclaimed for two years, subject to applicable unclaimed property law. After return to the Company, Holders entitled to the money or securities must look to the Company for payment as general creditors unless an applicable abandoned property law designates another person and the Trustee and the Paying Agent shall have no further liability to the Securityholders with respect to such money or securities for that period commencing after the return thereof.
12. Amendment; Waiver.
Subject to certain exceptions set forth in the Indenture, (i) the Indenture or the Securities may be amended with the written consent of the Holders of at least a majority in aggregate Principal Amount at Maturity of the Securities at the time outstanding and (ii) certain Defaults may be waived with the written consent of the Holders of a majority in aggregate Principal Amount at Maturity of the Securities at the time outstanding. Subject to certain exceptions set forth in the Indenture, without the consent of any Securityholder, the Company and the Trustee may amend the Indenture or the Securities so long as such changes, other that those in clause (ii) below, do not materially and adversely affect the interest of Securityholders, among other things, (i) to cure any ambiguity, omission, defect or inconsistency, (ii) to comply with Article 5 or
7

Section 10.12 of the Indenture, (iii) to secure the Company's obligations or to add any guarantee under the Securities and the Indenture; (iv) to add to the covenants of the Company for the benefit of Securityholders or to surrender any right or power conferred upon the Company, (v) to comply with any requirement of the SEC in connection with the qualification of the Indenture under the TIA ,
(vi) to provide for uncertificated Securities, (vii) to modify the restrictions on resales and other transfers of the Securities and any shares of Common Stock issuable upon conversion thereof, or (viii) to make any change that does not adversely affect the rights of any Securityholder.
13. Defaults and Remedies.
Under the Indenture, Events of Default include (i) default in payment of the Issue Price (or Restated Principal Amount) plus accrued interest, Redemption Price, Purchase Price or Change in Control Purchase Price, as the case may be, in respect of the Securities when the same becomes due and payable,
(ii) default in the payment of interest, if any, when due and payable, subject to lapse of time, (iii) material failure by the Company to comply with other agreements in the Indenture or the Securities, subject to notice and lapse of time; (iv) default by the Company under any instrument or instruments under which there is or may be secured or evidenced any Indebtedness of the Company (other than the Securities) having an outstanding principal amount of $50,000,000 (or its foreign currency equivalent) or more, individually or in the aggregate, that has caused the holders thereof to declare such Indebtedness to be due and payable prior to its Stated Maturity, unless such declaration has been rescinded within 30 days, (v) a default by the Company in the payment when due of the principal of any bond, debenture, note or other evidence of the Company's Indebtedness, in each case for money borrowed, or in the payment of principal under any mortgage, indenture, agreement or instrument under which there may be issued or by which there may be secured or evidenced any Indebtedness of the Company for money borrowed, which default for payment of principal is, individually or in an aggregate principal amount exceeding $50,000,000 (or its foreign currency equivalent) when such Indebtedness becomes due and payable (whether at maturity, upon redemption or acceleration or otherwise), if such default shall continue unremedied or unwaived for more than 30 days after the expiration of any grace period or extension of the time for payment applicable thereto; and (vi) certain events of bankruptcy, insolvency and reorganization.
Securityholders may not enforce the Indenture or the Securities except as provided in the Indenture. The Trustee may refuse to enforce the Indenture or the Securities unless it receives reasonable indemnity or security. Subject to certain limitations, Holders of a majority in aggregate Principal Amount at Maturity of the Securities at the time outstanding may direct the Trustee in its exercise of any trust or power. The Trustee may withhold from Securityholders notice of any continuing Default (except a Default in payment of amounts specified in clause (ii) above) if it determines that withholding notice is in their interests.
14. Trustee Dealings with the Company.
Subject to certain limitations imposed by the TIA, the Trustee under the Indenture, in its individual or any other capacity, may become the owner or pledgee of Securities and may otherwise deal with and collect obligations owed to it by the Company or its Affiliates and may otherwise deal with the Company or its Affiliates with the same rights it would have if it were not Trustee.
15. Calculations in Respect of Securities.
8

The Company will be responsible for making all calculations called for under the Securities including, but not limited to, determination of the market prices for the Securities and of the Common Stock and the amounts of interest payments, if any. Any calculations made in good faith and without manifest error will be final and binding on Holders of the Securities. The Company will be required to deliver to the Trustee a schedule of its calculations and the Trustee will be entitled to rely upon the accuracy of such calculations without independent verification.
16. No Recourse Against Others.
A director, officer, employee or shareholder, as such, of the Company shall not have any liability for any obligations of the Company under the Securities or the Indenture or for any claim based on, in respect of or by reason of such obligations or their creation. By accepting a Security, each Securityholder waives and releases all such liability. The waiver and release are part of the consideration for the issue of the Securities.
17. Authentication.
This Security shall not be valid until an authorize signatory of the Trustee manually signs the Trustee's Certificate of Authentication on the other side of this Security.
18. Abbreviations.
Customary abbreviations may be used in the name of a Securityholder or an assignee, such as TEN COM (=tenants in common), TEN ENT (=tenants by the entireties), JT TEN (=joint tenants with right of survivorship and not as tenants in common), CUST (=custodian), and U/G/M/A (=Uniform Gift to Minors Act).
19. GOVERNING LAW.
THE LAWS OF THE STATE OF NEW YORK SHALL GOVERN THE INDENTURE AND THIS
SECURITY.
The Company will furnish to any Securityholder upon written request and without charge a copy of the Indenture which has in it the text of this Security in larger type. Requests may be made to:
Calpine Corporation
50 West San Fernando Street
San Jose, CA 95113
Attn: Secretary
20. Registration Rights.
The Holders of the Securities are entitled to the benefits of a Registration Rights Agreement, dated as of April 30, 2001, between the Company and Goldman, Sachs & Co., including the receipt of liquidated damages upon a registration default.
9

                ASSIGNMENT FORM                                        CONVERSION NOTICE
                ---------------                                        -----------------
To assign this Security, fill in the form below:          To convert this Security into Common Stock
                                                          of the Company, check the box [   ]

I or we assign and transfer this Security to              To convert only part of this Security,
_______________________________________________           state the Principal Amount at Maturity to
_______________________________________________           be converted (which must be $1,000 or an
(Insert assignee's soc. sec. or tax ID no.)               integral multiple of $1,000):
_______________________________________________
_______________________________________________           If you want the stock certificate made out
_______________________________________________           in another person's name fill in the form
(Print or type assignee's name, address and zip           below:
code)                                                     ____________________________________________
                                                          ____________________________________________
and irrevocably appoint                                   (Insert the other person's soc. sec. tax
                                                          ID no.
____________________ agent to transfer this
Security on the books of the Company.  The                ____________________________________________
agent may substitute another to act for him.              ____________________________________________
                                                          ____________________________________________
                                                          ____________________________________________
                                                          ____________________________________________
                                                          (Print or type other person's name,
                                                          address and zip code)	

Date: __________ Your Signature: _____________________________________________

(Sign exactly as your name appears on the other side of this Security)
Signature Guaranteed

Participant in a Recognized Signature
Guarantee Medallion Program
By: _________________________________
Authorized Signatory
10

SCHEDULE OF INCREASES AND DECREASES OF GLOBAL SECURITY
Initial Principal Amount at Maturity of Global Security: __________($_________).

          Date             Amount of Increase    Amount of Decrease in    Principal Amount at        Notation by
                           in Principal Amount    Principal Amount at     Maturity of Global        Registrar or
                             at Maturity of        Maturity of Global       Security After       Security Custodian
                             Global Security            Security         Increase or Decrease
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11

EXHIBIT A-2
[Form of Certificated Security]
THIS SECURITY IS ISSUED WITH AN INDETERMINATE AMOUNT OF ORIGINAL ISSUE DISCOUNT AND WILL BE SUBJECT TO THE REGULATIONS GOVERNING CONTINGENT PAYMENT DEBT INSTRUMENTS FOR UNITED STATES FEDERAL INCOME TAX PURPOSES. AS REQUIRED UNDER APPLICABLE TREASURY REGULATIONS, THE COMPANY HAS SET FORTH THE "COMPARABLE YIELD" IN SECTION 4.6 OF THE INDENTURE PURSUANT TO WHICH THIS SECURITY IS BEING ISSUED.
THIS SECURITY AND ANY COMMON STOCK ISSUABLE UPON THE CONVERSION OF THIS SECURITY HAVE NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND MAY NOT BE SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. EACH PURCHASER OF THIS SECURITY IS HEREBY NOTIFIED THAT THE SELLER OF THIS SECURITY MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER.
THE HOLDER OF THIS SECURITY AGREES FOR THE BENEFIT OF CALPINE CORPORATION THAT THIS SECURITY AND ANY COMMON STOCK ISSUABLE UPON CONVERSION OF THIS SECURITY MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT (A) (1)TO A PERSON WHO THE TRANSFEROR REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A UNDER THE SECURITIES ACT ACQUIRING FOR ITS OWN ACCOUNT OR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (2) PURSUANT TO THE EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER (IF AVAILABLE), (3) TO AN INSTITUTIONAL INVESTOR THAT IS AN "ACCREDITED INVESTOR" WITHIN THE MEANING OF RULE 501(A)(1), (2), (3) OR (7) OF REGULATION D UNDER THE SECURITIES ACT PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT (IF AVAILABLE) OR (4) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, AND (B) IN ACCORDANCE WITH ALL APPLICABLE SECURITIES LAWS OF THE STATES OF THE UNITED STATES AND OTHER JURISDICTIONS.
THIS SECURITY, ANY SHARES OF COMMON STOCK ISSUABLE UPON ITS CONVERSION AND ANY RELATED DOCUMENTATION MAY BE AMENDED OR SUPPLEMENTED FROM TIME TO TIME TO MODIFY THE RESTRICTIONS ON RESALES AND OTHER TRANSFERS OF THIS SECURITY AND ANY SUCH SHARES TO REFLECT ANY CHANGE IN APPLICABLE LAW OR REGULATION (OR INTERPRETATION THEREOF) OR IN PRACTICES RELATING TO THE RESALE OR TRANSFER OF RESTRICTED SECURITIES GENERALLY. THE HOLDER OF THIS SECURITY AND SUCH SHARES SHALL BE DEEMED BY THE ACCEPTANCE OF THIS SECURITY AND ANY SUCH SHARES TO HAVE AGREED TO ANY SUCH AMENDMENT OR SUPPLEMENT.

The foregoing legend may be removed from this Security on satisfaction of the conditions specified in the indenture.
2

CALPINE CORPORATION
Zero-Coupon Convertible Debenture Due April 30, 2021
No. CUSIP:
Issue Date: April 30, 2001
Issue Price: $1,000
CALPINE CORPORATION, a Delaware corporation, promises to pay to _________ or registered assigns, the Principal Amount at Maturity of _________ ($__________) on April 30, 2021.
This Security shall not bear interest except as specified on the other side of this Security. This Security is convertible as specified on the other side of this Security.
Additional provisions of this Security are set forth on the other side of this Security.

Dated:                                    CALPINE CORPORATION

                                          By: __________________________________
                                          Title: _______________________________	

TRUSTEE'S CERTIFICATE OF AUTHENTICATION
WILMINGTON TRUST COMPANY, as Trustee, certifies that this is one of the Securities referred to in the within-mentioned Indenture.
By __________________________________
Authorized Signatory
Dated:
3

[FORM OF REVERSE SIDE IS IDENTICAL TO A-1]

EXHIBIT B-1
CALPINE CORPORATION
Zero-Coupon Convertible Debenture Due April 30, 2021
Transfer Certificate
In connection with any transfer of any of the Securities within the period prior to the expiration of the holding period applicable to the sales thereof under Rule 144(k) under the Securities Act of 1933, as amended (the "Securities Act") (or any successor provision), the undersigned registered owner of this Security hereby certifies with respect to $____________ Principal Amount at Maturity of the above-captioned Securities presented or surrendered on the date hereof (the "Surrendered Securities") for registration of transfer, or for exchange or conversion where the securities issuable upon such exchange or conversion are to be registered in a name other than that of the undersigned registered owner (each such transaction being a "transfer"), that such transfer complies with the restrictive legend set forth on the face of the Surrendered Securities for the reason checked below:
[_] A transfer of the Surrendered Securities is made to the Company or any subsidiaries; or
[_] The transfer of the Surrendered Securities complies with Rule 144A under the U.S. Securities Act of 1933, as amended (the "Securities Act"); or
[_] The transfer of the Surrendered Securities is pursuant to an effective registration statement under the Securities Act, or
[_] The transfer of the Surrendered Securities is pursuant to another available exemption from the registration requirement of the Securities Act.
and unless the box below is checked, the undersigned confirms that, to the undersigned's knowledge, such Securities are not being transferred to an "affiliate" of the Company as defined in Rule 144 under the Securities Act (an "Affiliate").

                  [_]      The transferee is an Affiliate of the Company.

DATE:                       __________________________________

                                        Signature(s)

                  (If the registered owner is a corporation, partnership or	

fiduciary, the title of the person signing on behalf of such registered owner must be stated.)

Signature Guaranteed

Participant in a Recognized Signature
Guarantee Medallion Program
By: _____________________________
Authorized Signatory
2

EXHIBIT C
Projected Payment Schedule
3

Exhibit 5.1
[Letterhead of Covington & Burling]
October 19, 2001
Calpine Corporation
50 West San Fernando Street
San Jose, California 95113
Ladies and Gentlemen:
We are acting as counsel to Calpine Corporation, a Delaware corporation (the Company"), in connection with the shelf registration by the Company under the Securities Act of 1933, as amended (the "Act"), of (a) $1,000,000,000 in aggregate principal amount of the Company's Zero-Coupon Convertible Debentures Due April 30, 2021 (the "Debentures") and (b) 13,271,400 shares of Common Stock, par value $.001 per share (the "Shares"), of the Company issuable upon conversion of all of the Debentures, pursuant to the Registration Statement on Form S-3 filed on July 27, 2001 with the Securities and Exchange Commission (the "Commission") (File No. 333-66078) (such Registration Statement, as amended by Amendment No.1 thereto, is herein referred to as the "Registration Statement").
We have reviewed such corporate records, certificates and other documents, and such questions of law, as we have considered necessary or appropriate for the purposes of this opinion. We have assumed that all signatures are genuine, that all documents submitted to us as originals are authentic, that all copies of documents submitted to us conform to the originals, and that the Debentures have been duly authenticated by the Trustee for the Debentures as provided in the Indenture for the Debentures.
We have relied as to certain matters on information obtained from public officials, officers of the Company, and other sources believed by us to be responsible.
Based upon the foregoing, and subject to the qualifications set forth below, we are of the opinion that:
(1) The Company is a corporation duly incorporated, validly existing and in good standing under the laws of the State of Delaware.
(2) The Debentures constitute the valid and binding obligations of the Company, enforceable against the Company in accordance with their terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and other laws of general applicability relating to or affecting creditors' rights and to general equity principles.

Calpine Corporation
October 19, 2001
Page 2
(3) The Shares have been duly authorized and reserved for issuance upon conversion of the Debentures and, when issued upon such conversion in accordance with the terms of the Debentures, and assuming compliance with the Act, will be validly issued, fully paid and nonassessable.
The foregoing opinion is subject to the qualifications that we express no opinion as to (i) waivers of defenses or statutory or constitutional rights or waivers of unmatured claims or rights, (ii) rights to indemnification, contribution or exculpation to the extent that they purport to indemnify any party against, or release or limit any party's liability for, its own breach or failure to comply with statutory obligations, or to the extent such provisions are contrary to public policy, or (iii) rights to collection or liquidated damages or penalties on overdue or defaulted obligations.
We are members of the bar of the State of New York. We do not purport to be experts in, and do not express any opinion on, any laws other than the law of the State of New York, the Delaware General Corporation Law and the Federal law of the United States of America.
We hereby consent to the filing of this opinion as Exhibit 5.1 to the Registration Statement and to the reference to our firm under the heading "Legal Matters" in the Prospectus contained in the Registration Statement. In giving such consent, we do not thereby admit that we are in the category of persons whose consent is required under Section 7 of the Securities Act.
Very truly yours,

/s/ Covington & Burling

Covington & Burling	

Exhibit 8.1
[TRP Letterhead]
October 19, 2001
Calpine Corporation
50 West San Fernando Street
San Jose, CA 95113
Re: Zero Coupon Convertible Debentures
Ladies and Gentlemen:
We have acted as your United States tax counsel in connection with the registration under the Securities Act of 1933, as amended (the "Act"), pursuant to the Registration Statement on Form S-3 (File No. 333-66078) (the "Registration Statement") originally filed with the Securities and Exchange Commission on July 27, 2001, to be amended on October __, 2001, with respect to $1,000,000,000 in aggregate principal amount of Zero Coupon Convertible Debentures (the "Debentures") of Calpine Corporation (the "Company"), to be issued pursuant to the Prospectus to be dated October __, 2001, to be filed with the Securities and Exchange Commission pursuant to Rule 424(b) under the Act ("the Prospectus").
We have reviewed such corporate records, certificates and other documents, and such questions of law, as we have considered necessary or appropriate for the purposes of this opinion. We have assumed that all signatures are genuine, that all documents submitted to us as originals are authentic and that all copies of documents submitted to us conform to the originals.
Based upon and subject to the foregoing, the statements in, respectively, the Prospectus and the related Prospectus Supplement under the captions "Certain United States Federal Income Tax Consequences" represent our opinion of the United States federal income tax law matters referred to therein and such statements are (subject to the qualifications and other matters stated therein) accurate with respect to the Debentures in all material respects.
The foregoing opinion is based on the Internal Revenue Code of 1986, as amended, Treasury Regulations promulgated thereunder, Internal Revenue Service rulings and pronouncements, and judicial decisions now in effect, any of which may be changed at any time with retroactive effect.

Calpine Corporation
October 19, 2001
Page 2
We are members of the bar of the State of New York. We do not express any opinion on any matters other than the United States federal income tax law matters specifically referred to herein.
We hereby consent to the filing of this opinion as Exhibit 8.1 to the Registration Statement. In giving such consent, we do not hereby admit that we are in the category of persons whose consent is required under Section 7 of the Act.
Very truly yours,

/s/ THELEN REID & PRIEST LLP
THELEN REID & PRIEST LLP	

Exhibit 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by reference in this Amendment No. 1 to Registration Statement on Form S-3 (No. 333-66078) of our report dated April 19, 2001 and to all references to our Firm included in this Amendment No. 1 to Registration Statement on Form S-3. Our report dated March 14, 2001 included in Calpine Corporation's Form 10-K for the year ended December 31, 2000 is no longer appropriate since restated financial statements have been presented giving effect to a business combination accounted for by a pooling-of-interests.

/s/ Arthur Andersen LLP

San Jose, California
  October 19, 2001	

Exhibit 23.2
CONSENT OF INDEPENDENT CHARTERED ACCOUNTANTS
We consent to the reference to our firm under the caption "Independent Auditors" in amendment No. 1 to the registration statement (Form S-3 No. 333-66078) and related Prospectus of Calpine Corporation and to the incorporation by reference therein of our report dated February 16, 2001 with respect to the consolidated financial statements of Encal Energy Ltd. included in the Current Report on Form 8-K of Calpine Corporation dated September 10, 2001, filed with the Securities and Exchange Commission.

/s/ "Ernst & Young LLP"

Calgary, Alberta
October 19, 2001