AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 4, 2002
REGISTRATION NO. 333-76880
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
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
CALPINE CANADA ENERGY FINANCE ULC
CALPINE CANADA ENERGY FINANCE II ULC
CALPINE CAPITAL TRUST IV
CALPINE CAPITAL TRUST V
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<Table>
DELAWARE 4911 77-0212977
NOVA SCOTIA 4911 NOT APPLICABLE
NOVA SCOTIA 4911 NOT APPLICABLE
DELAWARE 4911 10-6002905
DELAWARE 4911 10-6002907
(STATES OR OTHER JURISDICTIONS (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
OF INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBERS) IDENTIFICATION NUMBERS)
</Table>
<Table>
CALPINE CANADA ENERGY FINANCE ULC
CALPINE CORPORATION CALPINE CANADA ENERGY FINANCE II ULC
CALPINE CAPITAL TRUST IV SUITE 800, PURDY'S WHARF, TOWER 1
CALPINE CAPITAL TRUST V 1959 UPPER WATER STREET
50 WEST SAN FERNANDO STREET P.O. BOX 997
SAN JOSE, CALIFORNIA 95113 HALIFAX, NOVA SCOTIA B3J 3N2
(408) 995-5115 (902) 420-3335
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, (ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF REGISTRANTS' PRINCIPAL INCLUDING AREA CODE, OF REGISTRANTS' PRINCIPAL EXECUTIVE
EXECUTIVE OFFICES) OFFICES)
ANN B. CURTIS
VICE PRESIDENT AND SECRETARY
PETER CARTWRIGHT CALPINE CANADA ENERGY FINANCE ULC
CHAIRMAN, PRESIDENT AND CHIEF EXECUTIVE OFFICER, CALPINE CANADA ENERGY FINANCE II ULC
CALPINE CORPORATION C/O CALPINE CORPORATION
50 WEST SAN FERNANDO STREET 50 WEST SAN FERNANDO STREET
SAN JOSE, CALIFORNIA 95113 SAN JOSE, CALIFORNIA 95113
(408) 995-5115 (408) 995-5115
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE (NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE
NUMBER, INCLUDING AREA CODE, OF AGENT FOR SERVICE) NUMBER, INCLUDING AREA CODE, OF AGENT FOR SERVICE)
</Table>
WITH COPIES TO:
<Table>
BRUCE C. BENNETT JOSEPH A. COCO
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
</Table>
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: [ ]
------------------------
THE REGISTRANTS HEREBY AMEND THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANTS
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 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME EFFECTIVE
ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a), MAY
DETERMINE.
PURSUANT TO RULE 429(a) UNDER THE SECURITIES ACT, THE PROSPECTUS CONTAINED
IN THIS REGISTRATION STATEMENT RELATES TO SECURITIES REGISTERED UNDER THIS
REGISTRATION STATEMENT, THE SECURITIES REGISTERED AND REMAINING UNSOLD UNDER
REGISTRATION STATEMENT NO. 333-72583, REGISTRATION STATEMENT NO. 333-87427 AND
REGISTRATION STATEMENT NO. 333-67446 AND A PORTION OF THE SECURITIES REGISTERED
AND REMAINING UNSOLD UNDER REGISTRATION STATEMENT NO. 333-40652. PURSUANT TO
RULE 429(b) UNDER THE SECURITIES ACT, THIS REGISTRATION STATEMENT, WHICH IS A
NEW REGISTRATION STATEMENT, CONSTITUTES A POST-EFFECTIVE AMENDMENT TO EACH OF
REGISTRATION STATEMENT NOS. 333-72583, 333-87427, 333-40652 AND 333-67446 AND
SUCH POST-EFFECTIVE AMENDMENTS SHALL HEREAFTER BECOME EFFECTIVE CONCURRENTLY
WITH THE EFFECTIVENESS OF THIS REGISTRATION STATEMENT AND IN ACCORDANCE WITH
SECTION 8(c) OF THE SECURITIES ACT. IF SECURITIES PREVIOUSLY REGISTERED UNDER
REGISTRATION STATEMENT NOS. 333-72583, 333-87427, 333-40652 AND 333-67446 ARE
OFFERED AND SOLD PRIOR TO THE EFFECTIVE DATE OF THIS REGISTRATION STATEMENT, THE
AMOUNT OF SUCH PREVIOUSLY REGISTERED SECURITIES SO SOLD WILL NOT BE INCLUDED IN
THE PROSPECTUS HEREUNDER.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
CALCULATION OF REGISTRATION FEE
<Table>
- -------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------
TITLE OF EACH CLASS OF PROPOSED MAXIMUM PROPOSED MAXIMUM
SECURITIES AMOUNT TO BE OFFERING PRICE PER AGGREGATE OFFERING AMOUNT OF
TO BE REGISTERED REGISTERED(1) UNIT(1) PRICE(1)(2) REGISTRATION FEE
- -------------------------------------------------------------------------------------------------------------------
Common Stock, par value
$.001 per share, of
Calpine Corporation(3)...
- -------------------------------------------------------------------------------------------------------------------
Preferred Stock, par value
$.001 per share, of
Calpine Corporation......
- -------------------------------------------------------------------------------------------------------------------
Depositary Shares of
Calpine Corporation(4)...
- -------------------------------------------------------------------------------------------------------------------
Debt Securities of Calpine
Corporation(5)...........
- -------------------------------------------------------------------------------------------------------------------
Purchase Contracts of
Calpine Corporation......
- -------------------------------------------------------------------------------------------------------------------
Units of Calpine
Corporation..............
- -------------------------------------------------------------------------------------------------------------------
Warrants of Calpine
Corporation..............
- -------------------------------------------------------------------------------------------------------------------
Debt Securities of Calpine
Canada Energy Finance ULC
and Calpine Canada Energy
Finance II ULC(5)........
- -------------------------------------------------------------------------------------------------------------------
Guarantees of Debt
Securities of Calpine
Canada Energy Finance ULC
and Calpine Canada Energy
Finance II ULC by Calpine
Corporation(6)...........
- -------------------------------------------------------------------------------------------------------------------
Warrants of Calpine Canada
Energy Finance ULC and
Calpine Canada Energy
Finance II ULC...........
- -------------------------------------------------------------------------------------------------------------------
Preferred Securities of
Calpine Capital Trust IV
and Calpine Capital Trust
V........................
- -------------------------------------------------------------------------------------------------------------------
Guarantees of Preferred
Securities of Calpine
Capital Trust IV and
Calpine Capital Trust V
by Calpine
Corporation(7)...........
- -------------------------------------------------------------------------------------------------------------------
Total(8)............. $2,500,000,000 100% $2,500,000,000 $230,000(9)
- -------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------
</Table>
Notes appear on the following pages.
(1) Pursuant to Rule 457(o) and General Instruction II.D. of Form S-3 under the
Securities Act of 1933, the table does not specify by each class information
as to the amount to be registered, the proposed maximum aggregate price per
unit or the proposed maximum aggregate offering price. Subject to note 8
below, there are being registered hereunder such presently indeterminate
principal amount or number of (a) shares of common stock and preferred
stock, depository shares, debt securities, purchase contracts, units and
warrants as may be offered, from time to time, by Calpine Corporation; (b)
debt securities and warrants as may be offered, from time to time, by
Calpine Canada Energy Finance ULC; (c) debt securities and warrants as may
be offered, from time to time, by Calpine Canada Energy Finance II ULC; (d)
preferred securities as may be offered, from time to time, by Calpine
Capital Trust IV; and (e) preferred securities as may be offered, from time
to time, by Calpine Capital Trust V. There are also being registered
hereunder such presently indeterminate principal amount or number of shares
of common stock and preferred stock, depositary shares, purchase contracts
and units of Calpine Corporation, and debt securities of Calpine
Corporation, Calpine Canada Energy Finance ULC and Calpine Canada Energy
Finance II ULC, in each case issuable upon conversion, exchange, exercise or
settlement of securities registered hereunder. No separate cash
consideration will be received for any securities registered hereunder that
are issued upon conversion of, or in exchange for, other securities
registered hereunder. For each class of security, the amount to be
registered, the proposed maximum aggregate price per unit and the proposed
maximum aggregate offering price will be determined from time to time by us
in connection with the issuance of the securities registered hereunder.
(2) Estimated solely for purposes of determining the registration fee pursuant
to Rule 457(o) under the Securities Act, which permits the registration fee
to be calculated on the basis of the maximum aggregate offering price of all
securities listed.
(3) Includes certain preferred stock purchase rights (the "Rights") associated
with shares of the common stock. Until the occurrence of certain prescribed
events, none of which have occurred, the Rights are not exercisable, are
evidenced by the certificate representing the common stock and will be
transferred along with and only with the common stock. No separate
consideration is payable for the Rights.
(4) If Calpine Corporation elects to offer fractional interests in shares of
preferred stock, depositary shares, evidenced by depositary receipts issued
under a deposit agreement, will be distributed to those persons acquiring
the fractional interests, and the shares of preferred stock will be issued
to the depositary under such deposit agreement.
(5) If any debt securities are issued at an original issue discount, then the
offering price shall be in such greater principal amount as shall result in
an aggregate initial offering price not to exceed $2,500,000,000 less the
dollar amount of any securities previously issued hereunder (including other
debt securities issued at an original issue discount, which shall be treated
as described in this note 5).
(6) The debt securities to be issued by Calpine Canada Energy Finance ULC and
Calpine Canada Energy Finance II ULC will be irrevocably and unconditionally
guaranteed on an unsecured senior basis by Calpine Corporation. No separate
consideration will be received for the guarantees of Calpine Corporation.
(7) Calpine Corporation will issue guarantees and undertake other obligations in
connection with the issuance of preferred securities by Calpine Capital
Trust IV and Calpine Capital Trust V. No separate consideration will be
received for the guarantees of Calpine Corporation.
(8) The prospectus contained in this registration statement relates to
$1,526,493,281 aggregate amount of securities being registered under this
registration statement and, pursuant to Rule 429 under the Securities Act,
(a) $27,422,100 of unsold securities of Calpine Corporation previously
registered under Registration Statement No. 333-72583 initially filed on
February 18, 1999, for which a registration fee in the amount of $7,623 was
previously paid; (b) $84,701,520 of unsold securities of Calpine Corporation
and Calpine Capital Trust previously registered under Registration Statement
No. 333-87427 initially filed on September 20, 1999, for which a
registration fee in the amount of $23,547 was previously paid; (c)
$40,000,000 of unsold securities of Calpine Corporation previously
registered under Registration Statement No. 333-40652 initially filed on
June 30, 2000, for which a
registration fee in the amount of $10,560 was previously paid; and (d)
$821,383,099 of unsold securities of Calpine Corporation, Calpine Canada Energy
Finance ULC and Calpine Canada Energy Finance II ULC guaranteed by Calpine
Corporation previously registered on Registration Statement No. 333-67446,
initially filed on August 14, 2001, for which a registration fee in the
amount of $205,345 was previously paid. In no event will the aggregate
initial offering price of all securities issued from time to time pursuant
to the prospectus contained in this registration statement exceed
$2,500,000,000 or the equivalent thereof in one or more foreign currencies,
foreign currency units or composite currencies. The securities registered
hereunder may be sold separately, together or as units with other
securities registered hereunder.
(9) $247,075 was previously paid as a registration fee in respect of the
$973,506,719 aggregate amount of unsold securities being carried forward
from Registration Statement Nos. 333-72583, 333-87427, 333-40652 and
333-67446 pursuant to Rule 429 under the Securities Act. Pursuant to Rule
457(p) under the Securities Act, such previously paid registration fees are
being offset against the total registration fee due hereunder. Accordingly,
no registration fee is due in connection with the filing of this
registration statement. However, as required by the SEC, we paid one dollar
in connection with the filing of this Registration Statement on January 17,
2002.
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these securities
in any State in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such State.
SUBJECT TO COMPLETION, DATED APRIL 4, 2002
PROSPECTUS
[CALPINE CORP. LOGO] CALPINE CORPORATION
Common Stock
Preferred Stock
Depositary Shares
Debt Securities
Purchase Contracts
Units
Warrants
CALPINE CANADA ENERGY FINANCE ULC
CALPINE CANADA ENERGY FINANCE II ULC
Debt Securities Fully and Unconditionally
Guaranteed by Calpine Corporation
Warrants
CALPINE CAPITAL TRUST IV
CALPINE CAPITAL TRUST V
Trust Preferred Securities
Fully and Unconditionally Guaranteed,
as Described Herein, by Calpine Corporation
-------------------------
We may offer any combination of the securities described in this prospectus
in different series from time to time in amounts, at prices and on terms to be
determined at or prior to the time of the offering. We will provide you with
specific terms of the applicable offered securities in one or more supplements
to this prospectus. The aggregate initial offering price of the securities that
we may issue under this prospectus will not exceed $2,500,000,000.
We urge you to read this prospectus and any accompanying prospectus
supplement carefully before you make your investment decision. This prospectus
may not be used to make sales of the offered securities unless it is accompanied
by a prospectus supplement describing the method and terms of the offering of
those offered securities. We may sell the securities or we may distribute them
through underwriters or dealers. In addition, the underwriters may overallot a
portion of the securities.
Calpine Corporation's common stock is traded on The New York Stock Exchange
under the symbol "CPN." Unless we state otherwise in a prospectus supplement, we
will not list any other of these securities on any securities exchange or on the
Nasdaq Stock Market.
INVESTING IN THESE SECURITIES INVOLVES CERTAIN RISKS. SEE "RISK FACTORS" ON
PAGE 7.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
Prospectus dated , 2002.
No person is authorized to give any information or to make any
representations other than those contained or incorporated by reference in this
prospectus or the accompanying prospectus supplement and, if given or made, such
information or representations must not be relied upon as having been
authorized. This prospectus and accompanying prospectus supplement do not
constitute an offer to sell or the solicitation of an offer to buy any
securities other than the securities described in this prospectus and the
accompanying prospectus supplement or an offer to sell or the solicitation of an
offer to buy such securities in any circumstance in which such offer or
solicitation is unlawful. Neither the delivery of this prospectus or the
accompanying prospectus supplement, nor any sale made under this prospectus or
accompanying prospectus supplement shall, under any circumstances, create any
implication that there has been no change in our affairs since the date of the
prospectus supplement accompanying this prospectus or that the information
contained or incorporated by reference in this prospectus or accompanying
prospectus supplement is correct as of any time subsequent to the date of such
information.
TABLE OF CONTENTS
<Table>
<Caption>
PAGE
----
About This Prospectus....................................... 1
Calpine Corporation......................................... 3
Calpine Canada Energy Finance ULC and
Calpine Canada Energy Finance II ULC...................... 5
Calpine Capital Trust IV and Calpine Capital Trust V........ 6
Risk Factors................................................ 7
Where You Can Find More Information; Documents Incorporated
by Reference.............................................. 7
Forward-Looking Statements.................................. 8
Calpine Consolidated Ratio of Earnings to Fixed Charges..... 9
Use of Proceeds............................................. 9
Plan of Distribution........................................ 9
Description of Capital Stock................................ 12
Description of Depositary Shares............................ 16
Description of Debt Securities.............................. 19
Description of Purchase Contracts........................... 35
Description of Units........................................ 35
Description of Warrants..................................... 36
Description of Trust Preferred Securities................... 37
Certain United States Federal Income Tax Consequences....... 43
Certain Canadian Federal Income Tax Considerations.......... 58
Legal Matters............................................... 59
Experts..................................................... 59
</Table>
i
ABOUT THIS PROSPECTUS
This prospectus is part of a joint registration statement that Calpine
Corporation, Calpine Canada Energy Finance ULC, Calpine Canada Energy Finance II
ULC, Calpine Capital Trust IV and Calpine Capital Trust V filed with the
Securities and Exchange Commission (the "SEC") using a "shelf" registration, or
continuous offering, process. Under this shelf process, we may sell, from time
to time, any combination of the securities described in this prospectus in one
or more offerings up to a total dollar amount of $2,500,000,000, which amount
includes over-allotment options with regard to certain securities.
Pursuant to Rule 3-10 of Regulation S-X promulgated by the SEC, we are not
required to include in this prospectus separate financial statements of Calpine
Canada Energy Finance ULC, which we refer to as "Energy Finance," Calpine Canada
Energy Finance II ULC, which we refer to as "Energy Finance II," Calpine Capital
Trust IV, which we refer to as "Trust IV," or Calpine Capital Trust V, which we
refer to as "Trust V," because:
- in the case of Energy Finance and Energy Finance II, all of each of their
respective voting rights are owned by Calpine Corporation (which we refer
to as "Calpine"), either directly or indirectly;
- in the case of Trust IV and Trust V, the sum of all of each of their
respective interests are owned by Calpine, either directly or through
wholly-owned subsidiaries of Calpine, other than (i) securities that are
guaranteed by Calpine and, if applicable, other 100%-owned subsidiaries
of Calpine and (ii) securities that guarantee securities issued by
Calpine and, if applicable, other 100% owned subsidiaries of Calpine;
- Calpine files periodic and other reports with the SEC pursuant to the
Securities Exchange Act of 1934, as amended (the "Securities Exchange
Act");
- none of Energy Finance, Energy Finance II, Trust IV or Trust V has
operations other than the investment of funds in Calpine or its
subsidiaries; and
- Calpine will fully and unconditionally guarantee the obligations of
Energy Finance, Energy Finance II, Trust IV and Trust V, and the rights
of holders of their securities, and no subsidiary of Calpine will
guarantee those obligations.
Because Energy Finance, Energy Finance II, Trust IV and Trust V are
permitted to omit financial statements, pursuant to Rule 12h-5 under the
Securities Exchange Act, they are not subject to the information reporting
requirements of that Act.
This prospectus provides you with a general description of the securities
we may offer. Each time we sell such securities, we will provide a prospectus
supplement containing specific information about the terms of the securities
being offered, including any guarantees, and if we sell securities through
agents, underwriters or dealers, the names of such agents, underwriters or
dealers and any fees, discounts and commissions to be paid to them. That
prospectus supplement may include a discussion of any 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; Documents Incorporated by Reference."
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 website or at the SEC offices
mentioned under the heading "Where You Can Find More Information; Documents
Incorporated by Reference." Additional documents that contain the specific terms
of certain securities we may offer may subsequently be filed as exhibits to this
registration statement or incorporated into the prospectus or prospectus
supplement by reference to documents we file with the SEC.
1
The prospectus also incorporates business and financial information about
us that is not included or delivered with this document. YOU MAY REQUEST AND
OBTAIN THIS INFORMATION FREE OF CHARGE BY WRITING TO US AT CALPINE CORPORATION,
50 WEST SAN FERNANDO STREET, SAN JOSE, CALIFORNIA 95113, ATTENTION: LISA M.
BODENSTEINER, ASSISTANT SECRETARY, OR BY TELEPHONING US AT (408) 995-5115.
You should rely only on the information provided or incorporated by
reference in this prospectus and the accompanying 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 assume that the
information in this prospectus or the accompanying prospectus supplement is
accurate only as of the date on the front of the document and that any
information incorporated by reference is accurate only as of the date of the
document incorporated by reference.
Unless we have indicated otherwise, in this prospectus references to
"Calpine" are to Calpine Corporation, references to "Energy Finance" are to
Calpine Canada Energy Finance ULC, references to "Energy Finance II" are to
Calpine Canada Energy Finance II ULC, references to "Trust IV" are to Calpine
Capital Trust IV, references to "Trust V" are to Calpine Capital Trust V,
references to "the trusts" are, collectively, to Trust IV and Trust V, and
references to "we," "us" and "our" or similar terms are, collectively, to
Calpine Corporation and its consolidated subsidiaries. Unless otherwise
indicated, references in this prospectus to "$" or "dollar" are to the lawful
currency of the United States.
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.
2
CALPINE CORPORATION
We are a leading independent power company engaged in the development,
acquisition, ownership and operation of power generation facilities and the sale
of electricity predominantly in the United States, but also in Canada and the
United Kingdom. We are also the world's largest producer of renewable geothermal
energy, and we own 1.3 trillion cubic feet equivalent of proved natural gas
reserves in Canada and the United States. We have experienced significant growth
in all aspects of our business over the last five years. Currently, we own
interests in 64 power plants having a net capacity of 12,090 megawatts. We also
have 24 gas-fired projects under construction having a net capacity of 14,142
megawatts and have 34 projects in advanced development with a net capacity of
15,100 megawatts. Construction of these advanced development projects will
proceed if and when market fundamentals are sound, our return on investment
criteria are expected to be met, and financing is available on attractive terms.
The completion of the projects currently under construction would give us
interests in 86 power plants located in 21 states, three Canadian provinces and
the United Kingdom, having a net capacity of 26,232 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 net income, fully diluted earnings per share and assets have grown
significantly from 1997 to 2001, as shown in the table below, although we do not
anticipate our growth to continue at these rates in view of our revised
construction and advanced development activities.
<Table>
<Caption>
COMPOUND ANNUAL
1997 2001 GROWTH RATE
------------ ------------- ---------------
(DOLLARS IN MILLIONS, EXCEPT
PER SHARE AMOUNTS)
Net income.................................... $ 33.3 $ 648.1 110%
Fully diluted earnings per share(1)........... 0.18 1.85 79%
Fully diluted earnings per share from
recurring operations(2)..................... 0.18 1.92 81%
Total assets.................................. 1,643.2 21,309.3 90%
</Table>
- -------------------------
(1) Before extraordinary items and cumulative effect of a change in
accounting principle.
(2) Before deduction of merger expense in connection with the Encal Energy
Ltd. pooling-of-interests transaction, and before extraordinary items
and cumulative effect of a change in accounting principle.
Calpine is 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.
3
THE MARKET
The electric power industry represents one of the largest industries in the
United States and impacts nearly every aspect of our economy, with an estimated
end-user market of over $240 billion of electricity sales in 2001. 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 in certain power markets may purchase
electricity from a variety of suppliers, including independent power producers,
power marketers, regulated 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. We estimate that as much as
20%, or approximately 160,000 megawatts, of U.S. summer generating capacity is
vulnerable to environmental or economic replacement by new state-of-the-art
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.
RECENT DEVELOPMENTS
In addition to the recent developments described below, please see the
recent developments described in our Annual Report on Form 10-K for the year
ended December 31, 2001, which is incorporated by reference in this prospectus.
Recent Rating Agency Actions. In December 2001, Moody's Investors Service
("Moody's") downgraded our long-term debt from Baa3 (its lowest investment grade
rating) to Ba1 (its highest non-investment grade rating) and Fitch, Inc.
("Fitch") downgraded our long-term debt credit rating from BBB- (its lowest
investment grade rating) to BB+ (its highest non-investment grade rating). In
March 2002, each of Moody's and Fitch further downgraded our long-term debt
credit rating, including our senior unsecured debt credit rating, to B1
(Moody's) and BB (Fitch), and Standard & Poor's downgraded our corporate credit
rating from BB+ to BB and our senior unsecured debt credit rating from BB+ to
B+. Moody's continues to report our ratings outlook as negative. We cannot
assure you that Moody's, Fitch and/or Standard & Poor's will not further
downgrade our credit rating in the future. If any of our credit ratings are
further downgraded, we could be required to, among other things, pay additional
interest under our credit agreements, or provide additional guarantees,
collateral, letters of credit or cash for credit support obligations and it
could increase our cost of capital, make our efforts to raise capital more
difficult and have an adverse impact on us and our subsidiaries.
PRINCIPAL EXECUTIVE OFFICES
Calpine's 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.
4
CALPINE CANADA ENERGY FINANCE ULC AND
CALPINE CANADA ENERGY FINANCE II ULC
Energy Finance is an unlimited liability company organized in March 2001
under the laws of Nova Scotia, Canada. Energy Finance II is an unlimited
liability company organized in July 2001 under the laws of Nova Scotia, Canada.
Energy Finance's direct parent company is Quintana Canada Holdings, LLC, a
Delaware limited liability company. Energy Finance II's direct parent company is
Calpine Canada Resources Ltd., an Alberta, Canada corporation.
Energy Finance and Energy Finance II are both indirect, wholly-owned
special purpose finance subsidiaries of Calpine that engage in financing
activities to raise funds for the business operations of Calpine and its
subsidiaries. They will each issue debt securities and warrants to purchase debt
securities. Their debt securities will be fully and unconditionally guaranteed
by Calpine.
For the reasons set forth under the caption "About this Prospectus," we are
not required to include separate financial statements of Energy Finance or
Energy Finance II in this prospectus and neither entity is subject to the
information reporting requirements of the Securities Exchange Act.
The registered office of each of Energy Finance and Energy Finance II is
Suite 800, Purdy's Wharf, Tower 1, 1959 Upper Water Street, P.O. Box 997,
Halifax, Nova Scotia B3J 3N2, and their telephone number at that address is
(902) 420-3335.
5
CALPINE CAPITAL TRUST IV AND CALPINE CAPITAL TRUST V
Each of Trust IV and Trust V is a Delaware business trust created under the
Delaware Business Trust Act. Each of the trusts will be governed by a
declaration of trust (as it may be amended and restated from time to time) among
the trustees of each trust and Calpine. Each declaration will be qualified under
the Trust Indenture Act of 1939.
For the reasons set forth under the caption "About this Prospectus," we are
not required to include separate financial statements of Trust IV or Trust V in
this prospectus and neither entity is subject to the information reporting
requirements of the Securities Exchange Act.
Each of the trusts will exist primarily for the purposes of (i) issuing its
trust preferred and trust common securities; (ii) investing the proceeds from
the sale of its securities in Calpine's debt securities; and (iii) engaging in
only such other activities as are necessary or incidental to issuing its
securities and purchasing and holding Calpine's debt securities.
When a trust issues its trust preferred securities, you and the other
holders of the trust preferred securities will own all of the issued and
outstanding trust preferred securities of the trust. Calpine will acquire all of
the issued and outstanding trust common securities of each trust, representing
an undivided beneficial interest in the assets of each trust of at least 3%.
Wilmington Trust Company, acting in its capacity as guarantee trustee, will hold
for your benefit a trust preferred securities guarantee issued by Calpine, which
will be separately qualified under the Trust Indenture Act of 1939.
Each of the trusts will initially have three trustees. One of the trustees
will be an individual who is an officer or employee of Calpine. The second
trustee will be Wilmington Trust Company, which will serve as the property
trustee under the declaration of trust for purposes of the Trust Indenture Act
of 1939. The third trustee will be Wilmington Trust Company, which will serve as
Delaware trustee and has its principal place of business in the State of
Delaware.
Unless otherwise provided in the applicable prospectus supplement, because
Calpine will own all of the trust common securities of each trust, Calpine will
have the exclusive right to appoint, remove or replace trustees and to increase
or decrease the number of trustees. In most cases, there will be at least three
trustees. The term of a trust will be described in the applicable prospectus
supplement, but may dissolve earlier as provided in the applicable declaration
of trust.
The rights of the holders of the trust preferred securities of a trust,
including economic rights, rights to information and voting rights, and the
duties and obligations of the trustees of a trust, will be contained in and
governed by the declaration of trust of that trust (as it may be amended and
restated from time to time), the Delaware Business Trust Act and the Trust
Indenture Act of 1939.
The address of each trust is 50 West San Fernando Street, San Jose,
California 95113, and the telephone number of each trust at that address is
(408) 995-5115.
6
RISK FACTORS
Investing in our securities involves risk. Please see the risk factors
described in our Annual Report on Form 10-K for the year ended December 31,
2001, 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 respective business operations.
WHERE YOU CAN FIND MORE INFORMATION;
DOCUMENTS INCORPORATED BY REFERENCE
Calpine files 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 room 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.
None of Energy Finance, Energy Finance II, Trust IV or Trust V is currently
subject to the information reporting requirements of the Securities Exchange
Act, for the reasons set forth under the caption "About this Prospectus."
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 automatically
update and supersede this information. This prospectus incorporates by
reference:
- Calpine's Annual Report on Form 10-K (File No. 001-12079) for the year
ended December 31, 2001;
- Calpine's Current Reports on Form 8-K filed with the SEC on January 16,
2002, January 17, 2002, February 8, 2002, March 13, 2002, March 13, 2002,
and March 26, 2002;
- 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; and
- the description of rights relating to our common stock contained in our
Registration Statement on Form 8-A (File No. 001-12079), filed with the
SEC on June 17, 1997, and the amendments to that Registration Statement
filed on June 18, 1997, June 24, 1997 and September 28, 2001.
This prospectus also incorporates by reference any future filings we make
with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange
Act until we sell all of the securities being registered or until this offering
is otherwise terminated.
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 either by writing to Calpine Corporation, 50 West San
Fernando Street, San Jose, California 95113, attention: Lisa M. Bodensteiner,
Assistant Secretary, or by telephoning (408) 995-5115.
We have filed with the SEC a joint registration statement on Form S-3 under
the Securities Act of 1933, as amended (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. Copies of documents described herein are available free
of charge upon request as provided in the preceding paragraph.
7
FORWARD-LOOKING STATEMENTS
Some of the statements contained in this prospectus or any prospectus
supplement and incorporated by reference into this prospectus or any prospectus
supplement 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 respective, or
our respective 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
respective, or our respective 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:
- unseasonable weather patterns that reduce demand for power and natural
gas;
- systemic economic slowdowns, which can adversely affect consumption of
power by businesses and consumers;
- the timing and extent of deregulation of energy markets and the rules and
regulations adopted on a transitional basis with respect thereto;
- the timing and extent of changes in commodity prices for energy,
particularly natural gas and electricity;
- 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;
- a competitor's development of a lower-cost generating gas-fired power
plant;
- risks associated with marketing and selling power from power plants in
the newly-competitive energy market;
- the successful exploitation of an oil or gas resource that ultimately
depends upon the geology of the resource, the total amount and cost to
develop recoverable reserves and operational factors relating to the
extraction of natural gas; and
- other risks identified from time to time in our reports and registration
statements filed with the SEC, including the risk factors identified in
our Annual Report on Form 10-K for the year ended December 31, 2001,
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.
8
CALPINE CONSOLIDATED RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth Calpine's consolidated ratio of earnings to
fixed charges for each of the last five years.
<Table>
<Caption>
YEAR ENDED DECEMBER 31,
- -------------------------------------
1997 1998 1999 2000 2001
- ----- ----- ----- ----- -----
1.68x 1.52x 1.83x 2.26x 1.64x
</Table>
For purposes of computing Calpine's consolidated ratio of earnings to fixed
charges, earnings consist of pre-tax income before adjustment for minority
interests in its 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 pre-tax 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 our
company-obligated mandatorily redeemable convertible preferred securities of
subsidiary trusts ("HIGH TIDES"(SM)).
USE OF PROCEEDS
Unless otherwise specified in a prospectus supplement accompanying this
prospectus, we will add the net proceeds from the sale of the securities to
which this prospectus and the prospectus supplement relate to our general funds,
which we will use, directly or indirectly, for financing power projects under
development or construction, working capital, general corporate purposes and any
other purpose specified in a prospectus supplement. We may conduct concurrent or
additional financings at any time. The net proceeds from the sale of debt
securities by Energy Finance or Energy Finance II to which this prospectus
relates will be lent to us or our affiliates by Energy Finance or Energy Finance
II, as applicable, pursuant to one or more intercompany loans. The net proceeds
from the sale of trust preferred securities and trust common securities by Trust
IV and Trust V to which this prospectus relates will be used to purchase our
debt securities, and, unless otherwise specified in a prospectus supplement
accompanying this prospectus, we will add the net proceeds from the sale of such
debt securities to our general funds, which we will use, directly or indirectly,
for financing power projects under development or construction, working capital,
general corporate purposes and any other purpose specified in a prospectus
supplement.
PLAN OF DISTRIBUTION
We may sell the securities offered through this prospectus in and outside
the United States (i) to or through underwriters or dealers, (ii) directly to
purchasers, including our affiliates, (iii) through agents, or (iv) through a
combination of any these methods. The securities may be distributed at a fixed
price or prices, which may be changed, market prices prevailing at the time of
sale, prices related to the prevailing market prices, or negotiated prices. The
prospectus supplement will include the following information:
- the terms of the offering;
- the names of any underwriters or agents;
- the name or names of any managing underwriter or underwriters;
- the purchase price of the securities;
- the net proceeds from the sale of the securities;
- any delayed delivery arrangements;
- any underwriting discounts, commissions and other items constituting
underwriters' compensation;
- any initial public offering price;
9
- any discounts or concessions allowed or reallowed or paid to dealers; and
- any commissions paid to agents.
SALE THROUGH UNDERWRITERS OR DEALERS
If underwriters are used in the sale, the underwriters will acquire the
securities for their own account. The underwriters may resell the securities
from time to time in one or more transactions, including negotiated
transactions. Underwriters may offer securities to the public either through
underwriting syndicates represented by one or more managing underwriters or
directly by one or more firms acting as underwriters. Unless otherwise indicated
in the prospectus supplement, the obligations of the underwriters to purchase
the securities will be subject to certain conditions, and the underwriters will
be obligated to purchase all the offered securities if they purchase any of
them. The underwriters may change from time to time any initial public offering
price and any discounts or concessions allowed or reallowed or paid to dealers.
If dealers are used in the sale of securities offered through this
prospectus, we will sell the securities to them as principals. They may then
resell those securities to the public at varying prices determined by the
dealers at the time of resale. The prospectus supplement will include the names
of the dealers and the terms of the transaction.
DIRECT SALES AND SALES THROUGH AGENTS
We may sell the securities offered through this prospectus directly. In
this case, no underwriters or agents would be involved. Such securities may also
be sold through agents designated from time to time. The prospectus supplement
will name any agent involved in the offer or sale of the offered securities and
will describe any commissions payable to the agent. Unless otherwise indicated
in the prospectus supplement, any agent will agree to use its reasonable best
efforts to solicit purchases for the period of its appointment.
We may sell the securities directly to institutional investors or others
who may be deemed to be underwriters within the meaning of the Securities Act
with respect to any sale of those securities. The terms of any such sales will
be described in the prospectus supplement.
DELAYED DELIVERY CONTRACTS
If the prospectus supplement indicates, we may authorize agents,
underwriters or dealers to solicit offers from certain types of institutions to
purchase securities at the public offering price under delayed delivery
contracts. These contracts would provide for payment and delivery on a specified
date in the future. The contracts would be subject only to those conditions
described in the prospectus supplement. The applicable prospectus supplement
will describe the commission payable for solicitation of those contracts.
MARKET MAKING, STABILIZATION AND OTHER TRANSACTIONS
Unless the applicable prospectus supplement states otherwise, each series
of offered securities will be a new issue and will have no established trading
market. We may elect to list any series of offered securities on an exchange.
Any underwriters that we use in the sale of offered securities may make a market
in such securities, but may discontinue such market making at any time without
notice. Therefore, we cannot assure you that the securities will have a liquid
trading market.
Any underwriter may also engage in stabilizing transactions, syndicate
covering transactions and penalty bids in accordance with Rule 104 under the
Securities Exchange Act. Stabilizing transactions involve bids to purchase the
underlying security in the open market for the purpose of pegging, fixing or
maintaining the price of the securities. Syndicate covering transactions involve
purchases of the securities in the open market after the distribution has been
completed in order to cover syndicate short positions.
10
Penalty bids permit the underwriters to reclaim a selling concession from a
syndicate member when the securities originally sold by the syndicate member are
purchased in a syndicate covering transaction to cover syndicate short
positions. Stabilizing transactions, syndicate covering transactions and penalty
bids may cause the price of the securities to be higher than it would be in the
absence of the transactions. The underwriters may, if they commence these
transactions, discontinue them at any time.
GENERAL INFORMATION
Agents, underwriters, and dealers may be entitled, under agreements entered
into with us, to indemnification by Calpine and, if applicable, Energy Finance,
Energy Finance II, Trust IV or Trust V, against certain liabilities, including
liabilities under the Securities Act. Our agents, underwriters, and dealers, or
their affiliates, may be customers of, engage in transactions with or perform
services for us, in the ordinary course of business.
11
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 by-laws,
which have been incorporated by reference as exhibits to the registration
statement of which this prospectus is a part. The information provided below
reflects the 2 for 1 split of Calpine's common stock that became effective on
October 7, 1999, the 2 for 1 split of Calpine's common stock that became
effective on June 8, 2000 and the 2 for 1 split of Calpine's 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 the 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," below. In the event of Calpine's 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. Pursuant
to a rights agreement entered into in June 1997, as amended, Calpine's 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 is a part. See
"-- Anti-Takeover Effects of Provisions of the Certificate of Incorporation,
Bylaws, Rights Plan and Delaware Law -- Rights Plan," below.
DIVIDEND POLICY
We have not declared any cash dividends on Calpine's common stock during
the past two fiscal years. We do not anticipate paying any cash dividends on
Calpine's 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
The following description of preferred stock and the description of the
terms of a particular series of preferred stock that will be set forth in the
related prospectus supplement are not complete. These descriptions are qualified
in their entirety by reference to the certificate of designation relating to
that series. The rights, preferences, privileges and restrictions of the
preferred stock of each series will be fixed by the certificate of designation
relating to that series that will be filed as an amendment to this registration
statement at the time such series of preferred stock is offered.
As of April 4, 2002, there was one share of Calpine's preferred stock
outstanding. Our board of directors has the authority, without further vote or
action by the stockholders, to issue from time to time up to 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 the
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 common stock. The
12
issuance of preferred stock may have the effect of delaying, deferring or
preventing a change in control of Calpine, or could delay or prevent a
transaction that might otherwise give Calpine's 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 was amended on September 19, 2001. As of April 4, 2002, 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 and Delaware Law -- Rights Plan," below.
In connection with the business combination with Encal, a series of
preferred stock of Calpine, consisting of one share, was designated as special
voting preferred stock, having a par value of $.001 and a liquidation preference
of $.001. Except as otherwise required by law or Calpine's 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 Calpine's stockholders equal to the number of outstanding
exchangeable shares issued by Calpine's wholly-owned subsidiary from time to
time and not owned by Calpine or any entity controlled by Calpine. The holders
of Calpine common stock and the holder of the share of special voting preferred
stock will vote together as a single class on all matters on which holders of
Calpine's common stock are eligible to vote. In the event of Calpine's
liquidation, dissolution or winding-up, all outstanding exchangeable shares will
automatically be exchanged for shares of Calpine's common stock, and the holder
of the special voting preferred stock will not be entitled to receive any assets
available for distribution to Calpine's stockholders. The holder of the share of
special voting preferred stock will not be entitled to receive dividends. The
share of special voting preferred stock was issued to a Canadian 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 exchangeable
shares outstanding not owned by us or an entity controlled by us, the share of
special voting preferred stock will be canceled.
A prospectus supplement with respect to the issuance of a series of
preferred stock will specify:
- the maximum number of shares;
- the designation of the shares;
- the annual dividend rate, if any, whether the dividend rate is fixed or
variable, whether the series of preferred stock will be issued with
original issue discount and, if so, the computed dividend rate thereon,
the date dividends will accrue, the dividend payment dates, and whether
dividends will be cumulative;
- the price and the terms and conditions for redemption, if any, including
redemption at our option or at the option of the holders, including the
time period for redemption, and any accumulated dividends or premiums;
- the liquidation preference, if any, and any accumulated dividends upon
the liquidation, dissolution or winding up of our affairs;
- any sinking fund or similar provision, and, if so, the terms and
provisions relating to the purpose and operation of the fund;
- the terms and conditions, if any, for conversion or exchange of shares of
any other class or classes of our capital stock or any series of any
other class or classes, or of any other series of the same class, or any
other securities or assets, including the price or the rate of conversion
or exchange and the method, if any, of adjustment;
- if applicable, any additional material United States federal income tax
consequences relating to such series of preferred stock;
- the voting rights, if any; and
13
- any or all other preferences and relative, participating, optional or
other special rights, privileges or qualifications, limitations or
restrictions.
As described under "Description of Depositary Shares," below, we may, at
our option, elect to offer depositary shares evidenced by depositary receipts.
Each depositary receipt will represent an interest in a share of a particular
series of preferred stock that we will issue and deposit with a depositary. The
interest represented by the depositary receipt will be described in the
applicable prospectus supplement.
Preferred stock will be fully paid and nonassessable upon issuance. The
preferred stock or any series of preferred stock may be represented, in whole or
in part, by one or more global certificates, which will have an aggregate
liquidation preference equal to that of the preferred stock represented by the
global certificate.
Each global certificate will:
- be registered in the name of a depositary or a nominee of the depositary
identified in the prospectus supplement;
- be deposited with such depositary or nominee or a custodian for the
depositary; and
- bear a legend regarding the restrictions on exchanges and registration of
transfer and any other matters as may be provided for under the
certificate of designation.
ANTI-TAKEOVER EFFECTS OF PROVISIONS OF THE CERTIFICATE OF INCORPORATION, BYLAWS
AND DELAWARE LAW
CERTIFICATE OF INCORPORATION AND BYLAWS
Calpine's amended and restated certificate of incorporation and bylaws
provide that Calpine's 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 Calpine's capital stock entitled to vote.
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 therein defined) requires the affirmative vote
of the holders of two-thirds of the shares of Calpine's 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. Calpine's 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 Calpine.
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
Calpine. These provisions are designed to reduce Calpine's vulnerability to an
unsolicited acquisition 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 Calpine's
shares and, as a consequence, they also may inhibit fluctuations in the market
price of Calpine's shares that could result from actual or rumored takeover
attempts. Such provisions also may have the effect of preventing changes in
Calpine's management.
RIGHTS PLAN
On June 5, 1997, Calpine adopted a stockholders' rights plan to strengthen
Calpine's ability to protect Calpine's stockholders. The rights plan was 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, Calpine declared a dividend of one
preferred share purchase right for each outstanding share of Calpine's 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 Calpine's common
stock that shall become outstanding thereafter until the rights become
exercisable or they expire as described below.
14
Each right initially represents a contingent right to purchase, under certain
circumstances, one one-thousandth of a share, called a "unit," of Calpine's
Series A Participating Preferred Stock, par value $.001 per share, at a price of
$140.00 per unit, subject to adjustment. The rights will become exercisable and
trade independently from Calpine's common stock upon the public announcement of
the acquisition by a person or group of 15% or more of Calpine's common stock,
or ten days after commencement of a tender or exchange offer that would result
in the acquisition of 15% or more of Calpine's 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 Calpine's liquidation, each share of the
participating preferred stock will be entitled to any payment made per share of
common stock.
If Calpine is acquired in a merger or other business combination
transaction after a person or group has acquired 15% or more of Calpine's 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 Calpine's 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 Calpine's participating
preferred stock or shares of Calpine's common stock having a market value of
twice the right's exercise price.
The rights remain exercisable for up to 90 days following a triggering
event (such as a person acquiring 15% or more of Calpine's common stock). The
rights expire on June 18, 2007, unless redeemed earlier by Calpine. Calpine 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
Calpine is 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 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 any of its direct or indirect majority-owned
subsidiaries 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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DESCRIPTION OF DEPOSITARY SHARES
The following is a general description of the depositary shares to which
this prospectus and any prospectus supplement may relate. The applicable
prospectus supplement will describe the specific terms of the depositary shares
offered through that prospectus supplement, as well as any general terms
described in this section that will not apply to those depositary shares.
The following description of the depositary shares is subject to the
detailed provisions of the depositary receipts and the deposit agreement
relating to the applicable series of preferred stock, the form of each of which
has been filed as an exhibit to the registration statement of which this
prospectus is a part. Whenever particular provisions of the depositary receipts
or deposit agreement, or terms defined therein, are referred to, those
provisions or definitions are incorporated by reference herein and such
descriptions are qualified in their entirety by such reference. We urge you to
read the depositary receipts and the depositary agreement because they, and not
this description, describe every detail of the terms of the depositary shares.
The summary below of the general terms of the depositary shares will be
supplemented by the more specific terms in a prospectus supplement.
GENERAL
Calpine may, at its option, elect to have shares of its preferred stock
represented by depositary shares. The shares of any series of preferred stock
underlying the depositary shares will be deposited under a separate deposit
agreement that we will enter into with a bank or trust company of our choosing.
The prospectus supplement relating to a series of depositary shares will give
the name and address of the depositary. Subject to the terms of the deposit
agreement, each owner of a depositary share will be entitled to all the rights
and preferences of the preferred stock underlying the depositary share in
proportion to the applicable interest in the preferred stock underlying the
depositary share.
The depositary shares will be evidenced by depositary receipts issued
pursuant to the deposit agreement. Each depositary share will represent the
applicable interest in a number of shares of a particular series of the
preferred stock described in the applicable prospectus supplement.
Unless otherwise provided in the applicable prospectus supplement, upon
surrender of depositary shares at the office of the depositary and upon payment
of the charges provided in the deposit agreement, a holder of depositary shares
will be entitled to the number of whole shares of the related series of
preferred stock evidenced by the surrendered depositary shares.
DIVIDENDS AND OTHER DISTRIBUTIONS
The depositary will distribute all cash dividends or other cash
distributions received in respect of the preferred stock to the record holders
of depositary shares representing the preferred stock in proportion to the
number of the depositary shares owned by the holders on the relevant record
date. The depositary will distribute only that amount which can be distributed
without attributing to any depositary shareholders a fraction of one cent, and
any balance not so distributed will be added to and treated as part of the next
sum received by the depositary for distribution to record depositary
shareholders.
If there is a distribution other than in cash, the depositary will
distribute property to the entitled record depositary shareholders, unless the
depositary determines that it is not feasible to make that distribution. In that
case the depositary may, with our approval, adopt the method it deems equitable
and practicable for making that distribution, including any sale of property and
the distribution of the net proceeds from this sale to the concerned holders.
The deposit agreement will also contain provisions relating to the manner
in which any subscription or similar rights we offer to holders of preferred
stock will be made available to holders of depositary shares.
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CONVERSION AND EXCHANGE
If any preferred stock underlying depositary shares is convertible or
exchangeable, each record holder of depositary shares will have the right or
obligation to convert or exchange the depositary shares in the manner provided
in the deposit agreement and described in the applicable prospectus supplement.
REDEMPTION BY CALPINE
If the preferred stock underlying depositary shares is subject to
redemption at our option, the depositary shares will be redeemed from the
redemption proceeds received by the depositary. The redemption price per
depositary share will be equal to the aggregate redemption price payable with
respect to the number of shares of preferred stock underlying the depositary
shares. Whenever we redeem preferred stock from the depositary, the depositary
will redeem as of the same redemption date a proportionate number of depositary
shares representing the shares of preferred stock that we redeemed. If less than
all the depositary shares are to be redeemed, the depositary shares to be
redeemed will be selected by lot or pro rata as we may determine.
After the date fixed for redemption of the underlying preferred stock, the
depositary shares called for redemption will no longer be deemed to be
outstanding and all rights of the holders of the depositary shares will cease,
except the right to receive the redemption price. Any funds Calpine deposits
with the depositary for any depositary shares that the holders fail to redeem
will be returned to us after two years from the date the funds are deposited.
VOTING
Upon receipt of notice of any meeting or action in lieu of any meeting at
which the holders of any shares of preferred stock underlying the depositary
shares are entitled to vote, the depositary will mail the information contained
in the notice to the record holders of the depositary shares relating to the
preferred stock. Each record holder of the depositary shares on the record date,
which will be the same date as the record date for the preferred stock, will be
entitled to instruct the depositary as to the exercise of the voting rights
pertaining to the number of shares of preferred stock underlying the holder's
depositary shares. The depositary will endeavor, insofar as practicable, to vote
the number of shares of preferred stock underlying the depositary shares in
accordance with these instructions, and we will agree to take all action that
the depositary deems necessary to enable the depositary to do so.
AMENDMENT
The depositary receipt evidencing the depositary shares and any provision
of the deposit agreement may at any time be amended by agreement between Calpine
and the depositary. However, any amendment that materially and adversely alters
the rights of the existing holders of depositary shares will not be effective
unless the amendment has been approved by the record holders of at least a
majority of the depositary shares then outstanding.
CHARGES OF DEPOSITARY
We will pay all transfer and other taxes and governmental charges that
arise solely from the existence of the depositary arrangements. We will also pay
charges of the depositary in connection with the initial deposit of the
preferred stock and any exchange or redemption of the preferred stock. Holders
of depositary shares will pay all other transfer and other taxes and
governmental charges, and, in addition, any other charges that are expressly
provided in the deposit agreement to be for their accounts.
RESIGNATION AND REMOVAL OF DEPOSITARY
The depositary may resign at any time by delivering to us notice of its
election to do so, and we may at any time remove the depositary. Any resignation
or removal will take effect upon the appointment of a
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successor depositary and its acceptance of the appointment. We will appoint the
successor depositary within 60 days after delivery of the notice of resignation
or removal.
TERMINATION OF DEPOSIT AGREEMENT
The depositary may terminate, or we may direct the depositary to terminate,
the deposit agreement if:
- we have redeemed or reacquired all outstanding depositary shares relating
to the deposit agreement; or
- there has been a final distribution in respect of the preferred stock of
any series in connection with our liquidation, dissolution or winding up
and such distribution has been made to the related depositary
shareholders.
Upon termination of the deposit agreement, the depositary will discontinue
the transfer of depositary receipts, will suspend the distribution of dividends,
and will not give any further notices (other than notice of the termination) or
perform any further acts under the deposit agreement. However, the depositary
will continue to deliver preferred stock certificates, together with dividends
and distributions and the net proceeds of any sales of property, in exchange for
depositary receipts surrendered. At our request, the depositary will deliver to
us all books, records, certificates evidencing preferred stock, depositary
receipts and other documents relating to the deposit agreement.
MISCELLANEOUS
We, or at our option, the depositary, will make available to the holders of
depositary shares all reports and communications that we are required to furnish
to the holders of preferred stock.
Neither Calpine nor the depositary will be liable if the depositary is
prevented or delayed by law or any circumstance beyond its control in performing
its obligations under the deposit agreement. Our obligations and those of the
depositary under the deposit agreement will be limited to performance in good
faith of their respective duties under the deposit agreement. Neither Calpine
nor the depositary will be obligated to prosecute or defend any legal proceeding
regarding any depositary share or preferred stock unless satisfactory indemnity
has been furnished. Calpine and the depositary may rely upon written advice of
counsel or accountants. Calpine and the depositary may also rely upon
information provided to them by persons presenting preferred stock for deposit,
holders of depositary shares or other persons Calpine or the depositary believe
to be competent. Calpine and the depositary may also rely upon documents they
believe to be genuine.
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DESCRIPTION OF DEBT SECURITIES
The following is a general description of the debt securities to which this
prospectus and any prospectus supplement may relate. The applicable prospectus
supplement will describe the specific terms of the debt securities offered
through that prospectus supplement, as well as any general terms described in
this section that will not apply to those debt securities. Unless otherwise
stated, the senior debt securities and the subordinated debt securities are
together referred to as the "debt securities."
GENERAL
Calpine may issue from time to time one or more series of debt securities
under one or more separate indentures between Calpine and Wilmington Trust
Company, as trustee; Energy Finance may issue from time to time one or more
series of debt securities under one or more indentures between Energy Finance
and Wilmington Trust Company, as trustee; and Energy Finance II may issue from
time to time one or more series of debt securities under one or more indentures
between Energy Finance II and Wilmington Trust Company, as trustee.
For purposes of this section, references to the "issuer" are to Calpine, in
the case of debt securities issued by Calpine, to Energy Finance, in the case of
debt securities issued by Energy Finance, and to Energy Finance II, in the case
of debt securities issued by Energy Finance II, and references to the
"guarantor" are to Calpine with respect to debt securities issued by Energy
Finance or Energy Finance II. Additionally, in the case of debt securities
issued by Energy Finance or Energy Finance II, the term "indenture" includes the
guarantee agreement pursuant to which Calpine guarantees the debt securities.
The debt securities will be direct, unsecured obligations of the issuer.
The senior debt securities will rank equally with all other senior debt of the
issuer. The indentures will not limit the amount of debt securities that the
issuer may issue. The subordination provisions of any subordinated debt
securities will be described in an applicable prospectus supplement.
Almost all of Calpine's operations are conducted through Calpine's
subsidiaries and other affiliates. As a result, Calpine depends almost entirely
upon their earnings and cash flow to service Calpine's indebtedness, including
Calpine's ability to pay the interest on and principal of Calpine's debt
securities, and on the debt securities of Energy Finance and Energy Finance II
under the guarantees, if the guarantees are enforced. The non-recourse project
financing agreements of certain of Calpine's subsidiaries and other affiliates
generally restrict their ability to pay dividends, make distributions or
otherwise transfer funds to Calpine prior to the payment of other obligations,
including operating expenses, debt service and reserves. Each of Energy Finance
and Energy Finance II is a special purpose financing subsidiary formed solely as
a financing vehicle for Calpine and its subsidiaries. Therefore, the ability of
Energy Finance and Energy Finance II to pay their obligations under the debt
securities is dependent upon the receipt by them of payments from Calpine and
its subsidiaries to which they have made loans or otherwise under agreements
with them in connection with their respective financing activities. In addition,
under Canadian law, the respective direct parent companies of Energy Finance and
Energy Finance II will be liable for their subsidiary's indebtedness, including
any debt securities issued by such subsidiary, upon a winding-up of that
subsidiary. While each of Energy Finance and Energy Finance II believes that
payments made to it in connection with its financing activities will be
sufficient to pay the principal of, and interest on, any debt securities it
issues, if the responsible parties were not able to make such payments for any
reason, the holders of such debt securities would have to rely on the
enforcement of Calpine's guarantee described below.
Calpine's subsidiaries and other affiliates are separate and distinct legal
entities and will have no obligation to pay any amounts due on the debt
securities issued by Calpine hereunder, and will not guarantee the payment of
interest on or principal of the debt securities issued by Calpine hereunder.
Calpine's subsidiaries and other affiliates (other than Energy Finance (in the
case of debt securities issued by Energy Finance) and Energy Finance II (in the
case of debt securities issued by Energy Finance II) and their direct parent
companies, respectively, in the case of the winding-up of its subsidiary) will
not have any obligation to pay any amounts due on the debt securities issued by
Energy Finance or Energy
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Finance II hereunder and none of Calpine's subsidiaries or other affiliates will
guarantee the payment of interest on or principal of the debt securities issued
by Energy Finance or Energy Finance II hereunder. The right of Calpine's debt
security holders to receive any assets of any of Calpine's subsidiaries or other
affiliates upon Calpine's liquidation or reorganization will be subordinated to
the claims of any subsidiaries' or other affiliates' creditors (including trade
creditors and holders of debt issued by Calpine's subsidiaries or affiliates,
including Energy Finance and Energy Finance II). Similarly, the right of holders
of Energy Finance's or Energy Finance II's debt securities to receive any assets
of any of Calpine's subsidiaries or other affiliates upon Calpine's liquidation
or reorganization will be subordinated to the claims of any subsidiaries' or
other affiliates' creditors (including trade creditors and holders of debt
issued by Calpine's subsidiaries or affiliates). As of December 31, 2001,
Calpine's subsidiaries had approximately $3.4 billion of project financing.
Calpine intends to utilize project financing when appropriate in the future, and
this financing will be effectively senior to the debt securities and the
guarantees.
The following description of the debt securities is subject to the detailed
provisions of each indenture, a copy of each of which has been incorporated by
reference as an exhibit to the registration statement of which this prospectus
is a part. Whenever particular provisions of any indenture or terms defined
therein are referred to, those provisions or definitions are incorporated by
reference herein and such descriptions are qualified in their entirety by such
reference. We urge you to read the forms of indentures because they, and not
this description, describe every detail of the terms of the debt securities. The
summary below of the general terms of the debt securities will be supplemented
by the more specific terms in a prospectus supplement. Unless otherwise stated
herein or in an applicable prospectus supplement, the following indenture
description will apply to both senior and subordinated debt securities.
TERMS APPLICABLE TO DEBT SECURITIES
The prospectus supplement for a particular series of debt securities will
specify the terms of the series of debt securities, including:
- the classification of the offered debt securities as senior or
subordinated debt securities;
- the specific designation, the aggregate principal amount, the purchase
price and the authorized denominations, if other than $1,000 and integral
multiples of $1,000 of the offered debt securities;
- the percentage of the principal amount at which the debt securities will
be issued;
- the date or date on which the debt securities will mature;
- the currency, currencies or currency units in which payments on the debt
securities will be payable;
- the rate or rates at which the debt securities will bear interest, if
any, or the method of determination of such rate or rates;
- the date or dates from which the interest, if any, shall accrue, the
dates on which the interest, if any, will be payable and the method of
determining holders to whom any of the interest shall be payable;
- the prices, if any, at which, and the dates at or after which, the issuer
may or must repay, repurchase or redeem the debt securities;
- any right to convert the debt securities into, or exchange the debt
securities for, shares of Calpine common stock or other securities or
property;
- any sinking fund obligation with respect to the debt securities;
- if applicable, any additional material United States, and, in the case of
debt securities issued by Energy Finance or Energy Finance II, Canadian,
federal income tax consequences;
- the exchanges, if any, on which the debt securities may be listed; and
- any other material terms of the debt securities consistent with the
provisions of the indenture.
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Unless otherwise specified in the prospectus supplement, the issuer will
compute interest payments on the basis of a 360-day year consisting of twelve
30-day months.
Some of the debt securities may be issued as discounted debt securities to
be sold at a substantial discount below their stated principal amount. The
prospectus supplement relating to any discounted series of debt securities will
describe any special consequences applicable to discounted debt securities.
The indentures governing the senior debt do not contain any provisions
that:
- limit the issuer's ability to incur indebtedness; or
- provide protection in the event the issuer chooses to engage in a highly
leveraged transaction, reorganization, restructuring, merger or similar
transaction.
ISSUANCE OF DEBT SECURITIES IN CONNECTION WITH TRUST PREFERRED SECURITIES
As described under "Description of Trust Preferred Securities," below,
Calpine may issue debt securities to Trust IV or Trust V in connection with the
issuance of trust preferred or trust common securities by a trust. If Calpine
issues debt securities to either of the trusts, it will issue only one series of
debt securities to that trust and those debt securities subsequently may be
distributed to the holders of trust preferred and trust common securities either
upon dissolution of the trust or upon the occurrence of events that will be
described in the applicable prospectus supplement. An event of default under the
applicable indenture for a series of debt securities issued to a trust will
constitute a trust enforcement event under the declaration of trust for the
applicable trust preferred securities. A holder of trust preferred securities
may directly institute a proceeding against us for enforcement of payment to
that holder of its pro rata share of principal, premium, interest or any
additional amounts if:
- an event of default under the applicable declaration of trust has
occurred and is continuing; and
- that event of default is attributable to our failure to pay principal,
any premium, interest or additional amounts on the applicable series of
debt securities when due.
Except as described in the preceding sentences or in the prospectus
supplement, the holders of trust preferred securities will not be able to
exercise directly any other remedy available to the holders of the applicable
series of debt securities.
CONVERSION AND EXCHANGE
Calpine may issue debt securities that are convertible into or exchangeable
for, and Energy Finance and Energy Finance II may issue debt securities that are
exchangeable for, common stock or preferred stock, property or cash, or a
combination of any of the foregoing. The terms, if any, on which debt securities
of any series will be convertible or exchangeable will be summarized in the
prospectus supplement relating thereto. Such terms may include provisions, as
applicable, for conversion or exchange, either on a mandatory basis, at the
option of the holder, or at the issuer's option, in which case the number of
shares of common stock or preferred stock to be received by the holders of the
debt securities would be calculated according to the factors and at such time as
summarized in the related prospectus supplement. The prospectus supplement will
also summarize certain of the material United States federal income tax
consequences applicable to any such convertible or exchangeable debt securities.
REOPENING OF ISSUE
The issuer may, from time to time, reopen an issue of debt securities and
issue additional debt securities with the same terms (including maturity date
and interest rate) as debt securities issued on an earlier date. After such
additional debt securities are issued, they will be fungible with the debt
securities issued on the earlier date to the extent specified in the applicable
prospectus supplement.
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RANKING
Any senior debt securities issued by Calpine will be unsecured and will be
effectively subordinated to all of Calpine's existing and future secured
indebtedness to the extent of the value of the assets securing that
indebtedness, including, without limitation, indebtedness under (a) the Credit
Agreement, dated as of March 8, 2002, among Calpine, as borrower, certain
commercial lending institutions, as lenders, The Bank of Nova Scotia and
Bayerische Landesbank Girozentrale, as lead arrangers and bookrunners on the
revolving facility, Salomon Smith Barney Inc. and Deutsche Banc Alex. Brown
Inc., as lead arrangers and bookrunners on the Term B facility, The Bank of Nova
Scotia and Citicorp USA, Inc., as joint administrative agents, The Bank of Nova
Scotia, as funding agent, Bank of America, National Association, and Credit
Suisse First Boston, Cayman Islands Branch, as lead arrangers and syndication
agents for the revolving facility, and TD Securities (USA) Inc., as lead
arranger for the revolving facility, and (b) the Amended and Restated Credit
Agreement, dated as of May 23, 2000, as amended, among Calpine, as borrower, the
Bank of Nova Scotia, as lead arranger and administrative agent, Bayerische
Landesbank Girozentrale, as co-arranger and syndication agent, and the various
commercial lending institutions named therein as lenders, in each case as such
credit agreement may be amended, refinanced, replaced, renewed or extended from
time to time. Indebtedness under the March 8, 2002 credit agreement and the May
23, 2000 credit agreement is secured by, among other things, Calpine's pledge of
all of the stock of its wholly-owned subsidiaries Calpine CCFC Holdings, Inc.,
Calpine Natural Gas GP, Inc. and Calpine Natural Gas Holdings, Inc., which
subsidiaries own, directly or indirectly, all of Calpine's U.S. and Canadian
natural gas resources. Holders of existing or future secured indebtedness,
including indebtedness under the March 8, 2002 credit agreement and the May 23,
2000 credit agreement, will have claims with respect to assets constituting
collateral that are prior to the claims of the holders of the senior debt
securities.
Calpine currently conducts substantially all its operations through its
subsidiaries, and its subsidiaries generate substantially all of Calpine's
operating income and cash flow. As a result, distributions or advances from its
subsidiaries are the principal source of funds necessary to meet Calpine's debt
service obligations. Contractual provisions or laws, as well as its
subsidiaries' financial condition and operating requirements, may limit
Calpine's ability to obtain cash from its subsidiaries that Calpine requires to
pay its debt service obligations, including payments on any senior debt
securities issued by Calpine. In addition, holders of any senior debt securities
issued by Calpine will have a junior position to the claims of creditors of
Calpine's subsidiaries on the assets and earnings of such subsidiaries. As of
December 31, 2001, Calpine's subsidiaries had $3.4 billion of project finance
debt, to which any senior debt securities issued by Calpine will be structurally
subordinated.
Any senior debt securities issued by Calpine will rank equal in right of
payment with all of Calpine's existing and future unsecured and unsubordinated
indebtedness, including, without limitation, Calpine's obligations under its
outstanding senior debt securities, including Calpine's 7 5/8% Senior Notes Due
2006, Calpine's 7 3/4% Senior Notes Due 2009, Calpine's 7 7/8% Senior Notes Due
2008, Calpine's 8 3/4% Senior Notes Due 2007, Calpine's 10 1/2% Senior Notes Due
2006, Calpine's 8 1/4% Senior Notes Due 2005, Calpine's 8 5/8% Senior Notes Due
2010, Calpine's 8 1/2% Senior Notes Due 2011, Calpine's 4% Convertible Senior
Notes Due 2006 and Calpine's Zero-Coupon Convertible Debentures Due 2021 and (c)
indebtedness of its subsidiaries guaranteed by Calpine, including the 8 1/2%
Senior Notes Due 2008 and the 8 3/4% Senior Notes Due 2007 issued by Energy
Finance, and the 8 7/8% Senior Notes Due 2011 and 8 3/8% Senior Notes Due 2008
issued by Energy Finance II. As of December 31, 2001, Calpine had approximately
$9.0 billion of indebtedness outstanding, none of which was secured, that would
rank equally with the senior debt securities. In addition, Calpine currently can
borrow up to $1.4 billion under the revolving credit facilities under the March
8, 2002 credit agreement and the May 23, 2000 credit agreement, and, assuming
that Calpine meets certain borrowing conditions, it will be able to borrow up to
an additional $0.6 billion in term loans under the March 8, 2002 credit
agreement, all of which will be secured. As of April 1, 2002, Calpine had $250
million outstanding under the revolving credit facilities under such credit
agreements.
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Unless otherwise provided in the prospectus supplement relating to such
securities, debt securities issued by Energy Finance or Energy Finance II will
be:
- senior unsecured obligations of Energy Finance or Energy Finance II, as
applicable, and will rank equally and ratably with all of its other
unsecured and unsubordinated indebtedness; and
- guaranteed on a senior unsecured basis by Calpine, which guarantee will
rank equally and ratably with all other unsecured and unsubordinated
indebtedness of Calpine, including Calpine's indebtedness described above
including the other indebtedness of its subsidiaries guaranteed by
Calpine.
The subordinated debt securities issued by Calpine will be subordinate and
junior in right of payment to all of Calpine's senior indebtedness, including
any guarantee by Calpine of senior debt securities of Energy Finance and Energy
Finance II. The subordinated debt securities of Energy Finance and Energy
Finance II will be subordinate and junior in right of payment to all of their
respective senior indebtedness.
GUARANTEES
Calpine will fully and unconditionally guarantee to each holder of a debt
security issued by Energy Finance or Energy Finance II and authenticated and
delivered by the trustee the due and punctual payment of the principal of, and
any premium and interest on, the debt security, when and as it becomes due and
payable, whether at maturity, upon acceleration, by call for redemption,
repayment or otherwise in accordance with the terms of the debt securities and
of the related indenture. The claims of holders under the guarantee by Calpine
will be effectively subordinated to the claims of creditors of Calpine's
subsidiaries other than Energy Finance or Energy Finance II, as applicable.
Under its guarantee agreement, Calpine will:
- agree that, if an event of default occurs under the debt securities, its
obligations under the guarantees will be absolute and unconditional and
will be enforceable irrespective of any invalidity, irregularity or
unenforceability of any series of the debt securities or the related
indenture or any supplement thereto, and
- waive its right to require the trustee or the holders to pursue or
exhaust their legal or equitable remedies against Energy Finance or
Energy Finance II before exercising their rights under the guarantees.
COVENANTS
The indentures and the guarantee shall provide that, except as otherwise
set forth under "-- Defeasance," below, for so long as any debt securities
remain outstanding or any amount remains unpaid on any of the debt securities,
the issuer and the guarantor, if any, will comply with the applicable terms of
the covenants contained in the indentures or the guarantee, as applicable,
including the following:
PAYMENT OF SECURITIES
The issuer will duly and punctually pay the principal of and interest on
the debt securities in accordance with the terms of the debt securities and the
indenture.
MAINTENANCE OF OFFICE OR AGENCY
The issuer will maintain in the Borough of Manhattan, the City of New York,
and such other locations as may be required or specified in any supplement, an
office or agency where the debt securities may be paid and notices and demands
to or upon the issuer in respect of the debt securities and the indentures may
be served and an office or agency where debt securities may be surrendered for
registration of transfer or exchange. The issuer will give prompt written notice
to the trustee of the location, and any change in the location, of any such
office or agency. If at any time the issuer shall fail to maintain any
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required office or agency or shall fail to furnish the trustee with the address
of any required office or agency, all presentations, surrenders, notices and
demands may be served at the office of the trustee.
FURTHER ASSURANCES
The issuer, the guarantor, if any, and the trustee will execute and deliver
all documents, instruments and agreements, and do all other acts and things as
may be reasonably required, to enable the trustee to exercise and enforce its
rights under the indentures and under the documents, instruments and agreements
required under the indentures and to carry out the intent of the indentures.
LIMITATION ON SALE/LEASEBACK TRANSACTIONS
Under the terms of the indentures, the issuer and the guarantor, if any,
shall not, and shall not permit any of their respective Restricted Subsidiaries
to, enter into any Sale/Leaseback Transaction unless:
(a) the issuer or the guarantor, as the case may be, or the Restricted
Subsidiary would be entitled to create a Lien on the property or asset
subject to the Sale/Leaseback Transaction securing Indebtedness in an
amount equal to the Attributable Debt with respect to that transaction
without equally and ratably securing the debt securities pursuant to the
covenant entitled "Limitation on Liens"; or
(b) the net proceeds of the sale are at least equal to the fair value
(as determined by board of directors of the issuer or the guarantor, as the
case may be) of the property or asset subject to the Sale/Leaseback
Transaction and the issuer or the guarantor, as the case may be, or the
Restricted Subsidiary applies or causes to be applied, within 180 days of
the effective date of the Sale/ Leaseback Transaction, an amount in cash
equal to the net proceeds of the sale to the retirement of Indebtedness of
the issuer or the guarantor, as the case may be, or of the Restricted
Subsidiary.
In addition to the transactions permitted pursuant to the above clauses (a)
and (b), the issuer and the guarantor, if any, or any of their respective
Restricted Subsidiaries may enter into a Sale/Leaseback Transaction as long as
the sum of:
- the Attributable Debt with respect to that Sale/Leaseback Transaction and
all other Sale/ Leaseback Transactions entered into pursuant to this
provision; plus
- the amount of outstanding Indebtedness secured by Liens incurred pursuant
to the final provision to the covenant described under "-- Limitation on
Liens," below;
does not exceed 15% of Consolidated Net Tangible Assets as determined based on
Calpine's consolidated balance sheet as of the end of the most recent fiscal
quarter for which financial statements are available. In addition, any
Restricted Subsidiary of the issuer or the guarantor, if any, may enter into a
Sale/ Leaseback Transaction with respect to property or assets owned by that
Restricted Subsidiary, so long as the proceeds of that Sale/Leaseback
Transaction are used to acquire, develop, construct, or repay (within 365 days
of the commencement of full commercial operation of any such property or assets)
Indebtedness incurred to acquire, develop or construct property or assets of any
Restricted Subsidiary.
As used in the indentures, the following terms are defined as follows:
"Attributable Debt" means, as at the time of determination, the present
value (discounted at the rate of interest set forth or implicit in terms of the
lease (or, if not practicable to determine that rate, the weighted average rate
of interest borne by the debt securities outstanding hereunder (calculated, in
the event of the issuance of any original issue discount debt securities, based
on the computed interest rate with respect thereto)), compounded annually) of
the total obligations of the lessee for rental payments during the remaining
term of the lease included in such Sale/Leaseback Transaction (including any
period for which such lease has been extended).
"Capitalized Lease Obligations" of a person means the rental obligations
under any lease of any property (whether real, personal or mixed) of which the
discounted present value of the rental obligations
24
of that person as lessee, in conformity with generally accepted accounting
principals, is required to be capitalized on the balance sheet of that person;
the stated maturity of any such lease shall be the date of the last payment of
rent or any other amount due under such lease prior to the first date upon which
such lease may be terminated by the lessee without payment of a penalty.
"Consolidated Current Liabilities" means, as of any date of determination,
the aggregate amount of consolidated liabilities of Calpine and Calpine's
consolidated Restricted Subsidiaries which may properly be classified as current
liabilities (including taxes accrued as estimated), after eliminating (i) all
inter-company items between Calpine and its subsidiaries and (ii) all current
maturities of long-term Indebtedness, all as determined in accordance with
generally accepted accounting principles.
"Consolidated Net Tangible Assets" means, as of any date of determination,
the total amount of Calpine's consolidated assets (less accumulated depreciation
or amortization, allowances for doubtful receivables, other applicable reserves
and other properly deductible items) under generally accepted accounting
principles which would appear on Calpine's consolidated balance sheet,
determined in accordance with generally accepted accounting principles, and
after giving effect to purchase accounting and after deducting therefrom, to the
extent otherwise included, the amounts of:
(a) Consolidated Current Liabilities;
(b) minority interests in Calpine's consolidated subsidiaries held by
persons other than Calpine or any of its Restricted Subsidiaries;
(c) excess of cost over fair value of assets of businesses acquired,
as determined in good faith by Calpine's board of directors;
(d) any revaluation or other write-up in value of assets subsequent to
December 31, 1993 as a result of a change in the method of valuation in
accordance with generally accepted accounting principles;
(e) unamortized debt discount and expenses and other unamortized
deferred charges, goodwill, patents, trademarks, service marks, trade
names, copyrights, licenses, organization or developmental expenses and
other intangible items;
(f) treasury stock; and
(g) any cash set apart and held in a sinking or other analogous fund
established for the purpose of redemption or other retirement of capital
stock to the extent such obligation is not reflected in Consolidated
Current Liabilities.
"Indebtedness" of any person means, without duplication:
(a) the principal of and premium (if any premium is then due and
owing) in respect of indebtedness of that person for money borrowed;
(b) all Capitalized Lease Obligations of that person;
(c) all obligations of that person for the reimbursement of any
obligor on any letter of credit, banker's acceptance or similar credit
transaction, other than obligations with respect to letters of credit
securing obligations (other than obligations described in clauses (a) and
(b) above) entered into in the ordinary course of business of that person
to the extent such letters of credit are not drawn upon or, if and to the
extent drawn upon, that drawing is reimbursed no later than the tenth
business day following receipt by that person of a demand for reimbursement
following payment on the letter of credit;
(d) all obligations of the type referred to in clauses (a) through (c)
above of other persons and all dividends of other persons for the payment
of which, in either case, that person is responsible or liable, directly or
indirectly, as obligor, guarantor or otherwise; and
25
(e) all obligations of the type referred to in clauses (a) through (d)
above of other persons secured by any Lien on any property or asset of that
person (whether or not such obligation is assumed by that person), the
amount of the obligation on any date of determination being deemed to be
the lesser of the value of the property or assets or the amount of the
obligation so secured.
The amount of Indebtedness of any person at any date shall be, with respect
to unconditional obligations, the outstanding balance at such date of all such
obligations as described above and, with respect to any contingent obligations
at such date, the maximum liability determined by that person's board of
directors, in good faith, as in light of the facts and circumstances existing at
the time, reasonably likely to be incurred upon the occurrence of the
contingency giving rise to such obligation.
"Lien" means any mortgage, lien, pledge, charge, or other security interest
or encumbrance of any kind (including any conditional sale or other title
retention agreement and any lease in the nature thereof).
"Preferred Stock," as applied to the capital stock of any corporation,
means capital stock of any class or classes (however designated) which is
preferred as to the payment of dividends, or as to the distribution of assets
upon any voluntary or involuntary liquidation or dissolution of such
corporation, over shares of capital stock of any other class of such
corporation.
"Restricted Subsidiary" means any subsidiary of a person that is not
designated an Unrestricted Subsidiary by that person's board of directors.
"Sale/Leaseback Transaction" means an arrangement relating to property now
owned or later acquired whereby a person or one of such person's subsidiaries
transfers that property to another person and then leases it back from that
person, other than leases for a term of not more than 36 months or leases
between such person and a wholly owned subsidiary of such person or between such
person's wholly owned subsidiaries.
"Senior Indebtedness" means all indebtedness incurred, assumed or
guaranteed by a person, whether or not represented by bonds, debentures, notes
or other securities, for money borrowed, and any deferrals, renewals or
extensions or refunding of any such indebtedness, unless in the instrument
creating or evidencing any such indebtedness or pursuant to which the same is
outstanding it is specifically stated, at or prior to the time such person
becomes liable in respect thereof, that any such indebtedness or such deferral,
renewal, extension or refunding thereof is not Senior Indebtedness.
"Subordinated Security" means any security issued under an Indenture which
is designated as a Subordinated Debt Security.
"Unrestricted Subsidiary" means (i) any subsidiary that at the time of
determination shall be designated an Unrestricted Subsidiary by a person's board
of directors in the manner provided below and (ii) any subsidiary of an
Unrestricted Subsidiary. A person's board of directors may designate any
subsidiary (including any newly acquired or newly formed subsidiary) to be an
Unrestricted Subsidiary unless such subsidiary owns any capital stock of, or
owns or holds any Lien on any property of, that person or any other subsidiary
of that person that is not a subsidiary of the subsidiary to be so designated,
so long as the subsidiary to be designated an Unrestricted Subsidiary and all
other subsidiaries previously so designated at the time of any determination
hereunder shall, in the aggregate, have total assets not greater than 5% of
Consolidated Net Tangible Assets as determined based on Calpine's consolidated
balance sheet as of the end of the most recent financial quarter for which
financial statements are available. A person's board of directors may designate
any Unrestricted Subsidiary to be a Restricted Subsidiary; provided, however,
that immediately after giving effect to that designation no Default or Event of
Default under the indentures shall have occurred and be continuing. Any such
designation by a person's board of directors shall be evidenced to the trustee
by promptly filing with the trustee a copy of the board resolution giving effect
to the designation and a certificate signed by two of that person's officers
certifying that the designation complied with these provisions. However, the
failure to file the resolution and/or certificate with the trustee shall not
impair or affect the validity of the designation.
26
LIMITATION ON LIENS
Under the terms of the indentures, the issuer and the guarantor, if any,
shall not, and shall not permit any of their respective Restricted Subsidiaries
to, incur any Lien upon any properties (including capital stock) without
effectively providing that the outstanding debt securities shall be secured
equally and ratably with (or prior to) that Indebtedness, so long as that
Indebtedness shall be so secured. The above restriction on Liens will not,
however, apply to:
(a)(1) Liens securing Indebtedness incurred to finance the
exploration, drilling, development, construction or purchase of or by, or
repairs, improvements or additions to, property or assets, which Liens may
include Liens on the capital stock of a Restricted Subsidiary or (2) Liens
incurred by any Restricted Subsidiary that does not own, directly or
indirectly, at the time of such original incurrence of such Lien under this
clause (2) any operating properties or assets securing Indebtedness
incurred to finance the exploration, drilling, development, construction or
purchase of or by or repairs, improvements or additions to, property or
assets of any Restricted Subsidiary that does not, directly or indirectly,
own any operating properties or assets at the time of such original
incurrence of such Lien, which Liens may include Liens on the capital stock
of one or more Restricted Subsidiaries that do not, directly or indirectly,
own any operating properties or assets at the time of such original
incurrence of such Lien, provided, however, that the Indebtedness secured
by any such Lien may not be issued more than 365 days after the later of
the exploration, drilling, development, completion of construction,
purchase, repair, improvement, addition or commencement of full commercial
operation of the property or assets being so financed;
(b) Liens existing on the date of issuance of a series of debt
securities, other than Liens relating to Indebtedness or other obligations
being repaid or Liens that are otherwise extinguished with the proceeds of
any offering of debt securities pursuant to the indenture;
(c) Liens on property, assets or shares of stock of a person at the
time that person becomes a subsidiary of the issuer or the guarantor, as
applicable; provided, however, that any such Lien may not extend to any
other property or assets owned by such issuer or guarantor or any of its
Restricted Subsidiaries;
(d) Liens on property or assets existing at the time that the issuer
or the guarantor, as the case may be, or one of its subsidiaries, acquires
the property or asset, including any acquisition by means of a merger or
consolidation with or into the issuer or the guarantor, as applicable, or
one of its subsidiaries; provided, however, that such Liens are not
incurred in connection with, or in contemplation of, that merger or
consolidation and provided, further, that the Lien may not extend to any
other property or asset owned by the issuer or the guarantor, as
applicable, or any of its Restricted Subsidiaries;
(e) Liens securing Indebtedness or other obligations of one of the
subsidiaries of the issuer or the guarantor, as the case may be, that is
owing to such issuer or guarantor or any of its Restricted Subsidiaries, or
Liens securing Indebtedness of the issuer or the guarantor, as the case may
be, or other obligations that are owing to one of the subsidiaries of such
issuer or guarantor;
(f) Liens incurred on assets that are the subject of a Capitalized
Lease Obligation to which the issuer or the guarantor, as the case may be,
or any of its subsidiaries is a party, which shall include Liens on the
stock or other ownership interest in one or more Restricted Subsidiaries of
such issuer or guarantor, leasing such assets;
(g) Liens to secure any refinancing, refunding, extension, renewal or
replacement (or successive refinancings, refundings, extensions, renewals
or replacements) as a whole, or in part, of any Indebtedness secured by any
Lien referred to in clauses (a), (b), (c), (d) and (f) above, provided,
however, that (1) such new Lien shall be limited to all or part of the same
property or assets that secured the original Lien (plus repairs,
improvements or additions to that property or assets and Liens on the stock
or other ownership interest in one or more Restricted Subsidiaries
beneficially owning that property or assets) and (2) the amount of
Indebtedness secured by such Lien is not increased,
27
other than by an amount necessary to pay fees and expenses, including
premiums, related to the refinancing, refunding, extension, renewal or
replacement of the Indebtedness; and
(h) Liens by which the debt securities are secured equally and ratably
with other Indebtedness pursuant to this covenant.
However, the issuer and the guarantor, if any, and any one or more of their
respective Restricted Subsidiaries may incur other Liens to secure Indebtedness
as long as the sum of:
- the lesser of (1) the amount of outstanding Indebtedness secured by Liens
incurred pursuant to this provision and (2) the fair market value of the
property securing that item of Indebtedness; plus
- the Attributable Debt with respect to all Sale/Leaseback Transactions
entered into pursuant to clause (a) described under the covenant
"Limitation on Sale/Leaseback Transactions";
does not exceed 15% of Consolidated Net Tangible Assets as determined based on
Calpine's consolidated balance sheet as of the end of the most recent fiscal
quarter for which financial statements are available.
MERGER, CONSOLIDATION, SALE OR LEASE
Nothing in the indentures shall prevent the issuer and the guarantor, if
any, from consolidating with or merging into another corporation or conveying,
transferring or leasing their respective properties and assets substantially as
an entirety to any person, provided that (a) the successor entity assumes the
obligations of the issuer or the guarantor, as the case may be, on each series
of debt securities outstanding and (b) immediately after giving effect to the
transaction, no Event of Default, and no event which, after notice or lapse of
time or both, would become an Event of Default, shall have occurred and be
continuing.
SEC REPORTS
Calpine is subject to the informational reporting requirements of Sections
13 and 15(d) under the Securities Exchange Act and, in accordance with those
requirements, files certain reports and other information with the SEC. See
"Where You Can Find More Information; Documents Incorporated by Reference,"
above. In addition, if Sections 13 and 15(d) cease to apply to Calpine, Calpine
will covenant in the indentures to file those reports and information with the
trustee, and to mail such reports and information to holders of the debt
securities at their registered addresses, for so long as any debt securities
remain outstanding.
COMPLIANCE CERTIFICATES
The indentures will require that the issuer and the guarantor, if any, file
annually with the trustee a certificate describing any "Default," which is
defined in the indentures as any event which is, or after notice or passage of
time or both would be, an Event of Default, by the issuer or the guarantor, as
the case may be, in the performance of any conditions or covenants under the
indentures and the status of any such Default. The issuer and the guarantor, if
any, also must give the trustee written notice within 30 days of the occurrence
of certain Defaults under the indentures that could mature into Events of
Default, as described under the caption "-- Events of Default," below.
EVENTS OF DEFAULT
"Events of Default" are defined in the indentures with respect to any
series of debt securities as any of the following:
(a) default for 30 days in payment of any interest installment due and
payable on any debt securities of such series;
(b) default in payment of principal or premium, if any, when due on
the debt securities of such series;
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(c) default in the making of any sinking fund payment or analogous
obligation on the debt securities of such series;
(d) material default in performance by the issuer or the guarantor, if
any, of any other covenants or agreements in respect of the debt securities
of such series contained in the applicable indenture or the debt securities
for 60 days after written notice to the issuer and the guarantor, if any,
or to the issuer, the guarantor, if any, and the trustee by the holders of
at least 25% in aggregate principal amount of the debt securities of such
series then outstanding;
(e) there shall have occurred a default in the payment of the
principal or premium, if any, of any bond, debenture, note or other
evidence of indebtedness of the issuer or the guarantor, if any, in each
case for money borrowed, or in the payment of principal or premium, if any,
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 issuer or the guarantor, if any, for money borrowed
(including any other series of debt securities issued under the indenture),
which default for payment of principal or premium, if any, is 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 business days after the expiration of any grace period or extension
of the time for payment applicable thereto;
(f) certain events of bankruptcy, insolvency and reorganization with
respect to the issuer or guarantor, if any; and
(g) the guarantee, if any, ceases to be in full force and effect
(other than in accordance with terms of the guarantee agreement) or the
guarantor denies or disaffirms its obligations under the guarantee.
An Event of Default under one series of debt securities does not
necessarily constitute an Event of Default under any other series of debt
securities.
The indentures provide that if an Event of Default occurs and is continuing
with respect to any series of debt securities, either the trustee or the
registered holders of at least 25% in aggregate principal amount of that series
of debt securities, may declare the principal amount of those debt securities
and any accrued and unpaid interest on those debt securities to be due and
payable immediately. 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 those debt securities have been cured (other than the
nonpayment of principal of such debt securities which has become due solely by
reason of the declaration of acceleration) then the declaration of acceleration
shall be automatically annulled and rescinded.
The indentures will require that the issuer and the guarantor, if any, file
annually with the trustee a certificate describing any Default by the issuer or
the guarantor, as the case may be, in the performance of any conditions or
covenants that has occurred under the indentures and its status. See
"-- Covenants -- Compliance Certificates," above. The issuer and the guarantor,
if any, must give the trustee written notice within 30 days of any Default under
the indentures that could mature into an Event of Default described in clause
(d), (e) or (f).
The trustee will be entitled under the indentures, 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
indentures at the direction of the registered holders of the debt securities or
which requires the trustee to expend or risk its own funds or otherwise incur
any financial liability. The indentures will also provide that the registered
holders of a majority in principal amount of the outstanding debt securities of
any series issued under any indenture 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 that series of debt
securities. The trustee, however, may refuse to follow any such direction that
conflicts with law or such indenture, is unduly prejudicial to the rights of
other registered holders of that series of debt securities, or would involve the
trustee in personal liability.
29
The indentures will provide 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 any indenture within 90 days of
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 OF THE INDENTURES
The issuer, the guarantor, if any, and the trustee may amend or supplement
the indentures, including any guarantee agreement, if the holders of a majority
in principal amount of the outstanding debt securities of each series of debt
securities affected by the amendment or supplement consent to it, except that no
amendment or supplement may, without the consent of each affected registered
holder of that series:
- reduce the amount of principal the issuer has to repay or change the date
of maturity;
- reduce the rate or change the time of payment of interest;
- change the currency of payment;
- modify any redemption or repurchase right to the detriment of the holder;
- reduce the percentage of the aggregate principal amount of debt
securities needed to consent to an amendment or supplement;
- change the provisions of the indentures relating to waiver of past
defaults, rights of registered holders of the debt securities to receive
payments or the provisions relating to amendments of the indentures that
require the consent of registered holders of each affected series; or
- release the guarantee, if any, except in compliance with the terms of the
guarantee agreement and related indenture.
ACTIONS BY HOLDERS
A holder of any series of debt securities may not pursue any remedy with
respect to the indentures or the debt securities of such series (except a
registered holder of a series of debt securities may bring an action for payment
of overdue principal, premium, if any, or interest on that series), unless:
- the registered holder has given notice to the trustee of such series of a
continuing Event of Default;
- registered holders of at least 25% in principal amount of that series of
debt securities have made a written request to the trustee of such series
to pursue such remedy;
- such registered holder or holders have offered the trustee of such series
security or indemnity reasonably satisfactory to the trustee against any
loss, liability or expense;
- the trustee of such series has not complied with such request within 60
days of such request and offer; and
- the registered holders of a majority in principal amount of that series
of debt securities have not given the trustee of such series an
inconsistent direction during that 60-day period.
DEFEASANCE, DISCHARGE AND TERMINATION
DEFEASANCE AND DISCHARGE
Unless otherwise provided in the applicable indenture and described in the
applicable prospectus supplement, the issuer may discharge the issuer and the
guarantor, if any, from any and all obligations in respect of a series of debt
securities, and the provisions of the related indenture will no longer be in
effect with respect to that series of debt securities (except for, among other
matters, certain obligations to register the transfer or exchange of those debt
securities, to replace stolen, lost or mutilated debt securities,
30
to maintain paying agencies and to hold monies for payment in trust, and the
rights of holders of that series to receive payments of principal, premium, if
any, and interest), on the 123rd day after the date of the deposit with the
trustee, in trust, of money or U.S. Government Obligations that, through the
payment of interest, principal and premium, if any, in respect thereof in
accordance with their terms, will provide money, or a combination thereof, in an
amount sufficient to pay the principal, premium, if any, and interest on that
series of debt securities, when due in accordance with the terms of that
indenture and those debt securities. Such a trust may only be established if,
among other things,
(a) the issuer has delivered to the trustee either:
- an opinion of counsel (who may not be an employee of ours) to the
effect that registered holders of that series will not recognize
income, gain or loss for federal income tax purposes as a result of
such deposit, defeasance and discharge and will be subject to federal
income tax on the same amount and in the same manner and at the same
times as would have been the case if such deposit, defeasance and
discharge had not occurred, which opinion of counsel must refer to and
be based upon a ruling of the Internal Revenue Service or a change in
applicable federal income tax law occurring after the date of that
indenture; or
- a ruling of the Internal Revenue Service to such effect; and
(b) no Default under the indenture with respect to that series shall have
occurred and be continuing on the date of such deposit or during the period
ending on the 123rd day after such date of deposit and such deposit shall not
result in or constitute a Default or result in a breach or violation of, or
constitute a default under, any other agreement or instrument to which the
issuer or the guarantor, if any, is a party or by which the issuer or the
guarantor, if any, is bound.
"U.S. Government Obligations" are defined under the indentures as
securities that are (x) direct obligations of the United States for the payment
of which its full faith and credit is pledged or (y) obligations of a person
controlled or supervised by and acting as an agency or instrumentality of the
United States the payment of which is unconditionally guaranteed as a full faith
and credit obligation by the United States and which, in either case, are not
callable or redeemable before their maturity.
DEFEASANCE OF COVENANTS AND CERTAIN EVENTS OF DEFAULT
In addition, unless otherwise provided in the applicable indenture and
described in the applicable prospectus supplement, with respect to a series of
debt securities issued under an indenture, the provisions of that indenture
described under "-- Covenants -- Limitation on Liens," above, and
"-- Covenants -- Limitation on Sale/Leaseback Transactions," above, will no
longer be in effect, clauses (c) (with respect to such covenants) and (d) under
"-- Events of Default," above, shall be deemed not to be Events of Default under
that indenture, and the provisions described herein under "-- Ranking," above,
shall not apply, upon the deposit with the trustee, in trust, of money or U.S.
Government Obligations that through the payment of interest and principal in
respect thereof in accordance with their terms will provide money in an amount
sufficient to pay the principal, premium, if any, and interest on that series of
debt securities when due in accordance with the terms of that indenture. Such a
trust may only be established if, among other things, the provisions described
in clause (b) of the immediately preceding paragraph have been satisfied and the
issuer has delivered to the trustee an opinion of counsel (who may not be an
employee of ours) to the effect that the registered holders of that series will
not recognize income, gain or loss for federal income tax purposes as a result
of such deposit and defeasance, and will be subject to federal income tax on the
same amount and in the same manner and at the same times as would have been the
case if such deposit and defeasance had not occurred.
In the event the issuer exercises its option not to comply, or to discharge
the guarantor, if any, from compliance, with the covenants and certain other
provisions of an indenture with respect to a series of debt securities as
described in the immediately preceding paragraph, and that series of debt
securities are declared due and payable because of the occurrence of an Event of
Default that remains applicable, while the amount of money or U.S. Government
Obligations on deposit with the trustee will be sufficient to pay
31
principal of and interest on that series on the respective dates on which such
amounts are due, they may not be sufficient to pay amounts due on that series at
the time of the acceleration resulting from such Event of Default. However, the
issuer and the guarantor, if any, shall remain liable for such payments.
TERMINATION OF OBLIGATIONS IN CERTAIN CIRCUMSTANCES
Unless otherwise provided in the applicable indenture and described in the
applicable prospectus supplement, the issuer may discharge the issuer and the
guarantor, if any, from any and all obligations in respect of a series of debt
securities and the provisions of the related indenture will no longer be in
effect with respect to that series of debt securities (except to the extent
provided under "-- Defeasance and Discharge," above) if that series of debt
securities mature within one year and the issuer deposits with the trustee, in
trust, money or U.S. Government Obligations that, through the payment of
interest and principal in respect thereof in accordance with their terms, will
provide money in an amount sufficient to pay the principal of, premium, if any,
and accrued interest on that series of debt securities when due in accordance
with the terms of that indenture and the debt securities. Such a trust may only
be established if, among other things,
- no Default under the indenture with respect to that series shall have
occurred and be continuing on the date of such deposit;
- such deposit will not result in or constitute a Default or result in a
breach or violation of, or constitute a Default under, any other
agreement or instrument to which the issuer or the guarantor, if any, is
a party or by which the issuer or the guarantor, if any, is bound; and
- the issuer has delivered to the trustee an opinion of counsel stating
that such conditions have been complied with.
Pursuant to this provision, the issuer is not required to deliver an
opinion of counsel to the effect that registered holders of that series will not
recognize income, gain or loss for U.S. federal income tax purposes as a result
of such deposit and termination, and there is no assurance that registered
holders of that series would not recognize income, gain or loss for U.S. federal
income tax purposes as a result thereof or that they would be subject to U.S.
federal income tax on the same amount and in the same manner and at the same
times as would have been the case if such deposit and termination had not
occurred.
UNCLAIMED MONEY
Subject to any applicable abandoned property law, the indentures will
provide that the trustee will pay to the issuer upon request any money held by
the trustee for the payment of principal, premium, if any, or interest that
remains unclaimed for two years. After payment to the issuer, registered holders
of debt securities entitled to such money must look to the issuer for payment as
general creditors.
CONCERNING THE TRUSTEE AND PAYING AGENT
Wilmington Trust Company will initially act as Trustee and paying agent for
the debt securities. 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;
- an indenture with Energy Finance, dated as of April 25, 2001, as amended
and restated on October 16, 2001; and
- an indenture with Energy Finance II, dated as of October 18, 2001.
A number of Calpine's series of debt securities are presently outstanding
under the first two indentures above and additional securities of those series
and additional series may be issued under the second indenture above. Two series
of Energy Finance's debt securities, guaranteed by Calpine, are
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currently outstanding under the third indenture above and additional debt
securities of that series and other series, each guaranteed by Calpine, may be
offered under that indenture. Two series of Energy Finance II's debt securities,
guaranteed by Calpine, are currently outstanding under the fourth indenture
above and additional debt securities of those series and other series, each
guaranteed by Calpine, may be offered under that indenture. We may have in the
future other relationships with Wilmington Trust Company.
We will describe in the prospectus supplement any material business and
other relationships (including additional trusteeships), other than the
trusteeship under the indentures, between us and any of our affiliates, on the
one hand, and each trustee and paying agent under the indentures, on the other
hand.
The holders of a majority in principal amount of the outstanding senior
notes will have the right to direct the time, method and place of conducting any
proceeding for exercising any remedy available to the trustee, subject to
certain exceptions. If an event of default occurs (and is not cured), the
trustee will be required, in the exercise of its power, to use the degree of
care of a prudent man in the conduct of his own affairs. Subject to such
provisions, the trustee will be under no obligation to exercise any of its
rights or powers under the indenture at the request of any holder of senior
notes, unless such holder shall have offered to the trustee security and
indemnity satisfactory to the trustee against any loss, liability or expense and
then only to the extent required by the terms of the indenture.
The registered office of the trustee is Rodney Square North, 1100 North
Market Street, Wilmington, Delaware.
GOVERNING LAW
The laws of the State of New York will govern the indentures and each
series of debt securities.
BOOK-ENTRY SYSTEM
Unless otherwise specified in the prospectus supplement, each series of
debt securities will be represented by one or more global notes registered in
the name of a nominee of The Depository Trust Company ("DTC"), as depositary.
Upon the issuance of the global notes, DTC or its custodian will credit, on its
internal system, the respective principal amount of the individual beneficial
interests represented by the global notes to the accounts of persons who have
accounts with DTC. Each account initially will be designated by or on behalf of
the underwriters, dealer or agents. Ownership of beneficial interests in a
global note will be limited to persons who have accounts with DTC
("participants") or persons who hold interests through participants. Ownership
of beneficial interests in the global notes will be shown on, and transfers of
their ownership may be effected only through, records maintained by DTC or its
nominee (with respect to interests of participants) and the records of
participants (with respect to interests of persons other than participants). DTC
currently limits the maximum denomination of any single global note to
$400,000,000.
So long as DTC or its nominee is the registered owner or holder of the
global notes, DTC or such nominee, as the case may be, will be considered the
sole owner or holder of the debt securities represented by such global notes for
all purposes under the applicable indenture and the debt securities. No
beneficial owner of an interest in the global notes will be able to transfer
that interest except in accordance with DTC's applicable procedures, in addition
to those provided for under the indenture.
Payments of the principal of, and interest on, the global notes will be
made to DTC or its nominee, as the case may be, as the registered owner of the
global notes. Neither we, the trustee or any paying agent will have any
responsibility or liability for any aspect of the records relating to or
payments made on account of beneficial ownership interests in the global notes
or for maintaining, supervising or reviewing any records relating to such
beneficial ownership interests.
We expect that DTC or its nominee, upon receipt of any payment of principal
or interest in respect of the global notes will credit participants' accounts
with payments in amounts proportionate to their respective beneficial interests
in the principal amount of the global notes as shown on the records of DTC or
its nominee. We also expect that payments by participants to owners of
beneficial interests in the global notes held through such participants will be
governed by standing instructions and customary practices, as
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is now the case with securities held for the accounts of customers registered in
the names of nominees for such customers. Such payments will be the
responsibility of such participants.
Transfers between participants in DTC will be effected in the ordinary way
in accordance with DTC rules and will be settled in same-day funds. If a holder
requires physical delivery of a certificated note for any reason, including to
sell debt securities to persons in states which require delivery of certificated
notes or to pledge their debt securities, such holder must transfer its interest
in the global notes in accordance with the normal procedures of DTC and the
procedures set forth in the indenture.
DTC has advised us that it will take any action permitted to be taken by a
holder of a series of debt securities (including the presentation of debt
securities for exchange as described below) only at the direction of one or more
participants to whose account the DTC interests in the global notes relating to
such series is credited and only in respect of such portion of the aggregate
principal amount of debt securities as to which such participant or participants
has or have given such direction. However, if there is an Event of Default under
a series of debt securities, DTC will exchange the global notes relating to such
series for certificated notes which it will distribute to its participants.
DTC has advised us as follows: DTC is a limited purpose trust company
organized under the laws of the State of New York, a "banking organization"
within the meaning of New York Banking Law, a member of the Federal Reserve
System, a "clearing corporation" within the meaning of the Uniform Commercial
Code and a "Clearing Agency" registered pursuant to the provisions of Section
17A of the Securities Exchange Act. DTC was created to hold securities for its
participants and facilitate the clearance and settlement of securities
transactions between participants through electronic book-entry changes in
accounts of its participants, thereby eliminating the need for physical movement
of certificates. Participants include securities brokers and dealers, banks,
trust companies and clearing corporations and certain other organizations.
Indirect access to the DTC system is available to "indirect participants" such
as banks, brokers, dealers and trust companies that clear through or maintain a
custodial relationship with a participant, either directly or indirectly.
Although DTC has agreed to the foregoing procedures in order to facilitate
transfers of interest in the global notes among participants of DTC, it is under
no obligation to perform or continue to perform such procedures, and such
procedures may be discontinued at any time. Neither we nor the trustee will have
any responsibility for the performance by DTC or its respective participants or
indirect participants of their respective obligations under the rules and
procedures governing their operations.
CERTIFICATED NOTES
If DTC is at any time unwilling or unable to continue as a depositary for
the global notes and a successor depositary is not appointed by us within 90
days, or if the issuer otherwise chooses to issue definitive debt securities,
the issuer will issue certificated notes in exchange for the global notes. In
either instance, an owner of a beneficial interest in a global note will be
entitled to have debt securities equal in principal amount to such beneficial
interest registered in its name and will be entitled to physical delivery of
debt securities in definitive form. Debt securities in definitive form will be
issued in denominations of $1,000 and integral multiples of $1,000 and will be
issued in registered form only, without coupons. The issuer will maintain in the
Borough of Manhattan, The City of New York, one or more offices or agencies
where debt securities may be presented for payment and may be transferred or
exchanged. You will not be charged a fee for any transfer or exchange of your
debt securities, but the issuer may require payment of a sum sufficient to cover
any tax or other governmental charge payable in connection therewith.
SAME-DAY SETTLEMENT IN RESPECT OF GLOBAL NOTES
Global notes held by DTC will trade in DTC's Same-Day Funds Settlement
System until maturity and secondary market trading activity in the debt
securities will settle in immediately available funds. No assurance can be given
as to the effect, if any, of settlement in immediately available funds on the
trading activity in the debt securities.
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DESCRIPTION OF PURCHASE CONTRACTS
Calpine may issue purchase contracts for the purchase or sale of:
- debt or equity securities issued by us or securities issued by third
parties, a basket of such securities, an index or indices of such
securities or any combination of the above as specified in the applicable
prospectus supplement;
- currencies; or
- commodities.
Each purchase contract will entitle the holder thereof to purchase or sell,
and obligate us to sell or purchase, on specified dates, such securities,
currencies or commodities at a specified purchase price, which may be based on a
formula. We may, however, satisfy our obligations, if any, with respect to any
purchase contract by delivering the cash value of such purchase contract or the
cash value of the property otherwise deliverable or, in the case of purchase
contracts on underlying currencies, by delivering the underlying currencies.
The purchase contracts may require Calpine to make periodic payments to the
holders thereof or vice versa, which payments may be deferred to the extent set
forth in the applicable prospectus supplement, and may be unsecured or prefunded
on some basis. The purchase contracts may require the holders thereof to secure
their obligations in a manner specified in the applicable prospectus supplement.
Alternatively, purchase contracts may require holders to satisfy their
obligations thereunder when the purchase contracts are issued. Our obligation to
settle such pre-paid purchase contracts on the relevant settlement date may
constitute indebtedness. Accordingly, pre-paid purchase contracts will be issued
under an indenture.
The applicable prospectus supplement will describe the terms of the
purchase contracts, including the methods by which the holders may purchase or
sell such securities, currencies or commodities and any acceleration,
cancellation or termination provisions or other provisions relating to the
settlement of a purchase contract. The description in the prospectus supplement
will not necessarily be complete, and reference will be made to the purchase
contracts, and any other applicable documents or instruments relating to the
purchase contracts. Any such purchase contract, and any other document or
instrument relevant to a purchase contract, will be filed as an exhibit to, or
incorporated by reference in, the registration statement of which this
prospectus is a part at the time of the offering thereof. Material United States
federal income tax considerations applicable to the purchase contracts will also
be discussed in the applicable prospectus supplement.
DESCRIPTION OF UNITS
We may issue units comprised of one or more shares of common stock, shares
of preferred stock, debt securities, warrants, trust preferred securities or
debt obligations of third parties, including U.S. treasury securities, in any
combination. The applicable prospectus supplement will describe:
- the terms of the units and of the securities comprising the units,
including whether and under what circumstances the securities comprising
the units may be held or transferred separately;
- any provisions for the issuance, payment, settlement, transfer or
exchange of the units or of the securities comprising the units;
- certain material United States federal income tax considerations
applicable to the units; and
- the terms of any unit agreement governing the units.
The description in the prospectus supplement will not necessarily be
complete, and reference will be made to any unit, collateral or depositary
agreements relating to the units. Any such agreements, and any other document or
instrument relevant to the units, will be filed as an exhibit to, or
incorporated by
35
reference in, the registration statement of which this prospectus is a part at
the time of the offering thereof.
DESCRIPTION OF WARRANTS
The following is a general description of the warrants to which this
prospectus and any prospectus supplement may relate. The applicable prospectus
supplement will describe the specific terms of the securities warrants offered
through that prospectus supplement, as well as any general terms described in
this section that will not apply to those securities warrants.
Calpine may issue warrants for the purchase of Calpine's common stock,
preferred stock, debt securities, purchase contracts, units or any combination
thereof, as well as other types of warrants. Energy Finance and Energy Finance
II may each issue warrants for the purchase of their respective debt securities.
For purposes of this section, references to the "issuer" are to Calpine, in the
case of warrants issued by Calpine, to Energy Finance, in the case of warrants
issued by Energy Finance, and to Energy Finance II, in the case of warrants
issued by Energy Finance II.
Warrants may be issued independently or together with other securities, and
they may be attached to or separate from the other securities. Each series of
warrants will be issued under a separate warrant agreement that the issuer will
enter into with a bank or trust company that the issuer selects as warrant
agent, as detailed in the applicable prospectus supplement. The warrant agent
will act solely as an agent of the issuer in connection with the warrants and
will not assume any obligation, or agency or trust relationship, with the
holders of the warrants. The warrant agreements, including the forms of warrant
certificates, will be filed as an exhibit to, or incorporated by reference in,
the registration statement of which this prospectus is a part. You should refer
to the provisions of the warrant agreements for more specific information. Until
you exercise your warrants, you will not have any rights as a holder of the
underlying securities by virtue of your ownership of those warrants.
The prospectus supplement relating to a particular issue of warrants will
describe the terms of those warrants, including the following:
- the title of such warrants;
- the aggregate number of such warrants;
- the price or prices at which such warrants will be issued;
- the currency or currencies, including composite currencies, in which the
price of such warrants may be payable;
- the designation and terms of the securities purchasable upon exercise of
such warrants;
- the price at which and the currency or currencies, including composite
currencies, in which the securities purchasable upon exercise of such
warrants may be purchased;
- the date on which the right to exercise such warrants shall commence and
the date on which such right shall expire;
- whether such warrants will be issued in registered form or bearer form;
- if applicable, the minimum or maximum amount of such warrants that may be
exercised at any one time;
- if applicable, the designation and terms of the securities with which
such warrants are issued and the number of such warrants issued with each
such security;
- if applicable, the date on and after which such warrants and the related
securities will be separately transferable;
- information with respect to book-entry procedures, if any;
36
- a discussion of certain material United States federal income tax
considerations; and
- any other terms of such warrants, including terms, procedures and
limitations relating to the exchange and exercise of such warrants.
DESCRIPTION OF TRUST PREFERRED SECURITIES
The following is a general description of the trust preferred securities
and related guarantee to which this prospectus and any prospectus supplement may
relate. The applicable prospectus supplement will describe the specific terms of
the trust preferred securities and guarantee offered through that prospectus
supplement, as well as any general terms described in this section that will not
apply to those trust preferred securities.
Each of Trust IV and Trust V may issue from time to time trust preferred
securities representing undivided beneficial interests in the assets of the
trust under its declaration of trust, as it may be amended and restated from
time to time. Such trust preferred securities will be fully and unconditionally
guaranteed by Calpine. Each trust will use the proceeds from the sale of its
trust preferred securities to purchase debt securities from Calpine, which may
be distributed to holders of the trust preferred and trust common securities
either upon dissolution of the trust or upon the occurrence of events that will
be described in the applicable prospectus supplement. When a trust issues its
trust preferred securities, you and the other holders of the trust preferred
securities will own all of the issued and outstanding trust preferred securities
of the trust. Calpine will acquire all of the issued and outstanding trust
common securities of each trust, representing an undivided beneficial interest
in the assets of the trust of at least 3%.
The following description of trust preferred securities and related
guarantees is subject to the detailed provisions of the applicable declaration
of trust (as it may be amended and restated from time to time) and guarantee. A
copy of the applicable declaration of trust will be filed as an exhibit to, or
incorporated by reference in, the registration statement of which this
prospectus is a part at the time of the offering of securities pursuant thereto.
The form of the guarantee has been filed as an exhibit to the registration
statement of which this prospectus is a part. Whenever particular provisions of
a declaration of trust or guarantee, or terms defined therein, are referred to,
those provisions or definitions are incorporated by reference herein and such
descriptions are qualified in their entirety by such reference. We urge you to
read the declaration of trust and the guarantee because they, and not this
description, describe every detail of the terms of the trust preferred
securities and related guarantees.
THE TRUST PREFERRED SECURITIES
The prospectus supplement relating to the issuance of trust preferred
securities by a trust will include specific terms relating to the offering.
These terms will include some or all of the following:
- the designation of the trust preferred securities;
- the number of trust preferred securities issued by the trust;
- the annual distribution rate and any conditions upon which distributions
are payable, the distribution payment dates, the record dates for
distribution payments and the additional amounts, if any, that may be
payable with respect to the trust preferred securities;
- whether distributions will be cumulative and compounding and, if so, the
dates from which distributions will be cumulative or compounded;
- the amounts that will be paid out of the assets of the trust, after the
satisfaction of liabilities to creditors of the trust, to the holders of
trust preferred securities upon dissolution;
- any repurchase, redemption or exchange provisions;
- any preference or subordination rights upon a default or liquidation of
the trust;
- any voting rights of the trust preferred securities in addition to those
required by law;
37
- terms for any conversion or exchange of the debt securities or the trust
preferred securities into other securities;
- any rights to defer distributions on the trust preferred securities by
extending the interest payment period on the debt securities; and
- any other relevant terms, rights, preferences, privileges, limitations or
restrictions of the trust preferred securities.
The administrative trustees, on behalf of the trust and pursuant to the
declaration of trust, will issue one class of trust preferred securities and one
class of trust common securities. The trust securities will represent undivided
beneficial ownership interests in the assets of the trust.
Except as described in the applicable prospectus supplement, the trust
preferred securities will rank equally, and payments will be made thereon
proportionately, with the trust common securities. The property trustee of the
trust will hold legal title to the debt securities in trust for the benefit of
the holders of the trust securities. Calpine will execute a guarantee agreement
for the benefit of the holders of the trust preferred securities. The guarantee
will not guarantee the payment of distributions (as defined below) or any
amounts payable on redemption or liquidation of the trust preferred securities
when the trust does not have funds on hand available to make such payments.
The applicable prospectus supplement will also describe certain material
United States federal income tax consequences and special considerations
applicable to the trust preferred securities.
THE TRUST PREFERRED SECURITIES GUARANTEE
GENERAL
Calpine will fully and unconditionally guarantee payments on the trust
preferred securities of each of the trusts, as described in this section. The
guarantee covers the following payments:
- periodic cash distributions on the trust preferred securities out of
funds held by the property trustee of the trust;
- payments on dissolution of the trust; and
- payments on redemption of trust preferred securities of the trust.
Wilmington Trust Company, as guarantee trustee, will hold the guarantee for
the benefit of the holders of trust preferred securities.
Selected provisions of the guarantee are summarized below. This summary is
not complete. For a complete description, we encourage you to read the
guarantee, the form of which has been filed as an exhibit to the registration
statement of which this prospectus is a part.
Calpine will irrevocably and unconditionally agree to pay you in full the
following amounts to the extent not paid by a trust:
- any accumulated and unpaid distributions and any additional amounts with
respect to the trust preferred securities and any redemption price for
trust preferred securities called for redemption by the trust, if and to
the extent that Calpine has made corresponding payments on the debt
securities to the property trustee of the trust;
- payments upon the dissolution of the trust equal to the lesser of: (a)
the liquidation amount plus all accumulated and unpaid distributions and
additional amounts on the trust preferred securities to the extent the
trust has funds legally available for those payments; and (b) the amount
of assets of the trust remaining legally available for distribution to
the holders of trust preferred securities in liquidation of the trust.
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Calpine will not be required to make these liquidation payments if:
- the trust distributes the debt securities to the holders of trust
preferred securities in exchange for their trust preferred securities; or
- the trust redeems the trust preferred securities in full upon the
maturity or redemption of the debt securities.
Calpine may satisfy its obligation to make a guarantee payment either by
making payment directly to the holders of trust preferred securities or to the
guarantee trustee for remittance to the holders or by causing applicable trust
to make the payment to them.
Each guarantee is a guarantee from the time of issuance of the applicable
series of trust preferred securities. THE GUARANTEE ONLY COVERS, HOWEVER,
DISTRIBUTIONS AND OTHER PAYMENTS ON TRUST PREFERRED SECURITIES IF AND TO THE
EXTENT THAT CALPINE HAS MADE CORRESPONDING PAYMENTS ON THE DEBT SECURITIES TO
THE APPLICABLE PROPERTY TRUSTEE. IF CALPINE DOES NOT MAKE THOSE CORRESPONDING
PAYMENTS ON THE DEBT SECURITIES, THE APPLICABLE TRUST WILL NOT HAVE FUNDS
AVAILABLE FOR PAYMENTS AND CALPINE WILL HAVE NO OBLIGATION TO MAKE A GUARANTEE
PAYMENT.
Calpine's obligations under the declaration of trust for each trust, the
guarantee, the debt securities and the associated indenture taken together will
provide a full and unconditional guarantee of payments due on the trust
preferred securities. We will describe the specific terms of the guarantee in a
prospectus supplement.
COVENANTS OF CALPINE
In each guarantee, Calpine will agree that, as long as trust preferred
securities issued by any trust are outstanding, it will:
- remain the sole direct or indirect owner of all the outstanding common
securities of that trust, except as permitted by the applicable
declaration of trust;
- permit the trust common securities of that trust to be transferred only
as permitted by the declaration of trust; and
- use reasonable efforts to cause that trust to continue to be treated as a
grantor trust for United States federal income tax purposes, except in
connection with a distribution of debt securities to the holders of trust
preferred securities as provided in the declaration of trust, in which
case the trust would be dissolved.
AMENDMENTS AND ASSIGNMENTS
Calpine and the guarantee trustee may amend each guarantee without the
consent of any holder of trust preferred securities if the amendment does not
adversely affect the rights of the holders in any material respect. In all other
cases, Calpine and the guarantee trustee may amend each guarantee only with the
prior approval of the holders of at least a majority of outstanding trust
preferred securities issued by the applicable trust.
Calpine may assign its obligations under the guarantees only in connection
with a consolidation, merger or asset sale involving Calpine that is permitted
under the indenture governing the debt securities.
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TERMINATION OF THE GUARANTEE
A guarantee will terminate upon:
- full payment of the redemption price of all trust preferred securities of
the applicable trust;
- distribution of the related debt securities, or any securities into which
those debt securities are convertible, to the holders of the trust
preferred securities and trust common securities of that trust in
exchange for all the securities issued by that trust; or
- full payment of the amounts payable upon liquidation of that trust.
Each guarantee will, however, continue to be effective or will be
reinstated if any holder of trust preferred securities must repay any amounts
paid on those trust preferred securities or under the guarantee.
STATUS OF THE GUARANTEE
Calpine's obligations under each guarantee will be unsecured and
effectively junior to all debt and preferred stock of its subsidiaries. BY YOUR
ACCEPTANCE OF THE TRUST PREFERRED SECURITIES, YOU AGREE TO ANY SUBORDINATION
PROVISIONS AND OTHER TERMS OF THE RELATED GUARANTEE. We will specify in a
prospectus supplement the ranking of each guarantee with respect to Calpine's
capital stock and other liabilities, including other guarantees.
Each guarantee will be deposited with the guarantee trustee to be held for
your benefit. The guarantee trustee will have the right to enforce the guarantee
on your behalf. In most cases, the holders of a majority of outstanding trust
preferred securities issued by the applicable trust will have the right to
direct the time, method and place of:
- conducting any proceeding for any remedy available to the applicable
guarantee trustee; or
- exercising any trust or other power conferred upon that guarantee trustee
under the applicable guarantee.
Each guarantee will constitute a guarantee of payment and not merely of
collection. This means that the guarantee trustee may institute a legal
proceeding directly against Calpine to enforce the payment rights under the
guarantee without first instituting a legal proceeding against any other person
or entity.
If the guarantee trustee fails to enforce the guarantee or Calpine fails to
make a guarantee payment, you may institute a legal proceeding directly against
Calpine to enforce your rights under that guarantee without first instituting a
legal proceeding against the applicable trust, the guarantee trustee or any
other person or entity.
PERIODIC REPORTS UNDER THE GUARANTEE
Calpine will be required to provide annually to the guarantee trustee a
statement as to its performance of its obligations and its compliance with all
conditions under the guarantees.
DUTIES OF GUARANTEE TRUSTEE
The guarantee trustee normally will perform only those duties specifically
set forth in the applicable guarantee. The guarantees do not contain any implied
covenants. If a default occurs on a guarantee, the guarantee trustee will be
required to use the same degree of care and skill in the exercise of its powers
under the guarantee as a prudent person would exercise or use under the
circumstances in the conduct of his own affairs. The guarantee trustee will
exercise any of its rights or powers under the guarantee at the request or
direction of holders of the applicable series of trust preferred securities only
if it is offered security and indemnity satisfactory to it.
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GOVERNING LAW
New York law will govern the guarantees.
RELATIONSHIP AMONG THE TRUST PREFERRED SECURITIES, THE DEBT SECURITIES AND THE
TRUST PREFERRED SECURITIES GUARANTEE
To the extent set forth in the guarantee and to the extent funds are
available, Calpine will irrevocably guarantee the payment of distributions and
other amounts due on the trust securities. If and to the extent we do not make
payments on the debt securities, the trust will not have sufficient funds to pay
distributions or other amounts due on the trust securities. The guarantee does
not cover any payment of distributions or other amounts due on the trust
securities unless the trust has sufficient funds for the payment of such
distributions or other amounts. In such event, a holder of trust securities may
institute a legal proceeding directly against us to enforce payment of such
distributions or other amounts to such holder after the respective due dates.
Taken together, our obligations under the declaration of trust for each trust,
the debt securities, the indenture and the guarantee provide a full and
unconditional guarantee of payments of distributions and other amounts due on
the trust securities. No single document standing alone or operating in
conjunction with fewer than all of the other documents constitutes such
guarantee. It is only the combined operation of these documents that provides a
full and unconditional guarantee of the trust's obligations under the trust
securities.
SUFFICIENCY OF PAYMENTS
As long as payments of interest and other amounts are made when due on the
debt securities, such payments will be sufficient to cover distributions and
payments due on the trust securities of a trust because of the following
factors:
- the aggregate principal amount of the debt securities will be equal to
the sum of the aggregate stated liquidation amount of the trust
securities;
- the interest rate and the interest and other payment dates on the debt
securities will match the distribution rate and distribution and other
payment dates for the trust securities;
- Calpine, as issuer of the debt securities, will pay, and the trust will
not be obligated to pay, directly or indirectly, any costs, expenses,
debts and obligations of the trust (other than with respect to the trust
securities); and
- the declaration of trust further provides that the trust will not engage
in any activity that is not consistent with the limited purposes of the
trust.
Notwithstanding anything to the contrary in the indenture, we have the
right to set-off any payment we are otherwise required to make thereunder
against and to the extent we have already made, or are concurrently on the date
of such payment making, a related payment under the guarantee.
ENFORCEMENT RIGHTS OF HOLDERS OF PREFERRED SECURITIES
The declaration of trust provides that if we fail to make interest or other
payments on the debt securities when due (taking account of any extension
period), the holders of the trust preferred securities may direct the property
trustee to enforce its rights under the applicable indenture. If the property
trustee fails to enforce its rights under the indenture in respect of an event
of default under the indenture, any holder of record of trust preferred
securities may, to the fullest extent permitted by applicable law, institute a
legal proceeding against us to enforce the property trustee's rights under the
indenture without first instituting any legal proceeding against the property
trustee or any other person or entity. Notwithstanding the foregoing, if a trust
enforcement event has occurred and is continuing and such event is attributable
to our failure to pay interest, premium or principal on the debt securities on
the date such interest, premium or principal is otherwise payable, then a holder
of trust preferred securities may institute a direct action against us for
payment of such holder's pro rata share. If a holder brings such a direct
action, we will be
41
entitled to that holder's rights under the applicable declaration of trust to
the extent of any payment made by us to that holder.
If we fail to make payments under the guarantee, a holder of trust
preferred securities may institute a proceeding directly against us for
enforcement of the guarantee for such payments.
LIMITED PURPOSE OF TRUST
The trust preferred securities evidence undivided beneficial ownership
interests in the assets of the trust, and the trust exists for the sole purpose
of issuing and selling the trust securities and using the proceeds to purchase
our debt securities. A principal difference between the rights of a holder of
trust preferred securities and a holder of debt securities is that a holder of
debt securities is entitled to receive from us the principal amount of and
interest accrued on the debt securities held, while a holder of trust preferred
securities is entitled to receive distributions and other payments from the
trust (or from us under the guarantee) only if and to the extent the trust has
funds available for the payment of such distributions and other payments.
RIGHTS UPON DISSOLUTION
Upon any voluntary or involuntary dissolution of the trust involving the
redemption or repayment of the debt securities, the holders of the trust
securities will be entitled to receive, out of assets held by the trust, subject
to the rights of creditors of the trust, if any, the liquidation distribution in
cash. Because Calpine is the guarantor under the guarantee and, as issuer of the
debt securities, Calpine has agreed to pay for all costs, expenses and
liabilities of the trust (other than the trust's obligations to the holders of
the trust securities), the positions of a holder of trust securities and a
holder of debt securities relative to other creditors and to our stockholders in
the event of liquidation or bankruptcy of Calpine would be substantially the
same.
ACCOUNTING TREATMENT RELATING TO TRUST SECURITIES
The financial statements of any trust issuing securities will be
consolidated with our financial statements, with the trust preferred securities
shown on our consolidated financial statements as Calpine-obligated mandatorily
redeemable preferred capital trust securities of a subsidiary trust holding
solely Calpine debt securities. Our financial statements will include a footnote
that discloses, among other things, that the assets of the trust consist of our
debt securities and will specify the designation, principal amount, interest
rate and maturity date of the debt securities.
42
CERTAIN UNITED STATES FEDERAL INCOME TAX CONSEQUENCES
The following is a summary of certain material United States federal income
tax consequences of the ownership and disposition of our common stock, preferred
stock and debt securities and of the debt securities of Energy Finance and
Energy Finance II offered hereunder. A summary of certain material United States
federal income tax consequences of the ownership and disposition of the other
securities offered hereunder will be provided in the applicable prospectus
supplement, as will any information that updates or changes the information
provided below.
Unless otherwise stated, this summary deals only with common stock,
preferred stock and debt securities held as capital assets by U.S. holders. As
used herein, "U.S. holders" are any beneficial owners of the common stock,
preferred stock or debt securities, that are, for United States federal income
tax purposes, (i) citizens or residents of the United States, (ii) corporations
created or organized in, or under the laws of, the United States, any state
thereof or the District of Columbia, (iii) estates, the income of which is
subject to United States federal income taxation regardless of its source, or
(iv) 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. In addition, certain trusts in existence on August 20, 1996 and treated
as a U.S. holder prior to such date may also be treated as U.S. holders. As used
herein, "non-U.S. holders" are beneficial owners of the common stock, preferred
stock or debt securities, other than partnerships, that are not U.S. holders for
United States federal income tax purposes. If a partnership (including for this
purpose any entity treated as a partnership for United States federal tax
purposes) is a beneficial owner of such securities, the treatment of a partner
in the partnership will generally depend upon the status of the partner and upon
the activities of the partnership. Partnerships and partners in such
partnerships should consult their tax advisors about the United States federal
income tax consequences of owning and disposing of such securities.
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 securities held as part of a hedge, straddle,
"synthetic security" or other integrated transaction. This summary also does not
address the tax consequences to (i) persons that have a functional currency
other than the U.S. dollar, (ii) U.S. holders who are resident or who carry on a
trade or business in Canada, (iii) certain U.S. expatriates or (iv)
shareholders, partners or beneficiaries of a holder of the common stock,
preferred stock or debt securities. Further, it does not include any description
of any alternative minimum tax consequences or the tax laws of any state or
local government or of any foreign government that may be applicable to the
common stock, preferred stock and debt securities. 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 or differing
interpretations, possibly on a retroactive basis.
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 ownership and disposition of the securities.
TAXATION OF COMMON STOCK OF CALPINE
This subsection describes certain material United States federal income tax
consequences of owning and disposing of the common stock that Calpine may offer.
U.S. HOLDERS OF COMMON STOCK
Dividends
The amount of any distribution Calpine makes in respect of its common stock
will be equal to the amount of cash and the fair market value, on the date of
distribution, of any property distributed.
43
Generally, distributions will be treated as a dividend, subject to tax as
ordinary income, to the extent of Calpine's current or accumulated earnings and
profits, then as a tax-free return of capital to the extent of a holder's tax
basis in the common stock and thereafter as gain from the sale or exchange of
such stock as described below.
In general, a dividend distribution to a corporate holder will qualify for
the 70% dividends-received deduction. The dividends-received deduction is
subject to certain holding period, taxable income, and other limitations (see
"-- Taxation of Preferred Stock -- U.S. Holders of Preferred Stock -- Dividends
to Corporate Holders," below).
Sale or Exchange of Common Stock
Upon the sale or exchange of common stock, a holder generally will
recognize capital gain or loss equal to the difference between (i) the amount of
cash and the fair market value of any property received upon the sale or
exchange and (ii) such holder's adjusted tax basis in the common stock. In the
case of a holder other than a corporation, preferential tax rates may apply to
such gain if the holder's holding period for the common stock exceeds one year.
A holder's basis in the common stock is generally equal to its initial purchase
price.
Information Reporting and Backup Withholding Tax
In general, information reporting requirements will apply to payments of
dividends on common stock and payments of the proceeds of the sale of common
stock, and a backup withholding tax may apply to such payments if the holder
fails to comply with certain identification requirements. Back-up withholding is
currently imposed at a rate of 30%, which rate is scheduled to be reduced in
future years. Any amounts withheld under the backup withholding rules from a
payment to a holder will be allowed as a credit against such holder's United
States federal income tax and may entitle the holder to a refund, provided that
the required information is furnished to the Internal Revenue Service.
NON-U.S. HOLDERS OF COMMON STOCK
The rules governing United States federal income taxation of a non-U.S.
holder of common stock are complex and no attempt will be made herein 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 common
stock, including any reporting requirements.
Dividends
Distributions by Calpine with respect to the common stock that are treated
as dividends paid, as described above under "Dividends," to a non-U.S. holder
(excluding dividends that are effectively connected with the conduct of a United
States trade or business by such holder and are taxable as described below) will
be subject to United States federal withholding tax at a 30% rate (or a lower
rate provided under an applicable income tax treaty). Except to the extent that
an applicable income tax treaty otherwise provides, 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 conduct of a United States trade or
business by the non-U.S. holder. If such non-U.S. holder is a foreign
corporation, it may also be subject to a United States branch profits tax on
such effectively connected income at a 30% rate (or such lower rate as may be
specified by an applicable income tax treaty). Even though such effectively
connected dividends are subject to income tax and may be subject to the branch
profits tax, they will not be subject to United States federal withholding tax
if the holder delivers a properly executed Internal Revenue Service Form W-8ECI
(or successor form) to the payor or the payor's agent.
A non-U.S. holder who wishes to claim the benefit of an applicable income
tax treaty is required to satisfy certain certification and other requirements.
If you are eligible for a reduced rate of United States
44
withholding tax pursuant to an income tax treaty, you may obtain a refund of any
excess amounts withheld by filing an appropriate claim for refund with the
Internal Revenue Service.
Sale or Exchange of Common Stock
A non-U.S. holder generally will not be subject to United States federal
income tax or withholding tax on the sale or exchange of common stock unless (1)
the gain is effectively connected with a United States trade or business of the
non-U.S. holder, (2) in the case of a non-U.S. holder who is an individual, such
holder is present in the United States for a period or periods aggregating 183
days or more during the taxable year of the disposition, and either (a) such
holder has a "tax home" in the United States or (b) the disposition is
attributable to an office or other fixed place of business maintained by such
holder in the United States, (3) the 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 event that Calpine is characterized as a United
States real property holding corporation and the non-U.S. holder does not
qualify for certain exemptions (see discussion below under "Foreign Investment
in Real Property Tax Act").
If an individual non-U.S. holder falls under clause (1) above, such
individual generally will be taxed on the net gain derived from a sale in the
same manner as a U.S. holder. If an individual non-U.S. holder falls under
clause (2) above, such individual generally will be subject to a flat 30% tax on
the gain derived from a sale, which may be offset by certain United States
capital losses (notwithstanding the fact that such individual is not considered
a resident of the United States). Individual non-U.S. holders who have spent (or
expect to spend) 183 days or more in the United States in the taxable year in
which they contemplate a sale of common stock are urged to consult their tax
advisors as to the tax consequences of such sale. If a non-U.S. holder that is a
foreign corporation falls under clause (1), it generally will be taxed on the
net gain derived from a sale in the same manner as a U.S. holder and, in
addition, may be subject to the branch profits tax on such effectively connected
income at a 30% rate (or such lower rate as may be specified by an applicable
income tax treaty).
Information Reporting and Backup Withholding Tax
United States information reporting requirements and backup withholding tax
will not apply to any payment of the proceeds of the sale of common stock
effected outside the United States by a foreign office of a "broker" as defined
in applicable Treasury regulations, unless such broker (1) is a United States
person as defined in the Internal Revenue Code, (2) is a foreign person that
derives 50% or more of its gross income for certain periods from the conduct of
a trade or business in the United States, (3) is a controlled foreign
corporation for United States federal income tax purposes or (4) is a foreign
partnership with certain U.S. connections. Payment of the proceeds of any such
sale effected outside the United States by a foreign office of any broker that
is described in the preceding sentence may be subject to backup withholding tax
and information reporting requirements, unless such broker has documentary
evidence in its records that the beneficial owner is a non-U.S. holder and
certain other conditions are met, or the beneficial owner otherwise establishes
an exemption. Dividends on common stock held by a non-U.S. holder will be
subject to information reporting and may be subject to backup withholding
requirements unless certain certification requirements are satisfied.
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 specified procedures that the corporation is not (and was not
for the prior five-year period) a "United States real property holding
corporation." We believe it is likely that we are a United States real property
holding
45
corporation and we can give no assurance that we will not continue to be a
United States real property holding corporation in the future. However, so long
as our common stock is regularly traded on an established securities market, an
exemption applies with respect to any non-U.S. holder whose beneficial and/or
constructive ownership of common stock is 5% or less 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.
THE UNITED STATES FEDERAL INCOME TAX DISCUSSION SET FORTH ABOVE IS INCLUDED
FOR GENERAL INFORMATION ONLY AND MAY NOT BE APPLICABLE DEPENDING UPON A HOLDER'S
PARTICULAR SITUATION. HOLDERS SHOULD CONSULT THEIR TAX ADVISORS WITH RESPECT TO
THE TAX CONSEQUENCES TO THEM OF THE OWNERSHIP AND DISPOSITION OF COMMON STOCK,
INCLUDING THE TAX CONSEQUENCES UNDER STATE, LOCAL, FOREIGN AND OTHER TAX LAWS
AND THE POSSIBLE EFFECTS OF CHANGES IN UNITED STATES FEDERAL OR OTHER TAX LAWS.
TAXATION OF PREFERRED STOCK OF CALPINE
This subsection describes certain material United States federal income tax
consequences of owning and disposing of the preferred stock that Calpine may
offer.
U.S. HOLDERS OF PREFERRED STOCK
Dividends
The amount of any distribution Calpine makes in respect of its preferred
stock will be equal to the amount of cash and the fair market value, on the date
of distribution, of any property (including common stock) distributed.
Generally, distributions will be treated as a dividend, subject to tax as
ordinary income, to the extent of Calpine's current or accumulated earnings and
profits, then as a tax-free return of capital to the extent of a holder's tax
basis in the preferred stock and thereafter as gain from the sale or exchange of
such stock as described below.
Dividends to Corporate Holders
A dividend distribution to a corporate holder will generally qualify for
the 70% dividends-received deduction. In determining entitlement to the
dividends-received deduction, corporate holders should also consider the
provisions of Sections 246(c), 246A and 1059 of the Internal Revenue Code, as
well as Treasury regulations and Internal Revenue Service rulings and
administrative pronouncements relating to such provisions. Under current law,
Section 246(c) of the Internal Revenue Code disallows the dividends-received
deduction in its entirety if the holder does not satisfy the applicable holding
period requirement for the dividend-paying stock for a period beginning before
and ending after such holder becomes entitled to receive each dividend on the
stock. Section 246(c)(4) of the Internal Revenue Code provides that a holder may
not count toward this minimum holding period any period in which the holder (1)
has an option to sell, is under a contractual obligation to sell, or has made
(and not closed) a short sale of, substantially identical stock or securities,
or (2) has diminished its risk of loss by holding one or more positions with
respect to substantially similar or related property. Under certain
circumstances, Section 1059 of the Internal Revenue Code (A) reduces the tax
basis of stock by a portion of any "extraordinary dividends" that are eligible
for the dividends-received deduction and (B) to the extent that the basis
reduction would otherwise reduce the tax basis of the stock below zero, requires
immediate recognition of gain, which is treated as gain from the sale or
exchange of the stock. An "extraordinary dividend" includes any amount treated
as a dividend with respect to a redemption that is not pro rata to all
stockholders (or meets certain other requirements), without regard to either the
relative amount of the dividend or the holder's holding period for the stock.
Section 246A of the Internal Revenue Code contains
46
the "debt-financed" portfolio stock rules, under which the dividends-received
deduction could be reduced to the extent that a holder incurs indebtedness
directly attributable to its investment in the stock.
Receipt of Common Stock Upon Conversion of the Preferred Stock
If the preferred stock is convertible into common stock of Calpine, gain or
loss will not be recognized by a holder upon the conversion of such preferred
stock into common stock if no cash is received. A holder who receives cash in
lieu of a fractional share of common stock will in general be treated as having
received such fractional share and having exchanged it for cash in a redemption,
which would be treated in the manner described under "Sale, Exchange or
Redemption of Preferred Stock," below. As discussed therein, a holder who cannot
qualify for sale or exchange treatment under the rules applicable to redemptions
will generally be taxable on the cash received in lieu of a fractional share as
a distribution described in "-- Dividends," above.
A holder's tax basis in the common stock received upon conversion will
generally be equal to the holder's tax basis in the preferred stock less the tax
basis allocated to any fractional share for which cash is received, and a
holder's holding period in the common stock received upon conversion generally
will include the period during which the preferred stock was held by such
holder.
Adjustments of Conversion Price in Respect of Preferred Stock
If the preferred stock is convertible into common stock of Calpine,
adjustments to the conversion price ratio to take into account a stock dividend
or stock split generally will not be taxable. However, an adjustment to the
conversion price ratio to reflect the issuance of certain rights, warrants,
evidences of indebtedness, securities or other assets to holders of common stock
(an "Adjustment") may result in constructive distributions to the holders of the
preferred stock. The amount of any such constructive distribution would be the
fair market value on the date of the Adjustment of the number of shares of
common stock which, if actually distributed to holders of preferred stock, would
produce the same increase in the proportionate interests of such holders in the
assets or earnings and profits of Calpine as that produced by the Adjustment.
The distribution would be treated in the manner described above under
"Dividends."
Excessive Redemption Price of Preferred Stock
Under Section 305 of the Internal Revenue Code and the applicable Treasury
regulations, if preferred stock with a mandatory redemption date or preferred
stock subject to certain redemption rights on the part of either Calpine or the
holder of such stock has a redemption price that exceeds its issue price (i.e.,
its fair market value at its date of original issuance) by more than a de
minimis amount, such excess may be treated as a constructive distribution that
will be treated in the same manner as distribution described above under
"Dividends." A holder of such preferred stock would be required to treat such
excess as a constructive distribution received by the holder over the life of
such stock under a constant interest (economic yield) method that takes into
account the compounding of yield.
Accrued Dividends on the Preferred Stock
The tax treatment of accrued dividends that are payable upon a redemption
of the preferred stock will be addressed in the applicable prospectus
supplement.
Sale, Exchange or Redemption of Preferred Stock
Upon the sale or exchange of preferred stock, a holder generally will
recognize capital gain or loss equal to the difference between (1) the amount of
cash and the fair market value of any property received upon the sale or
exchange and (2) such holder's adjusted tax basis in the stock. In the case of a
holder other than a corporation, preferential tax rates may apply to such gain
if the holder's holding period for the preferred stock exceeds one year. A
holder's basis in the preferred stock is generally equal to its initial purchase
price.
47
Gain or loss recognized by a holder on a redemption of the preferred stock
will be treated as a sale or exchange and therefore qualify for the treatment
described above if certain requirements are satisfied. Generally, these
requirements are satisfied if either (1) the holder's interest in the stock of
Calpine is completely terminated as a result of such redemption, (2) such
holder's percentage ownership of Calpine's voting stock immediately after the
redemption is less than 80% of such holder's percentage ownership immediately
before the redemption or (3) the redemption is "not essentially equivalent to a
dividend." The attribution rules of Section 318 of the Internal Revenue Code
treat a person as owning stock owned by certain related parties or certain
entities in which the person owns an interest and stock that a person could
acquire through exercise of an option. For this purpose, an option would include
any conversion right under the preferred stock. Whether a redemption is "not
essentially equivalent to a dividend" depends on each holder's facts and
circumstances, but in any event requires a "meaningful reduction" in such
holder's equity interest in Calpine. A holder of the preferred stock who sells
some or all of the stock of Calpine owned by it may be able to take such sales
into account to satisfy one of the foregoing conditions. Conversely, a holder
who purchases additional shares of stock of Calpine may be required to take such
shares into account in determining whether any of the foregoing conditions are
satisfied.
If none of the above requirements for sale or exchange treatment is
satisfied, the entire amount of the cash (or property) received on a redemption
will be treated as a distribution (without offset by the holder's tax basis in
the redeemed shares), which will be treated in the same manner as distributions
described above under "Dividends." In such case, the holder's basis in the
redeemed preferred stock would be transferred to the holder's remaining shares
of Calpine stock (if any). If the holder does not retain any shares of Calpine's
stock but dividend treatment arises because of the constructive ownership rules,
such basis may be entirely lost to the holder.
Other Preferred Stock
Special tax rules may apply to certain types of preferred stock. The
applicable prospectus supplement will discuss any such special United States
federal income tax rules with respect to such preferred stock.
Information Reporting and Backup Withholding Tax
In general, information reporting requirements will apply to payments of
dividends on the preferred stock and payments of the proceeds of the sale of the
preferred stock, and a backup withholding tax may apply to such payments if the
holder fails to comply with certain identification requirements. Back-up
withholding is currently imposed at a rate of 30%, which rate is scheduled to be
reduced in future years. Any amounts withheld under the backup withholding rules
from a payment to a holder will be allowed as a credit against such holder's
United States federal income tax and may entitle the holder to a refund,
provided that the required information is furnished to the Internal Revenue
Service.
NON-U.S. HOLDERS OF PREFERRED STOCK
The rules governing United States federal income taxation of a non-U.S.
holder of preferred stock are complex and no attempt will be made herein 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 preferred stock, including any reporting requirements.
Dividends
Distributions by Calpine with respect to the preferred stock that are
treated as dividends paid (or deemed paid), as described above under "Dividends"
and "Sale, Exchange or Redemption of Preferred Stock," to a non-U.S. holder
(excluding dividends that are effectively connected with the conduct of a United
States trade or business by such holder and are taxable as described below) will
be subject to United States federal withholding tax at a 30% rate (or a lower
rate provided under an applicable income tax treaty). Except to the extent that
an applicable income tax treaty otherwise provides, a non-U.S.
48
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 conduct of a United States
trade or business by the non-U.S. holder. If such non-U.S. holder is a foreign
corporation, it may also be subject to a United States branch profits tax on
such effectively connected income at a 30% rate (or such lower rate as may be
specified by an applicable income tax treaty). Even though such effectively
connected dividends are subject to income tax, and may be subject to the branch
profits tax, they will not be subject to United States withholding tax if the
holder delivers a properly executed Internal Revenue Service Form W-8ECI (or
successor form) to the payor or the payor's agent.
A non-U.S. holder who wishes to claim the benefit of an applicable income
tax treaty is required to satisfy certain certification and other requirements.
If you are eligible for a reduced rate of United States withholding tax pursuant
to an income tax treaty, you may obtain a refund of any excess amounts withheld
by filing an appropriate claim for refund with the Internal Revenue Service.
Receipt of Common Stock Upon Conversion of the Preferred Stock
In general, no United States federal income tax or withholding tax will be
imposed upon the conversion of preferred stock into common stock by a non-U.S.
holder (except with respect to the non-U.S. holder's receipt of cash in lieu of
fractional shares where one of the conditions described below under "Sale,
Exchange or Redemption of Preferred Stock" is satisfied).
Sale, Exchange or Redemption of Preferred Stock
A non-U.S. holder generally will not be subject to United States federal
income tax or withholding tax on the sale or exchange of preferred stock unless
(1) the gain is effectively connected with a United States trade or business of
the non-U.S. holder, (2) in the case of a non-U.S. holder who is an individual,
such holder is present in the United States for a period or periods aggregating
183 days or more during the taxable year of the disposition, and either (A) such
holder has a "tax home" in the United States or (B) the disposition is
attributable to an office or other fixed place of business maintained by such
holder in the United States, (3) the 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 event that Calpine is characterized as a United
States real property holding corporation and the non-U.S. holder does not
qualify for certain exemptions (see discussion below under "Foreign Investment
in Real Property Tax Act").
If an individual non-U.S. holder falls under clause (1) above, such
individual generally will be taxed on the net gain derived from a sale in the
same manner as a U.S. holder. If an individual non-U.S. holder falls under
clause (2) above, such individual generally will be subject to a flat 30% tax on
the gain derived from a sale, which may be offset by certain United States
capital losses (notwithstanding the fact that such individual is not considered
a resident of the United States). Individual non-U.S. holders who have spent (or
expect to spend) 183 days or more in the United States in the taxable year in
which they contemplate a sale of preferred stock are urged to consult their tax
advisors as to the tax consequences of such sale. If a non-U.S. holder that is a
foreign corporation falls under clause (1) above, it generally will be taxed on
the net gain derived from a sale in the same manner as a U.S. holder and, in
addition, may be subject to the branch profits tax on such effectively connected
income at a 30% rate (or such lower rate as may be specified by an applicable
income tax treaty).
Gain or loss realized by a non-U.S. holder on a redemption of the preferred
stock will be treated as a sale or exchange and qualify for the treatment
described in this section if certain requirements are satisfied. For a
description of these requirements, see "-- U.S. Holders -- Sale, Exchange or
Redemption of Preferred Stock," above.
Information Reporting and Backup Withholding Tax
United States information reporting requirements and backup withholding tax
will not apply to any payment of the proceeds of the sale of preferred stock
effected outside the United States by a foreign
49
office of a "broker" as defined in applicable Treasury regulations, unless such
broker (1) is a United States person as defined in the Internal Revenue Code,
(2) is a foreign person that derives 50% or more of its gross income for certain
periods from the conduct of a trade or business in the United States, (3) is a
controlled foreign corporation for United States federal income tax purposes or
(4) is a foreign partnership with certain U.S. connections. Payment of the
proceeds of any such sale effected outside the United States by a foreign office
of any broker that is described in the preceding sentence may be subject to
backup withholding tax and information reporting requirements, unless such
broker has documentary evidence in its records that the beneficial owner is a
non-U.S. holder and certain other conditions are met, or the beneficial owner
otherwise establishes an exemption. Dividends on preferred stock held by a
non-U.S. holder will be subject to information reporting and may be subject to
backup withholding requirements unless certain certification requirements are
satisfied.
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 specified procedures that the corporation is not (and was not
for the prior five-year period) a "United States real property holding
corporation." We believe it is likely that we are a United States real property
holding corporation and we can give no assurance that we will not continue to be
a United States real property holding corporation in the future. However, so
long as the preferred stock is regularly traded on an established securities
market, an exemption applies with respect to any non-U.S. holder whose
beneficial and/or constructive ownership of preferred stock is 5% or less of the
total fair market value of the preferred stock. In addition, if the preferred
stock is not regularly traded on an established securities market, but our
common stock continues to be so regularly traded, an exemption will apply if the
fair market value of the non-U.S. holder's interest in the preferred stock is 5%
or less 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 preferred stock
may be required to inform its transferee whether such preferred stock
constitutes a United States real property interest.
THE UNITED STATES FEDERAL INCOME TAX DISCUSSION SET FORTH ABOVE IS INCLUDED
FOR GENERAL INFORMATION ONLY AND MAY NOT BE APPLICABLE DEPENDING UPON A HOLDER'S
PARTICULAR SITUATION. HOLDERS SHOULD CONSULT THEIR TAX ADVISORS WITH RESPECT TO
THE TAX CONSEQUENCES TO THEM OF THE OWNERSHIP AND DISPOSITION OF THE PREFERRED
STOCK, INCLUDING THE TAX CONSEQUENCES UNDER STATE, LOCAL, FOREIGN AND OTHER TAX
LAWS AND THE POSSIBLE EFFECTS OF CHANGES IN UNITED STATES FEDERAL OR OTHER TAX
LAWS.
TAXATION OF DEBT SECURITIES OF CALPINE AND ENERGY FINANCE
This subsection describes certain material United States federal income tax
consequences of owning and disposing of the debt securities offered by Calpine
or Energy Finance, as the case may be. It deals only with debt securities that
are due to mature 30 years or less from the date on which they are issued. The
United States federal income tax consequences of owning and disposing of debt
securities that are due to mature more than 30 years from the date of issue will
be discussed in an applicable prospectus supplement. The discussion regarding
United States federal income tax laws assumes that any debt securities will be
issued, and transfers thereof and payments thereon will be made, in accordance
with the applicable indenture and deposit agreement.
50
U.S. HOLDERS OF DEBT SECURITIES
Interest Income
Subject to the original issue discount rules described below, payments of
interest on the debt securities (including, in the case of debt securities
issued by Energy Finance, the amount of Canadian tax withheld, if any) generally
will be taxable to a U.S. holder as ordinary interest income at the time such
payments are accrued or received (in accordance with the holder's regular method
of tax accounting).
A debt security will be treated as issued with original issue discount
("OID") if its stated redemption price at maturity exceeds its issue price by
more than a de minimis amount. Generally, the issue price will be the first
price at which a substantial amount of the debt securities is sold to persons
other than bond houses, brokers or similar persons or organizations acting in
the capacity of underwriters, placement agents or wholesalers. A debt security's
stated redemption price at maturity is the total of all payments on the debt
security that are not payments of qualified stated interest. An interest payment
is qualified stated interest if it is one of a series of stated interest
payments that are unconditionally payable at least annually at a single fixed
rate.
A debt security is not treated as issued with OID if the OID (i.e., the
excess of the stated redemption price at maturity over the issue price) is de
minimis. For this purpose the amount of OID is de minimis if it does not exceed
the product of 0.25 percent of the stated redemption price at maturity
multiplied by the number of complete years to maturity. If the debt security has
de minimis OID, a holder must generally include the de minimis amount in income
(as capital gain) when stated principal payments are made.
If the debt security is treated as issued with OID, a U.S. holder will be
required to include the amount of the OID in income periodically over the term
of the debt security before receipt of the cash or other payment attributable to
such income and irrespective of such holder's general method of tax accounting.
In particular, a U.S. holder of a debt security must include in gross income, as
interest for United States federal income tax purposes, the sum of the daily
portions of OID with respect to the debt security for each day during the
taxable year or portion of a taxable year in which such holder holds the debt
security ("accrued OID"). The daily portion is determined by allocating to each
day of an accrual period a pro rata portion of an amount equal to the adjusted
issue price of the debt security at the beginning of the accrual period
multiplied by the yield to maturity of the debt security and subtracting from
this product the amount of qualified stated interest allocable to the accrual
period. The adjusted issue price of the debt security at the start of any
accrual period is the issue price of the debt security increased by the accrued
OID for each prior accrual period and decreased by the amount of any payments
previously made with respect to the debt security (other than qualified stated
interest).
Source of Income and Foreign Tax Credits With Respect to Debt Securities of
Energy Finance
If Canadian withholding taxes are imposed on payments on the debt
securities issued by Energy Finance, the eligibility of a U.S. holder for a
United States foreign tax credit with respect to such taxes may be limited
because, for United States foreign tax credit purposes, such payments would
constitute income from sources within the United States. Interest on the debt
securities will generally constitute "passive income" for United States foreign
tax credit purposes. Moreover, if such Canadian withholding taxes are imposed on
interest payments at a rate that equals or exceeds 5%, such interest income
would constitute "high withholding tax interest" for United States foreign tax
credit purposes. A U.S. holder that does not claim a foreign tax credit may be
entitled to a deduction for United States federal income tax purposes with
respect to any such Canadian withholding taxes. The calculation of foreign tax
credits or deductions involves the application of complex rules that depend on a
holder's particular circumstances. Accordingly, U.S. holders are urged to
consult their tax advisors regarding the creditability or deductibility of such
taxes. For a discussion of the Canadian income tax considerations, see "Certain
Canadian Federal Income Tax Considerations," below.
51
Debt Securities Purchased at a Market Discount
A holder will be considered to have purchased a debt security at a "market
discount" if the holder's adjusted basis in the debt security is less than its
stated redemption price at maturity, or in the case of a debt security issued at
a discount, its revised issue price (which has the same meaning as "adjusted
issue price" as defined above), unless such market discount is a de minimis
amount (generally up to 1/4 of 1 percent of the stated redemption price or
revised issue price, as the case may be, on the purchase date multiplied by the
number of complete years to maturity remaining as of such date). In general, any
partial payment of principal on, or gain recognized on the maturity or
disposition of, the debt security will be treated as ordinary income to the
extent that such gain does not exceed the accrued market discount on the
underlying debenture. Alternatively, a holder of a debt security may elect to
include market discount in income currently over the life of the debt security.
Such an election applies to all debt instruments with market discount acquired
by the electing holder on or after the first day of the first taxable year to
which the election applies and may not be revoked without the consent of the
Internal Revenue Service.
Market discount accrues on a straight-line basis unless the holder elects
to accrue such discount on a constant yield to maturity basis. Such an election
is applicable only to the debt security with respect to which it is made and is
irrevocable. A holder of a debt security that does not elect to include market
discount in income currently generally will be required to defer deductions for
interest on borrowings allocable to such debt security in an amount not
exceeding the accrued market discount on such debt security until the maturity
or disposition of such debt security.
Debt Securities Purchased at a Premium
A holder will be considered to have purchased a debt security at a premium
if the holder's adjusted basis in the debt security immediately after the
purchase is greater than the amount payable on maturity of the debt security. A
holder may elect to treat such premium as "amortizable bond premium," in which
case the amount of interest required to be included in the holder's income each
year with respect to the interest on the debt security will be reduced by the
amount of the amortizable bond premium allocable (based on the debt security's
yield to maturity) to such year. Any election to amortize bond premium is
applicable to all bonds (other than bonds the interest on which is excludible
from gross income) held by the holder at the beginning of the first taxable year
to which the election applies or thereafter acquired by the holder, and may not
be revoked without the consent of the Internal Revenue Service.
Sale or Exchange of Debt Securities
A holder will generally recognize taxable gain or loss equal to the
difference between the amount realized on the sale, exchange or other
disposition of the debt security and the holder's adjusted tax basis in such
debt security, except that ordinary income will be recognized to the extent that
a portion of the amount realized is attributable to market discount or accrued
interest not previously included in income. A holder's adjusted tax basis in the
debt security generally will be the initial purchase price paid therefore,
increased by any OID or market discount previously included in income with
respect to the debt security and reduced by any amortizable bond premium and any
payments previously received with respect to the debt security other than
qualified stated interest. In the case of a holder other than a corporation,
preferential tax rates may apply to gain recognized on the sale of a debt
security if such holder's holding period for such debt security exceeds one
year.
To the extent the selling price is less than the holder's adjusted tax
basis, the holder will recognize a capital loss. Subject to certain limited
exceptions, capital losses cannot be applied to offset ordinary income for
United States federal income tax purposes.
Other Debt Securities
Special tax rules may apply to certain types of debt securities including,
but not limited to, debt securities subject to contingencies, variable rate debt
securities and debt securities convertible into equity
52
of Calpine. The applicable prospectus supplement will discuss any such special
United States federal income tax rules with respect to such debt securities.
Information Reporting and Backup Withholding Tax
In general, information reporting requirements will apply to payments of
principal, premium, if any, and interest on the debt securities and payments of
the proceeds of the sale of the debt securities, and a backup withholding tax
may apply to such payments if the holder fails to comply with certain
identification requirements. Back-up withholding is currently imposed at a rate
of 30%, which rate is scheduled to be reduced in future years. Any amounts
withheld under the backup withholding rules from a payment to a holder will be
allowed as a credit against such holder's United States federal income tax and
may entitle the holder to a refund, provided that the required information is
furnished to the Internal Revenue Service.
NON-U.S. HOLDERS OF DEBT SECURITIES
The rules governing United States federal income taxation of a non-U.S.
holder of debt securities are complex and no attempt will be made herein 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 debt securities, including any reporting requirements.
This discussion assumes that the debt security or coupon is not subject to
the rules of Section 871(h)(4)(A) of the Internal Revenue Code, relating to
interest payments that are determined by reference to income, profits, changes
in value of property or other attributes of the issuer or a related party.
Interest Income
Generally, interest income of a non-U.S. holder that is not effectively
connected with a United States trade or business will be subject to a
withholding tax at a 30% rate (or, if applicable, a lower tax rate specified by
a treaty). However, interest income earned on a debt security by a non-U.S.
holder will qualify for the "portfolio interest" exemption and therefore will
not be subject to United States federal income tax or withholding tax, provided
that such interest income is not effectively connected with a United States
trade or business of the non-U.S. holder and provided that (1) the non-U.S.
holder does not actually or constructively own 10% of more of the total combined
voting power of all classes of Calpine stock entitled to vote; (2) the non-U.S.
holder is not a controlled foreign corporation that is related to the issuer or
Calpine through stock ownership; (3) the non-U.S. holder is not a bank which
acquired the debt security in consideration for an extension of credit made
pursuant to a loan agreement entered into in the ordinary course of business;
and (4) either (A) the non-U.S. holder certifies to the payor or the payor's
agent, under penalties of perjury, that it is not a United States person and
provides its name, address, and certain other information on a properly executed
Internal Revenue Service Form W-8BEN or a suitable substitute form or (B) a
securities clearing organization, bank or other financial institution that holds
customer securities in the ordinary course of its trade or business and holds
the debt securities in such capacity, certifies to the payor or the payor's
agent, under penalties of perjury, that such a statement has been received from
the beneficial owner by it or by a financial institution between it and the
beneficial owner, and furnishes the payor or the payor's agent with a copy
thereof. The applicable United States Treasury regulations also provide
alternative methods for satisfying the certification requirements of clause (4),
above. Special certification rules apply for debt securities held by a foreign
partnership and other intermediaries.
Except to the extent that an applicable income tax treaty otherwise
provides, a non-U.S. holder generally will be taxed with respect to interest in
the same manner as a U.S. holder if the interest is effectively connected with a
United States trade or business of the non-U.S. holder. Effectively connected
interest income received or accrued by a corporate non-U.S. holder may also,
under certain circumstances, be subject to an additional "branch profits" tax at
a 30% rate (or, if applicable, at a lower tax rate
53
specified by an applicable income tax treaty). Even though such effectively
connected income is subject to income tax, and may be subject to the branch
profits tax, it is not subject to withholding tax if the non-U.S. holder
delivers a properly executed Internal Revenue Service Form W-8ECI (or successor
form) to the payor or the payor's agent.
Sale or Exchange of Debt Securities
A non-U.S. holder generally will not be subject to United States federal
income tax or withholding tax on any gain realized on the sale, exchange or
other disposition of a debt security unless (1) the gain is effectively
connected with a United States trade or business of the non-U.S. holder, (2) in
the case of a non-U.S. holder who is an individual, such holder is present in
the United States for a period or periods aggregating 183 days or more during
the taxable year of the disposition, and either such holder has a "tax home" in
the United States or the disposition is attributable to an office or other fixed
place of business maintained by such holder in the United States or (3) the
non-U.S. holder is subject to tax pursuant to the provisions of the Internal
Revenue Code applicable to certain United States expatriates.
If an individual non-U.S. holder falls under clause (1) above, such
individual generally will be taxed on the net gain derived from a sale in the
same manner as a U.S. holder. If an individual non-U.S. holder falls under
clause (2) above, such individual generally will be subject to a flat 30% tax on
the gain derived from a sale, which may be offset by certain United States
capital losses (notwithstanding the fact that such individual is not considered
a resident of the United States). Individual non-U.S. holders who have spent (or
expect to spend) 183 days or more in the United States in the taxable year in
which they contemplate a sale or other disposition of a debt security are urged
to consult their tax advisors as to the tax consequences of such sale. If a
non-U.S. holder that is a foreign corporation falls under clause (1), it
generally will be taxed on the net gain derived from a sale in the same manner
as a U.S. holder and, in addition, may be subject to the branch profits tax on
such effectively connected income at a 30% rate (or such lower rate as may be
specified by an applicable income tax treaty).
Information Reporting and Backup Withholding Tax
United States backup withholding tax will not apply to payments on the debt
securities to a non-U.S. holder if the statement described in clause (4) of
"Interest Income" is duly provided by such holder, provided that the payor does
not have actual knowledge that the holder is a United States person. Information
reporting requirements may apply with respect to interest payments on the debt
securities, in which event the amount of interest paid and tax withheld (if any)
with respect to each non-U.S. holder will be reported annually to the Internal
Revenue Service. Information reporting requirements and backup withholding tax
will not apply to any payment of the proceeds of the sale of debt securities
effected outside the United States by a foreign office of a "broker" as defined
in applicable Treasury regulations (absent actual knowledge that the payee is a
United States person), unless such broker (1) is a United States person as
defined in the Internal Revenue Code, (2) is a foreign person that derives 50%
or more of its gross income for certain periods from the conduct of a trade or
business in the United States, (3) is a controlled foreign corporation for
United States federal income tax purposes or (4) is a foreign partnership with
certain U.S. connections. Payment of the proceeds of any such sale effected
outside the United States by a foreign office of any broker that is described in
the preceding sentence may be subject to backup withholding tax and information
reporting requirements, unless such broker has documentary evidence in its
records that the beneficial owner is a non-U.S. holder and certain other
conditions are met, or the beneficial owner otherwise establishes an exemption.
Payment of the proceeds of any such sale to or through the United States office
of a broker is subject to information reporting and backup withholding
requirements unless the beneficial owner of the debt securities provides the
statement described in clause (4) of "Interest Income" or otherwise establishes
an exemption.
THE UNITED STATES FEDERAL INCOME TAX DISCUSSION SET FORTH ABOVE IS INCLUDED
FOR GENERAL INFORMATION ONLY AND MAY NOT BE APPLICABLE DEPENDING UPON A HOLDER'S
PARTICULAR SITUATION. HOLDERS SHOULD CONSULT THEIR TAX ADVISORS WITH RESPECT TO
THE TAX CONSEQUENCES TO THEM OF THE OWNERSHIP AND DISPOSITION OF THE
54
DEBT SECURITIES, INCLUDING THE TAX CONSEQUENCES UNDER STATE, LOCAL, FOREIGN AND
OTHER TAX LAWS AND THE POSSIBLE EFFECTS OF CHANGES IN UNITED STATES FEDERAL OR
OTHER TAX LAWS.
TAXATION OF DEBT SECURITIES OF ENERGY FINANCE II
This subsection describes certain material United States federal income tax
consequences of owning and disposing of the debt securities offered by Energy
Finance II. It deals only with debt securities that are due to mature 30 years
or less from the date on which they are issued. The United States federal income
tax consequences of owning and disposing of debt securities that are due to
mature more than 30 years from the date of issue will be discussed in an
applicable prospectus supplement. The discussion regarding United States federal
income tax laws, including the statements regarding the U.S.-Canada double
taxation convention relating to income and capital gains (the "Tax Treaty"),
assumes that any debt securities will be issued, and transfers thereof and
payments thereon will be made, in accordance with the applicable indenture and
deposit agreement.
U.S. HOLDERS OF DEBT SECURITIES
Interest Income
Subject to the original issue discount rules described below, payments of
interest on the debt securities (including the amount of Canadian tax withheld,
if any) generally will be taxable to a U.S. holder as ordinary interest income
at the time such payments are accrued or received (in accordance with the
holder's regular method of tax accounting).
A debt security will be treated as issued with original issue discount
("OID") if its stated redemption price at maturity exceeds its issue price by
more than a de minimis amount. Generally, the issue price will be the first
price at which a substantial amount of the debt securities is sold to persons
other than bond houses, brokers or similar persons or organizations acting in
the capacity of underwriters, placement agents or wholesalers. A debt security's
stated redemption price at maturity is the total of all payments on the debt
security that are not payments of qualified stated interest. An interest payment
is qualified stated interest if it is one of a series of stated interest
payments that are unconditionally payable at least annually at a single fixed
rate.
A debt security is not treated as issued with OID if the OID (i.e., the
excess of the stated redemption price at maturity over the issue price) is de
minimis. For this purpose the amount of OID is de minimis if it does not exceed
the product of 0.25 percent of the stated redemption price at maturity
multiplied by the number of complete years to maturity. If the debt security has
de minimis OID, a holder must generally include the de minimis amount in income
(as capital gain) when stated principal payments are made.
If the debt security is treated as issued with OID, a U.S. holder will be
required to include the amount of the OID in income periodically over the term
of the debt security before receipt of the cash or other payment attributable to
such income and irrespective of such holder's general method of tax accounting.
In particular, a U.S. holder of a debt security must include in gross income, as
interest for United States federal income tax purposes, the sum of the daily
portions of OID with respect to the debt security for each day during the
taxable year or portion of a taxable year in which such holder holds the debt
security ("accrued OID"). The daily portion is determined by allocating to each
day of an accrual period a pro rata portion of an amount equal to the adjusted
issue price of the debt security at the beginning of the accrual period
multiplied by the yield to maturity of the debt security and subtracting from
this product the amount of qualified stated interest allocable to the accrual
period. The adjusted issue price of the debt security at the start of any
accrual period is the issue price of the debt security increased by the accrued
OID for each prior accrual period and decreased by the amount of any payments
previously made with respect to the debt security (other than qualified stated
interest).
55
Source of Income and Foreign Tax Credits With Respect to Debt Securities of
Energy Finance II
If Canadian withholding taxes are imposed on payments on the debt
securities issued by Energy Finance II, a U.S. holder may be eligible for a
United States foreign tax credit with respect to such taxes. The interest
payments will be foreign source income and will generally constitute "passive
income" for foreign tax credit purposes. Moreover, if Canadian withholding taxes
are imposed on the interest payments at a rate that equals or exceeds 5%, such
interest income would constitute "high withholding tax interest" for United
States foreign tax credit purposes. A U.S. holder who is entitled under the Tax
Treaty to a refund of Canadian tax, if any, withheld on interest on the debt
securities will not be entitled to claim a foreign tax credit with respect to
such withheld tax. A U.S. holder that does not claim a foreign tax credit may be
entitled to a deduction for United States federal income tax purposes with
respect to any such Canadian withholding taxes. The calculation of foreign tax
credits or deductions involves the application of complex rules that depend on a
holder's particular circumstances. Accordingly, U.S. holders are urged to
consult their tax advisors regarding the creditability or deductibility of such
taxes. For a discussion of the Canadian income tax considerations, see "Certain
Canadian Federal Income Tax Considerations," below.
Debt Securities Purchased at a Market Discount
A holder will be considered to have purchased a debt security at a "market
discount" if the holder's adjusted basis in the debt security is less than its
stated redemption price at maturity, or in the case of a debt security issued at
a discount, its revised issue price (which has the same meaning as "adjusted
issue price" as defined above), unless such market discount is a de minimis
amount (generally up to 1/4 of 1 percent of the stated redemption price or
revised issue price, as the case may be, on the purchase date multiplied by the
number of complete years to maturity remaining as of such date). In general, any
partial payment of principal on, or gain recognized on the maturity or
disposition of, the debt security will be treated as ordinary income to the
extent that such gain does not exceed the accrued market discount on the
underlying debenture. Alternatively, a holder of a debt security may elect to
include market discount in income currently over the life of the debt security.
Such an election applies to all debt instruments with market discount acquired
by the electing holder on or after the first day of the first taxable year to
which the election applies and may not be revoked without the consent of the
Internal Revenue Service.
Market discount accrues on a straight-line basis unless the holder elects
to accrue such discount on a constant yield to maturity basis. Such an election
is applicable only to the debt security with respect to which it is made and is
irrevocable. A holder of a debt security that does not elect to include market
discount in income currently generally will be required to defer deductions for
interest on borrowings allocable to such debt security in an amount not
exceeding the accrued market discount on such debt security until the maturity
or disposition of such debt security.
Debt Securities Purchased at a Premium
A holder will be considered to have purchased the debt security at a
premium if the holder's adjusted basis in the debt security immediately after
the purchase is greater than the amount payable on maturity of the debt
security. A holder may elect to treat such premium as "amortizable bond
premium," in which case the amount of interest required to be included in the
holder's income each year with respect to the interest on the debt security will
be reduced by the amount of the amortizable bond premium allocable (based on the
debt security's yield to maturity) to such year. Any election to amortize bond
premium is applicable to all bonds (other than bonds the interest on which is
excludible from gross income) held by the holder at the beginning of the first
taxable year to which the election applies or thereafter acquired by the holder,
and may not be revoked without the consent of the Internal Revenue Service.
Sale or Exchange of Debt Securities
A holder will generally recognize taxable gain or loss equal to the
difference between the amount realized on the sale, exchange or other
disposition of the debt security and the holder's adjusted tax basis in such
debt security, except that ordinary income will be recognized to the extent that
a portion of the
56
amount realized is attributable to market discount or accrued interest not
previously included in income. A holder's adjusted tax basis in the debt
security generally will be the initial purchase price paid therefore, increased
by any OID or market discount previously included in income with respect to the
debt security and reduced by any amortizable bond premium and any payments
previously received with respect to the debt security other than qualified
stated interest. In the case of a holder other than a corporation, preferential
tax rates may apply to gain recognized on the sale of a debt security if such
holder's holding period for such debt security exceeds one year.
To the extent the selling price is less than the holder's adjusted tax
basis, the holder will recognize a capital loss. Subject to certain limited
exceptions, capital losses cannot be applied to offset ordinary income for
United States federal income tax purposes.
Other Debt Securities
Special tax rules may apply to certain types of debt securities including,
but not limited to, debt securities subject to contingencies, variable rate debt
securities and debt securities convertible into equity of Calpine. The
applicable prospectus supplement will discuss any such special United States
federal income tax rules with respect to such debt securities.
Information Reporting and Backup Withholding Tax
In general, information reporting requirements and backup withholding will
not apply to payments of principal, premium, if any, and interest on the debt
securities and payments of the proceeds of the sale of the debt securities if
all actions necessary to effect such payments are completed outside the United
States. If any such actions are effected within the United States or if payments
are made by transfer to an account maintained by the payee in the United States
or by mail to a United States address, information reporting and a backup
withholding tax may apply to such payments if the holder fails to comply with
certain identification requirements. Back-up withholding is currently imposed at
a rate of 30%, which rate is scheduled to be reduced in future years. Any
amounts withheld under the backup withholding rules from a payment to a holder
will be allowed as a credit against such holder's United States federal income
tax and may entitle the holder to a refund, provided that the required
information is furnished to the Internal Revenue Service.
THE UNITED STATES FEDERAL INCOME TAX DISCUSSION SET FORTH ABOVE IS INCLUDED
FOR GENERAL INFORMATION ONLY AND MAY NOT BE APPLICABLE DEPENDING UPON A HOLDER'S
PARTICULAR SITUATION. HOLDERS SHOULD CONSULT THEIR TAX ADVISORS WITH RESPECT TO
THE TAX CONSEQUENCES TO THEM OF THE OWNERSHIP AND DISPOSITION OF THE DEBT
SECURITIES, INCLUDING THE TAX CONSEQUENCES UNDER STATE, LOCAL, FOREIGN AND OTHER
TAX LAWS AND THE POSSIBLE EFFECTS OF CHANGES IN UNITED STATES FEDERAL OR OTHER
TAX LAWS.
57
CERTAIN CANADIAN FEDERAL INCOME TAX CONSIDERATIONS
THE DISCUSSION BELOW IS INTENDED TO BE A GENERAL DESCRIPTION ONLY OF
CERTAIN CANADIAN FEDERAL INCOME TAX CONSIDERATIONS APPLICABLE TO THE OWNERSHIP
AND DISPOSITION OF DEBT SECURITIES OF ENERGY FINANCE OR ENERGY FINANCE II
ACQUIRED PURSUANT TO THIS OFFERING, AND IS NOT INTENDED TO BE, NOR SHOULD IT BE
CONSTRUED TO BE, LEGAL OR TAX ADVICE TO ANY PARTICULAR PURCHASER (AS DEFINED
BELOW). ACCORDINGLY, PROSPECTIVE INVESTORS ARE URGED TO CONSULT THEIR OWN TAX
ADVISORS WITH RESPECT TO THE CANADIAN FEDERAL AND PROVINCIAL TAX CONSEQUENCES OF
AN INVESTMENT IN THE DEBT SECURITIES.
In the opinion of McCarthy Tetrault LLP, Canadian tax counsel to Energy
Finance and Energy Finance II, the following is a summary of the principal
Canadian federal income tax considerations generally applicable under the Income
Tax Act (Canada) (the "Tax Act") to a person (a "Purchaser") who acquires
beneficial ownership of debt securities of Energy Finance or Energy Finance II
pursuant to this offering and who for purposes of the Tax Act, and at all
relevant times, is not resident or deemed to be resident in Canada, deals at
arm's length with the issuer of the debt securities, and does not use or hold,
and is not deemed to use or hold, the debt securities in carrying on business in
Canada. For purposes of the Tax Act, related persons (as defined therein) are
deemed not to deal at arm's length, and it is a question of fact whether persons
not related to each other deal at arm's length.
This summary is based on the current provisions of the Tax Act and the
Regulations thereunder (the "Regulations") in force on the date hereof, specific
proposals (the "Tax Proposals") to amend the Tax Act or the Regulations publicly
announced by the Minister of Finance prior to the date hereof, and counsel's
understanding of the current published administrative and assessing practices of
the Canada Customs and Revenue Agency (the "CCRA"). This summary is not
exhaustive of all possible Canadian income tax consequences and, except for the
Tax Proposals, does not take into account or anticipate any changes in law or
changes in the administrative and assessing practices of the CCRA, whether by
legislative, governmental or judicial action, nor does it take into account
income tax laws or considerations of any province or territory of Canada or any
jurisdiction other than Canada. No assurance can be given that the Tax Proposals
will become law in their present form or at all.
The summary assumes that no interest payable on the debt securities will be
contingent or dependent on the use of or production from property in Canada or
computed by reference to revenue, profit, cash flow, commodity price or any
other similar criteria or by reference to dividends paid or payable to
shareholders of any class of shares of the capital stock of a corporation.
The payment of interest, premium, if any, and principal by Energy Finance
or Energy Finance II on the debt securities of a particular series to such a
Purchaser will be exempt from Canadian non-resident withholding tax under the
Tax Act, provided that the terms of the debt securities of that particular
series do not require the issuer thereof to repay more than 25% of the principal
amount payable thereunder before the fifth anniversary of the date of issue of
that particular series of debt securities. If the terms of the debt securities
of a particular series do require the issuer to repay more than 25% of the
principal amount thereof before the fifth anniversary of the date of issue
thereof, or if a Purchaser thereof does not deal at arm's length with the
issuer, the payment of interest thereon will be subject to Canadian non-
resident withholding tax under the Tax Act at a rate of 25% thereof (or, if
applicable, such lower rate as is specified by a tax treaty between Canada and
the Purchaser's country of residence).
No other tax on income (including capital gains) will be payable under the
Tax Act in respect of the holding, repayment, redemption or disposition of the
debt securities, or the receipt of interest, premium, if any, or principal
thereon by a Purchaser, except that in certain circumstances a non-resident
insurer carrying on business in Canada and elsewhere in respect of which the
debt securities are designated insurance property for purposes of the Tax Act,
may be subject to such taxes.
58
LEGAL MATTERS
The validity of the securities offered hereby by Calpine, including the
guarantees of Calpine issued in connection with the issuance of debt securities
by Energy Finance and Energy Finance II and in connection with the issuance of
the trust preferred securities by Trust IV and Trust V, will be passed upon for
us by Covington & Burling, New York, New York. The validity of the debt
securities and warrants of Energy Finance and Energy Finance II offered hereby
will be passed upon for us by Covington & Burling, New York, New York and by
Stewart McKelvey Stirling Scales, Halifax, Nova Scotia, Canada. The validity of
the trust preferred securities to be issued by Trust IV and Trust V, the
enforceability of the declarations of trust and the creation of Trust IV and
Trust V will be passed upon for us by Richards, Layton and Finger, P.A.,
Wilmington, Delaware. Any underwriters will be represented by Skadden, Arps,
Slate, Meagher & Flom LLP, New York, New York.
EXPERTS
Our audited financial statements incorporated by reference in this
prospectus and elsewhere in the registration statement of which this prospectus
is a part 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 our Annual Report on Form 10-K
for the year ended December 31, 2001, is included herein in reliance upon the
authority of said firm as experts in giving said report.
59
[CALPINE LOGO]
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
Corporation ("Calpine") in connection with sales of the securities being
registered. All amounts are estimates except the SEC registration statement
filing fee.
<Table>
SEC Registration Statement filing fee....................... $ 1
Legal fees and expenses..................................... 500,000
Accounting fees and expenses................................ 144,500
Trustee's fees and expenses (including counsel fees)........ 120,000
Printing fees............................................... 450,000
Transfer agent fees......................................... 12,000
Miscellaneous............................................... 3,499
----------
Total..................................................... $1,230,000
==========
</Table>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
CALPINE CORPORATION
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 the 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.
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 the
II-1
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.
CALPINE CANADA ENERGY FINANCE ULC
Every director or officer, former director or officer, or person who acts
or acted at the request of Calpine Canada Energy Finance ULC, as a director or
officer of Calpine Canada Energy Finance ULC, a body corporate, partnership or
other association of which Calpine Canada Energy Finance ULC is or was a
shareholder, partner, member or creditor, and the heirs and legal
representatives of such person, in the absence of any dishonesty on the part of
such person, shall be indemnified by Calpine Canada Energy Finance ULC against
all costs, losses and expenses, including an amount paid to settle an action or
claim or satisfy a judgment, that such person may incur or become liable to pay
in respect of any claim made against such person or civil, criminal or
administrative action or proceeding to which such person is made a party by
reason of being or having been a director or officer of Calpine Canada Energy
Finance ULC.
CALPINE CANADA ENERGY FINANCE II ULC
Every director or officer, former director or officer, or person who acts
or acted at the request of Calpine Canada Energy Finance II ULC, as a director
or officer of Calpine Canada Energy Finance II ULC, a body corporate,
partnership or other association of which Calpine Canada Energy Finance II ULC
is or was a shareholder, partner, member or creditor, and the heirs and legal
representatives of such person, in the absence of any dishonesty on the part of
such person, shall be indemnified by Calpine Canada Energy Finance II ULC
against all costs, losses and expenses, including an amount paid to settle an
action or claim or satisfy a judgment, that such person may incur or become
liable to pay in respect of any claim made against such person or civil,
criminal or administrative action or proceeding to which such person is made a
party by reason of being or having been a director or officer of Calpine Canada
Energy Finance II ULC.
CALPINE CAPITAL TRUST IV AND CALPINE CAPITAL TRUST V
In each of the Declarations of Trust of Calpine Capital Trust IV and
Calpine Capital Trust V (each, a "Trust"), Calpine, as Depositor, agrees to
indemnify, defend and hold harmless the trustees of the applicable Trust, and
any of the officers, directors, employees and agents of those trustees
(collectively, the "Indemnified Persons"), from and against any and all losses,
damages, liabilities, claims, actions, suits, costs, expenses, disbursements
(including the reasonable fees and expenses of counsel), taxes and penalties of
any kind and nature whatsoever (collectively, "Expenses"), to the extent that
such Expenses arise out of or are imposed upon or asserted at any time against
such Indemnified Persons with respect to the performance of the applicable
Declaration of Trust, the creation, operation or termination of the applicable
Trust or the transactions contemplated by the applicable Declaration of Trust;
provided, however, that Calpine is not required to indemnify any Indemnified
Person for any Expenses that are a result of the willful misconduct, bad faith
or gross negligence of such Indemnified Person.
II-2
ITEM 16. EXHIBITS.
<Table>
<Caption>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
*1.1 Form of Underwriting Agreement with respect to Common Stock,
Preferred Stock and Debt Securities of Calpine Corporation
+1.2 Form of Underwriting Agreement with respect to Units,
Purchase Contracts, Warrants and Depositary Shares of
Calpine Corporation
+1.3 Form of Underwriting Agreement with respect to securities of
Calpine Canada Energy Finance ULC
+1.4 Form of Underwriting Agreement with respect to securities of
Calpine Canada Energy Finance II ULC
*1.5 Form of Underwriting Agreement with respect to securities of
Calpine Capital Trust IV ("Trust IV") and Calpine Capital
Trust V ("Trust V")
3.1 Amended and Restated Certificate of Incorporation of Calpine
Corporation(a)
3.2 Certificate of Correction of Calpine Corporation(b)
3.3 Certificate of Amendment of Amended and Restated Certificate
of Incorporation of Calpine Corporation(c)
3.4 Certificate of Designation of Series A Participating
Preferred Stock of Calpine Corporation(b)
3.5 Amendment to Certificate of Designation of Series A
Participating Preferred Stock of Calpine Corporation(b)
3.6 Amendment to Certificate of Designation of Series A
Participating Preferred Stock of Calpine Corporation(c)
3.7 Certificate of Designation of Special Voting Preferred Stock
of Calpine Corporation(d)
3.8 Amended and Restated By-laws of Calpine Corporation(k)
3.9 Memorandum of Association of Calpine Canada Energy Finance
ULC(f)
3.10 Articles of Association of Calpine Canada Energy Finance
ULC(f)
3.11 Memorandum of Association of Calpine Canada Energy Finance
II ULC(g)
3.12 Articles of Association of Calpine Canada Energy Finance II
ULC(g)
*4.1 Indenture dated as of August 10, 2000 between Calpine
Corporation and Wilmington Trust Company, as Trustee
4.2 First Supplemental Indenture dated as of September 28, 2000
between Calpine Corporation and Wilmington Trust Company, as
Trustee(b)
4.3 Indenture dated as of April 25, 2001 between Calpine Canada
Energy Finance ULC and Wilmington Trust Company, as
Trustee(h)
4.4 Guarantee Agreement dated as of April 25, 2001 between
Calpine Corporation and Wilmington Trust Company, as
Trustee, with respect to debt securities of Calpine Canada
Energy Finance ULC(i)
4.5 Amended and Restated Indenture dated as of October 16, 2001
between Calpine Canada Energy Finance ULC and Wilmington
Trust Company, as Trustee(i)
4.6 First Amendment to Guarantee Agreement dated as of October
16, 2001 between Calpine Canada and Wilmington Trust
Company, as Trustee(i)
4.7 Indenture dated as of October 18, 2001 between Calpine
Canada Energy Finance II ULC and Wilmington Trust Company,
as Trustee(i)
4.8 Guarantee Agreement dated as of October 18, 2001 between
Calpine Corporation and Wilmington Trust Company, as
Trustee, with respect to debt securities of Calpine Canada
Energy Finance ULC II(i)
4.9 First Amendment to Guarantee Agreement dated as of October
18, 2001 between Calpine Corporation and Wilmington Trust
Company, as Trustee(i)
4.10 Amended and Restated Rights Agreement, dated as of September
19, 2001 between Calpine Corporation and EquiServe Trust
Company, N.A., as Rights Agent(j)
*4.11 Declaration of Trust of Trust IV
</Table>
II-3
<Table>
<Caption>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
*4.12 Declaration of Trust of Trust V
+4.13 Form of Amended and Restated Declaration of Trust
*4.14 Certificate of Trust of Trust IV, filed January 10, 2002
*4.15 Certificate of Trust of Trust V, filed January 10, 2002
*4.16 Form of Preferred Securities Guarantee Agreement between
Calpine Corporation, as Guarantor and Wilmington Trust
Company, as Guarantee Trustee with respect to Trust IV and
Trust V
+4.17 Form of Forward Purchase Contract Agreement
+4.18 Form of Pledge Agreement
+4.19 Form of Remarketing Agreement
*4.20 Form of Deposit Agreement
*4.21 Form of Depositary Receipt (included in Exhibit 4.20)
++5.1 Opinion of Covington & Burling
+5.2 Opinion of Richards, Layton & Finger, P.A. with respect to
Trust IV
+5.3 Opinion of Richards, Layton & Finger, P.A. with respect to
Trust V
++5.4 Opinion of Stewart McKelvey Stirling Scales
++8.1 Opinion of Covington & Burling as to certain U.S. federal
tax matters
++8.2 Opinion of McCarthy Tetrault LLP as to certain Canadian
federal tax matters
12.1 Statement Regarding Computation of Ratios(k)
++23.1 Consent of Arthur Andersen LLP, independent public
accountants
++23.2 Consent of Covington & Burling (included in Exhibits 5.1 and
8.1)
+23.3 Consent of Richards, Layton & Finger P.A. (included in
Exhibit 5.2)
+23.4 Consent of Richards Layton & Finger P.A. (included in
Exhibit 5.3)
++23.5 Consent of McCarthy Tetrault LLP (included in Exhibit 8.2)
++23.6 Consent of Stewart McKelvey Stirling Scales (included in
Exhibit 5.4)
++23.7 Consent of Ernst and Young LLP, independent chartered
accountants
*24.1 Power of Attorney of Officers and Directors of Calpine
*24.2 Power of Attorney of Officers and Directors of Calpine
Canada Energy Finance ULC
*24.3 Power of Attorney of Officers and Directors of Calpine
Canada Energy Finance II ULC
*25.1 Form T-1 Statement of Eligibility under the Trust Indenture
Act of 1939, as amended, of Wilmington Trust Company, as
Trustee under the Calpine Corporation Indenture
*25.2 Form T-1 Statements of Eligibility under the Trust Indenture
Act of 1939, as amended, of Wilmington Trust Company, as
Trustee with respect to the Calpine Canada Energy Finance
ULC Indenture and the Calpine/Calpine Canada Energy Finance
ULC Guarantee
*25.3 Form T-1 Statements of Eligibility under the Trust Indenture
Act of 1939, as amended, of Wilmington Trust Company, as
Trustee with respect to the Calpine Canada Energy Finance II
ULC Indenture and the Calpine/Calpine Canada Energy Finance
II ULC Guarantee
+25.4 Form T-1 Statement of Eligibility under the Trust Indenture
Act of 1939, as amended, of Wilmington Trust Company, as
Trustee under the Form of Amended and Restated Declaration
of Trust of Calpine Capital Trust IV relating to the Trust
Preferred Securities
+25.5 Form T-1 Statement of Eligibility under the Trust Indenture
Act of 1939, as amended, of Wilmington Trust Company, as
Trustee under the Form of Amended and Restated Declaration
of Trust of Calpine Capital Trust V relating to the Trust
Preferred Securities
+25.6 Form T-1 Statement of Eligibility under the Trust Indenture
Act of 1939, as amended, of Wilmington Trust Company, as
Trustee under the Form of Guarantee Agreement of Calpine
Corporation relating to the Trust Preferred Securities of
Calpine Capital Trust IV
</Table>
II-4
<Table>
<Caption>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
+25.7 Form T-1 Statement of Eligibility under the Trust Indenture
Act of 1939, as amended, of Wilmington Trust Company, as
Trustee under the Form of Guarantee Agreement of Calpine
Corporation relating to the Trust Preferred Securities of
Calpine Capital Trust V
</Table>
- ---------------
* Previously filed.
+ To be filed by amendment or by a report on Form 8-K pursuant to Item 601 of
Regulation S-K and incorporated herein by reference.
++ Filed herewith.
(a) Incorporated by reference to Calpine Corporation's Registration Statement on
Form S-3 (Registration No. 333-40652) filed with the SEC on June 30, 2000.
(b) Incorporated by reference to Calpine Corporation's Annual Report on Form
10-K for the year ended December 31, 2000, filed with the SEC on March 15,
2001.
(c) Incorporated by reference to Calpine Corporation's Registration Statement on
Form S-3 (Registration No. 333-66078) filed with the SEC on July 27, 2001.
(d) Incorporated by reference to Calpine Corporation's Quarterly Report on Form
10-Q dated March 31, 2001 and filed on May 15, 2001 (File No. 001-12079).
(e) Incorporated by reference to Calpine Corporation's Registration Statement on
Form S-3/A (Registration No. 333-67446) filed with the SEC on September 20,
2001.
(f) Incorporated by reference to Calpine Corporation's Registration Statement on
Form S-3 (Registration No. 333-57338) filed with the SEC on March 21, 2001.
(g) Incorporated by reference to Calpine Corporation's Registration Statement on
Form S-3 (Registration No. 333-67446) filed with the SEC on August 14, 2001.
(h) Incorporated by reference to Calpine Corporation's Registration Statement on
Form S-3/A (Registration No. 333-57338) filed with the SEC on April 19,
2001.
(i) Incorporated by reference to Calpine Corporation's Current Report on Form
8-K dated October 16, 2001 and filed with the SEC on November 13, 2001.
(j) Incorporated by reference to Calpine Corporation's Registration Statement on
Form 8-A/A filed with the SEC on September 28, 2001.
(k)Incorporated by reference to Calpine Corporation's Annual Report on Form 10-K
for the year ended December 31, 2001, filed with the SEC on March 29, 2002.
ITEM 17. UNDERTAKINGS
The undersigned registrants hereby undertake:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) to include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) to reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of prospectus filed
with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than 20 percent change
II-5
in the maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration statement;
(iii) 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;
provided, however, that paragraphs (1)(i) and (1)(ii) above do not apply if
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the registrants
pursuant to Section 13 or 15(d) of the Exchange Act that are incorporated
by reference in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each 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 any of the registrants 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 registrants include 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.
(5) That, for purposes of determining any liability under the
Securities Act of 1933, the information omitted from the form of prospectus
filed as part of this registration statement in reliance upon Rule 430A and
contained in a form of prospectus filed by the registrant pursuant to Rule
424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be
part of this registration statement as of the time it was declared
effective.
(6) That, for purposes of determining any liability under the
Securities Act of 1933, each filing of Calpine Corporation'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.
(7) To file an application for the purpose of determining the
eligibility of any trustee to act under subsection (a) of Section 310 of
the Trust Indenture Act in accordance with the rules and regulations
prescribed by the Securities and Exchange Commission under Section
305(b)(2) of the Trust Indenture Act.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
registrants pursuant to the foregoing provisions, or otherwise, the registrants
have 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
II-6
a claim for indemnification against such liabilities (other than the payment by
the registrants of expenses incurred or paid by a director, officer or
controlling person of the registrants 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 registrants 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 it is against public policy as expressed in the
Securities Act of 1933 and will be governed by the final adjudication of such
issue.
II-7
SIGNATURES
CALPINE CORPORATION
Pursuant to the requirements of the Securities Act of 1933, Calpine
Corporation 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 be signed on
its behalf by the undersigned, thereunto duly authorized, in the City of San
Jose, State of California, on this 4th day of April, 2002.
CALPINE CORPORATION
By /s/ ROBERT D. KELLY
------------------------------------
Robert D. Kelly
Executive Vice President and
Chief Financial Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
Amendment No. 1 to the Registration Statement on Form S-3 has been signed below
by the following persons on behalf of Calpine Corporation and in the capacities
and on the dates indicated.
<Table>
<Caption>
SIGNATURE TITLE DATE
--------- ----- ----
* Chairman, President, Chief April 4, 2002
- ----------------------------------------------------- Executive Officer and Director
Peter Cartwright (Principal Executive Officer)
/s/ ANN B. CURTIS Executive Vice President, April 4, 2002
- ----------------------------------------------------- Vice Chairman and Director
Ann B. Curtis
/s/ ROBERT D. KELLY Executive Vice President and April 4, 2002
- ----------------------------------------------------- Chief Financial Officer
Robert D. Kelly (Principal Financial Officer)
* Senior Vice President and April 4, 2002
- ----------------------------------------------------- Corporate Controller
Charles B. Clark, Jr. (Principal Accounting Officer)
Director
- -----------------------------------------------------
Kenneth T. Derr
* Director April 4, 2002
- -----------------------------------------------------
Jeffrey E. Garten
* Director April 4, 2002
- -----------------------------------------------------
Gerald Greenwald
* Director April 4, 2002
- -----------------------------------------------------
Susan C. Schwab
* Director April 4, 2002
- -----------------------------------------------------
George J. Stathakis
</Table>
II-8
<Table>
<Caption>
SIGNATURE TITLE DATE
--------- ----- ----
* Director April 4, 2002
- -----------------------------------------------------
John O. Wilson
*By: /s/ ANN B. CURTIS
------------------------------------------------
Ann B. Curtis
Attorney-in-fact
</Table>
II-9
SIGNATURES
CALPINE CANADA ENERGY FINANCE ULC
Pursuant to the requirements of the Securities Act of 1933, Calpine Canada
Energy Finance ULC 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
be signed on its behalf by the undersigned, thereunto duly authorized, in the
City of Calgary, Province of Alberta, on this 4th day of April, 2002.
CALPINE CANADA ENERGY FINANCE ULC
By /s/ DANIEL ALLARD
------------------------------------
Daniel Allard
Vice President
Pursuant to the requirements of the Securities Exchange Act of 1934, this
Amendment No. 1 to the Registration Statement on Form S-3 has been signed below
by the following persons on behalf of Calpine Canada Energy Finance ULC and in
the capacities and on the dates indicated.
<Table>
<Caption>
SIGNATURE TITLE DATE
--------- ----- ----
Vice President and Director
- -----------------------------------------------------
Robert McManus
* Vice President and Director April 4, 2002
- -----------------------------------------------------
Daniel Allard
* President and Director April 4, 2002
- ----------------------------------------------------- (Principal Executive Officer)
Peter Cartwright
/s/ ANN B. CURTIS Vice President, Secretary and April 4, 2002
- ----------------------------------------------------- Director
Ann B. Curtis (Principal Financial and
Accounting Officer)
* Vice President and Director April 4, 2002
- -----------------------------------------------------
Arthur MacNichol
Authorized Representative in April 4, 2002
the United States
/s/ ANN B. CURTIS
- -----------------------------------------------------
Ann B. Curtis
Authorized Representative
*By: /s/ ANN B. CURTIS
------------------------------------------------
Ann B. Curtis
Attorney-in-fact
</Table>
II-10
SIGNATURES
CALPINE CANADA ENERGY FINANCE II ULC
Pursuant to the requirements of the Securities Act of 1933, Calpine Canada
Energy Finance II ULC 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
be signed on its behalf by the undersigned, thereunto duly authorized, in the
City of Calgary, Province of Alberta, on this 4th day of April, 2002.
CALPINE CANADA ENERGY FINANCE II ULC
By /s/ DANIEL ALLARD
------------------------------------
Daniel Allard
Vice President
Pursuant to the requirements of the Securities Exchange Act of 1934, this
Amendment No. 1 to Registration Statement on Form S-3 has been signed below by
the following persons on behalf of Calpine Canada Energy Finance II ULC and in
the capacities and on the dates indicated.
<Table>
<Caption>
SIGNATURE TITLE DATE
--------- ----- ----
Vice President and Director
- -----------------------------------------------------
Robert McManus
* Vice President and Director April 4, 2002
- -----------------------------------------------------
Daniel Allard
* President and Director April 4, 2002
- ----------------------------------------------------- (Principal Executive Officer)
Peter Cartwright
/s/ ANN B. CURTIS Vice President, Secretary and April 4, 2002
- ----------------------------------------------------- Director
Ann B. Curtis (Principal Financial and
Accounting Officer)
* Vice President and Director April 4, 2002
- -----------------------------------------------------
Arthur MacNichol
Authorized Representative in April 4, 2002
the United States
/s/ ANN B. CURTIS
- -----------------------------------------------------
Ann B. Curtis
Authorized Representative
</Table>
*By: /s/ ANN B. CURTIS
-------------------------------
Ann B. Curtis
Attorney-in-fact
II-11
SIGNATURES
CALPINE CAPITAL TRUST IV AND CALPINE CAPITAL TRUST V
Pursuant to the requirements of the Securities Act of 1933, each of Calpine
Capital Trust IV and Calpine Capital Trust V 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 be signed on its behalf by the undersigned, thereunto
duly authorized in the City of San Jose, State of California, on this 4th day of
April, 2002.
CALPINE CAPITAL TRUST IV,
By Calpine Corporation, as Depositor
By /s/ ANN B. CURTIS
------------------------------------
Ann B. Curtis
Executive Vice President and
Chief Financial Officer
CALPINE CAPITAL TRUST V,
By Calpine Corporation, as Depositor
By /s/ ANN B. CURTIS
------------------------------------
Ann B. Curtis
Executive Vice President and
Chief Financial Officer
II-12
INDEX TO EXHIBITS
<Table>
<Caption>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
*1.1 Form of Underwriting Agreement with respect to Common Stock,
Preferred Stock and Debt Securities of Calpine Corporation
+1.2 Form of Underwriting Agreement with respect to Units,
Purchase Contracts, Warrants and Depositary Shares of
Calpine Corporation
+1.3 Form of Underwriting Agreement with respect to securities of
Calpine Canada Energy Finance ULC
+1.4 Form of Underwriting Agreement with respect to securities of
Calpine Canada Energy Finance II ULC
*1.5 Form of Underwriting Agreement with respect to securities of
Calpine Capital Trust IV ("Trust IV") and Calpine Capital
Trust V ("Trust V")
3.1 Amended and Restated Certificate of Incorporation of Calpine
Corporation(a)
3.2 Certificate of Correction of Calpine Corporation(b)
3.3 Certificate of Amendment of Amended and Restated Certificate
of Incorporation of Calpine Corporation(c)
3.4 Certificate of Designation of Series A Participating
Preferred Stock of Calpine Corporation(b)
3.5 Amendment to Certificate of Designation of Series A
Participating Preferred Stock of Calpine Corporation(b)
3.6 Amendment to Certificate of Designation of Series A
Participating Preferred Stock of Calpine Corporation(c)
3.7 Certificate of Designation of Special Voting Preferred Stock
of Calpine Corporation(d)
3.8 Amended and Restated By-laws of Calpine Corporation(k)
3.9 Memorandum of Association of Calpine Canada Energy Finance
ULC(f)
3.10 Articles of Association of Calpine Canada Energy Finance
ULC(f)
3.11 Memorandum of Association of Calpine Canada Energy Finance
II ULC(g)
3.12 Articles of Association of Calpine Canada Energy Finance II
ULC(g)
*4.1 Indenture dated as of August 10, 2000 between Calpine
Corporation and Wilmington Trust Company, as Trustee
4.2 First Supplemental Indenture dated as of September 28, 2000
between Calpine Corporation and Wilmington Trust Company, as
Trustee(b)
4.3 Indenture dated as of April 25, 2001 between Calpine Canada
Energy Finance ULC and Wilmington Trust Company, as
Trustee(h)
4.4 Guarantee Agreement dated as of April 25, 2001 between
Calpine Corporation and Wilmington Trust Company, as
Trustee, with respect to debt securities of Calpine Canada
Energy Finance ULC(i)
4.5 Amended and Restated Indenture dated as of October 16, 2001
between Calpine Canada Energy Finance ULC and Wilmington
Trust Company, as Trustee(i)
4.6 First Amendment to Guarantee Agreement dated as of October
16, 2001 between Calpine Canada and Wilmington Trust
Company, as Trustee(i)
4.7 Indenture dated as of October 18, 2001 between Calpine
Canada Energy Finance II ULC and Wilmington Trust Company,
as Trustee(i)
4.8 Guarantee Agreement dated as of October 18, 2001 between
Calpine Corporation and Wilmington Trust Company, as
Trustee, with respect to debt securities of Calpine Canada
Energy Finance ULC II(i)
4.9 First Amendment to Guarantee Agreement dated as of October
18, 2001 between Calpine Corporation and Wilmington Trust
Company, as Trustee(i)
4.10 Amended and Restated Rights Agreement, dated as of September
19, 2001 between Calpine Corporation and EquiServe Trust
Company, N.A., as Rights Agent(j)
*4.11 Declaration of Trust of Trust IV
*4.12 Declaration of Trust of Trust V
+4.13 Form of Amended and Restated Declaration of Trust
</Table>
<Table>
<Caption>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
*4.14 Certificate of Trust of Trust IV, filed January 10, 2002
*4.15 Certificate of Trust of Trust V, filed January 10, 2002
*4.16 Form of Preferred Securities Guarantee Agreement between
Calpine Corporation, as Guarantor and Wilmington Trust
Company, as Guarantee Trustee with respect to Trust IV and
Trust V
+4.17 Form of Forward Purchase Contract Agreement
+4.18 Form of Pledge Agreement
+4.19 Form of Remarketing Agreement
*4.20 Form of Deposit Agreement
*4.21 Form of Depositary Receipt (included in Exhibit 4.20)
++5.1 Opinion of Covington & Burling
+5.2 Opinion of Richards, Layton & Finger, P.A. with respect to
Trust IV
+5.3 Opinion of Richards, Layton & Finger, P.A. with respect to
Trust V
++5.4 Opinion of Stewart McKelvey Stirling Scales
++8.1 Opinion of Covington & Burling as to certain U.S. federal
tax matters
++8.2 Opinion of McCarthy Tetrault LLP as to certain Canadian
federal tax matters
12.1 Statement Regarding Computation of Ratios(k)
++23.1 Consent of Arthur Andersen LLP, independent public
accountants
++23.2 Consent of Covington & Burling (included in Exhibits 5.1 and
8.1)
+23.3 Consent of Richards, Layton & Finger P.A. (included in
Exhibit 5.2)
+23.4 Consent of Richards, Layton & Finger P.A. (included in
Exhibit 5.3)
++23.5 Consent of McCarthy Tetrault LLP (included in Exhibit 8.2)
++23.6 Consent of Stewart McKelvey Stirling Scales (included in
Exhibit 5.4)
++23.7 Consent of Ernst and Young LLP, independent chartered
accountants
*24.1 Power of Attorney of Officers and Directors of Calpine
*24.2 Power of Attorney of Officers and Directors of Calpine
Canada Energy Finance ULC
*24.3 Power of Attorney of Officers and Directors of Calpine
Canada Energy Finance II ULC
*25.1 Form T-1 Statement of Eligibility under the Trust Indenture
Act of 1939, as amended, of Wilmington Trust Company, as
Trustee under the Calpine Corporation Indenture
*25.2 Form T-1 Statements of Eligibility under the Trust Indenture
Act of 1939, as amended, of Wilmington Trust Company, as
Trustee with respect to the Calpine Canada Energy Finance
ULC Indenture and the Calpine/Calpine Canada Energy Finance
ULC Guarantee
*25.3 Form T-1 Statements of Eligibility under the Trust Indenture
Act of 1939, as amended, of Wilmington Trust Company, as
Trustee with respect to the Calpine Canada Energy Finance II
ULC Indenture and the Calpine/Calpine Canada Energy Finance
II ULC Guarantee
+25.4 Form T-1 Statement of Eligibility under the Trust Indenture
Act of 1939, as amended, of Wilmington Trust Company, as
Trustee under the Form of Amended and Restated Declaration
of Trust of Calpine Capital Trust IV relating to the Trust
Preferred Securities
+25.5 Form T-1 Statement of Eligibility under the Trust Indenture
Act of 1939, as amended, of Wilmington Trust Company, as
Trustee under the Form of Amended and Restated Declaration
of Trust of Calpine Capital Trust V relating to the Trust
Preferred Securities
+25.6 Form T-1 Statement of Eligibility under the Trust Indenture
Act of 1939, as amended, of Wilmington Trust Company, as
Trustee under the Form of Guarantee Agreement of Calpine
Corporation relating to the Trust Preferred Securities of
Calpine Capital Trust IV
+25.7 Form T-1 Statement of Eligibility under the Trust Indenture
Act of 1939, as amended, of Wilmington Trust Company, as
Trustee under the Form of Guarantee Agreement of Calpine
Corporation relating to the Trust Preferred Securities of
Calpine Capital Trust V
</Table>
- -------------------------
* Previously filed.
+ To be filed by amendment or by a report on Form 8-K pursuant to Item 601 of
Regulation S-K and incorporated herein by reference.
++ Filed herewith.
(a) Incorporated by reference to Calpine Corporation's Registration Statement on
Form S-3 (Registration No. 333-40652) filed with the SEC on June 30, 2000.
(b) Incorporated by reference to Calpine Corporation's Annual Report on Form
10-K for the year ended December 31, 2000, filed with the SEC on March 15,
2001.
(c) Incorporated by reference to Calpine Corporation's Registration Statement
on Form S-3 (Registration No. 333-66078) filed with the SEC on July 27,
2001.
(d) Incorporated by reference to Calpine Corporation's Quarterly Report on Form
10-Q dated March 31, 2001 and filed on May 15, 2001 (File No. 001-12079).
(e) Incorporated by reference to Calpine Corporation's Registration Statement
on Form S-3/A (Registration No. 333-67446) filed with the SEC on September
20, 2001.
(f) Incorporated by reference to Calpine Corporation's Registration Statement
on Form S-3 (Registration No. 333-57338) filed with the SEC on March 21,
2001.
(g) Incorporated by reference to Calpine Corporation's Registration Statement on
Form S-3 (Registration No. 333-67446) filed with the SEC on August 14, 2001.
(h) Incorporated by reference to Calpine Corporation's Registration Statement on
Form S-3/A (Registration No. 333-57338) filed with the SEC on April 19,
2001.
(i) Incorporated by reference to Calpine Corporation's Current Report on Form
8-K dated October 16, 2001 and filed with the SEC on November 13, 2001.
(j) Incorporated by reference to Calpine Corporation's Registration Statement
on Form 8-A/A filed with the SEC on September 28, 2001.
(k) Incorporated by reference to Calpine Corporation's Annual Report on Form
10-K for the year ended December 31, 2001, filed with the SEC on March 29,
2002.