UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): November 9, 2004
CALPINE CORPORATION
(A Delaware Corporation)
Commission file number: 001-12079
I.R.S. Employer Identification No. 77-0212977
50 West San Fernando Street
San Jose, California 95113
Telephone: (408) 995-5115
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions:
[ ] Written communications pursuant to Rule 425 under the Securities Act
(17 CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act
(17 CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
ITEM 8.01 -- OTHER EVENTS.
On November 9, 2004, Calpine Corporation (the "Company") filed its
Quarterly Report on Form 10-Q for the quarter ended September 30, 2004 (the
"Report") with the Securities and Exchange Commission. The document listed as
Exhibit 99.1 to the Report was inadvertently omitted from such filing.
Accordingly, the Company is filing such document as Exhibit 99.1 to this Form
8-K.
ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements of Businesses Acquired.
Not Applicable
(b) Pro Forma Financial Information.
Not Applicable
(c) Exhibits.
99.1 Term Debenture, issued August 23, 2001, by Calpine Canada Resources
Ltd., to Calpine Canada Energy Finance II ULC.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
CALPINE CORPORATION
By: /s/ Charles B. Clark, Jr.
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Charles B. Clark, Jr.
Senior Vice President and Controller
Chief Accounting Officer
Date: November 10, 2004
EXHIBIT INDEX
Exhibit Description
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99.1 Term Debenture, issued August 23, 2001, by Calpine Canada Resources
Ltd., to Calpine Canada Energy Finance II ULC.
EXHIBIT 99.1
Execution Copy
TERM DEBENTURE
CALPINE CANADA RESOURCES LTD., a corporation subsisting under the
laws of the Province of Alberta, Canada ("Issuer")
(pound)275,000,000
Due: April 25, 2021
THIS DEBENTURE is issued this 23rd day of August, 2001 by the Issuer, whose
principal office or place of business is located at Suite 1000, 350 - 7th Avenue
S.W., Calgary, Alberta, to Calpine Canada Energy Finance II ULC, an unlimited
liability company subsisting under the laws of the Province of Nova Scotia (the
"Holder") with a registered office at Suite 800, Purdy's Wharf Tower One, 1959
Upper Water Street, P.O. Box 997, Halifax, Nova Scotia.
WHEREAS this Debenture is issued to Calpine Canada Energy Finance II ULC,
the initial Holder, as consideration for an advance made by Holder to Issuer for
general corporate purposes;
AND WHEREAS it is intended that this Debenture may be used by the Holder to
arrange its financing and may be held by the Holder, or sold, assigned, pledged
as security from time to time by the Holder, (or otherwise used or transferred
by the Holder) in connection with the Holder's financing activities;
NOW THEREFORE for good and valuable consideration (the receipt and
sufficiency of which is hereby acknowledged), the Issuer covenants,
acknowledges, represents and warrants as follows:
ARTICLE 1
INTERPRETATION
1.1 Definitions
Each word and phrase with initial capitals used in this Debenture has the
meaning assigned to it in Schedule "A".
1.2 Statutes
A reference in this Debenture to a statute refers to that statute as it may be
amended from time to time, and to any restated or successor legislation of
comparable effect.
1.3 Generally Accepted Accounting Terms
Where the Canadian Institute of Chartered Accountants includes a recommendation
in its Handbook concerning the treatment of any accounting matter, such
recommendation shall be regarded as the only generally accepted accounting
principle applicable to the circumstances that it covers and references herein
to generally accepted accounting principles shall be interpreted accordingly.
1.4 Headings
The division of this Debenture into Articles, Sections, and Schedules and the
insertion of headings are for convenience of reference only and shall not affect
the construction or interpretation of this Debenture. The Article, Section and
Schedule headings in this Debenture are not intended to be full or precise
descriptions of the text to which they refer and shall not be considered part of
this Debenture.
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1.5 Number and Gender
In this Debenture, words in the singular include the plural and vice versa and
words in one gender include all genders.
1.6 Currency
All sums of money payable under this Debenture shall be denominated in Pounds
Sterling.
1.7 Schedules
The following Schedules are incorporated into and form part of this Debenture:
SCHEDULE DESCRIPTION
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A Definitions
B Interest Rate Determinations
ARTICLE 2
DEBENTURE PAYMENTS
2.1 Promise to Pay
The Issuer hereby acknowledges itself indebted to the Holder and:
(a) promises to pay the Holder, by certified cheque (unless otherwise
directed by the Holder) payable to or to the order of the Holder and
delivered to the address of the Holder shown in the Register, on the
Maturity Date (or on such earlier date as the principal indebtedness
hereby evidenced may become payable in accordance with the terms
hereof) the principal sum of (pound)275,000,000 (as restated from time
to time pursuant to Section 2.4, the "Principal Amount"); and
(b) promises to pay interest thereon to Holder, at the rate per annum
equal to the Interest Rate in effect from time to time, both before
and after maturity, default or judgment, together with interest on
overdue interest at the same rate, provided that the amount of any
such interest obligation payable on any Interest Payment Date shall be
rounded down to the next whole pound.
Without limiting the Issuer's payment obligation, the Holder of this Debenture
may demand payment of the Principal Amount by presenting and surrendering this
Debenture on the Maturity Date (or on any earlier date the Principal Amount may
become payable in accordance with the terms hereof) at the office of the Issuer
in the City of Calgary, Alberta, specified in Section 7.3 hereof (or at such
other place in Canada as the Issuer may designate from time to time by five (5)
Business Days written notice to the Holder), or may demand payment in any other
manner permitted by applicable law. Interest shall accrue on a daily basis
(without compounding unless interest is overdue) and shall be calculated and
payable in arrears on the following dates (each, an "Interest Payment Date"):
(I) on the last Business Day of each Interest Period (with the first such
payment of interest becoming due and payable on the last Business Day of the
first Interest Period of this Debenture); and (II) on such earlier date as the
Principal Amount shall be repaid in full in accordance with the terms hereof.
Interest hereon shall be paid in cash by wire transfer or uncertified cheque
payable on the Interest Payment Date to the Holder, in the case of any
uncertified cheque, mailed to the Holder's address as shown on the Register
three (3) Business Days prior to the relevant Interest Payment Date.
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2.2 Interest Reset
The Holder may, from time to time, on notice (each, an "Interest Reset Notice")
delivered to the Issuer at least ninety (90) days and not more than 120 days
prior to the Initial Reset Date or next Reset Date, as the case may be, advise
the Issuer that, effective on the Initial Reset Date or next Reset Date, as
applicable, the Interest Rate shall be calculated using the Premium and the
Reference Rate proposed in such Interest Reset Notice, which Premium and
Reference Rate shall be selected in the Holder's sole discretion. Not less than
ten (10) Business Days prior to such Reset Date, the Issuer shall advise the
Holder in writing (each, an "Interest Advisory Notice") if the Premium and
Reference Rate stated in the relevant Interest Reset Notice are acceptable to
the Issuer. If the Issuer:
(a) delivers an Interest Advisory Notice to the Holder in which the Issuer
agrees to accept such proposed Premium and Reference Rate, then,
effective the Initial Reset Date or next Reset Date, as the case may
be, this Debenture shall be and be deemed to be amended to replace the
former Interest Rate with the Interest Rate arrived at by applying
such proposed Premium and Reference Rate and the Holder and the Issuer
shall forthwith execute all such documents and do or cause to be done
all such further acts and things as may be necessary to evidence such
amendment;
(b) delivers an Interest Advisory Notice to the Holder in which the Issuer
advises the Holder that it does not agree to accept such proposed
Premium or Reference Rate, then the Issuer shall, on the Reset Date
next following the delivery of the relevant Interest Reset Notice,
repay the Principal Amount and all interest accrued thereon, without
penalty, as is set forth in Section 2.3 hereof; or
(c) fails to deliver an Interest Advisory Notice at least ten (10)
Business Days prior to the Initial Reset Date or next Reset Date, as
applicable, the Issuer shall be deemed to have accepted such proposed
Premium and Reference Rate, and this Debenture shall, effective the
Initial Reset Date or next Reset Date, as applicable, be and be deemed
to be amended to replace the former Interest Rate with the Interest
Rate arrived at by applying such proposed Premium and Reference Rate,
and the Holder and the Issuer shall forthwith execute all such
documents and do or cause to be done all such further acts and things
as may be necessary to evidence such amendment.
2.3 Prepayment Right
The Issuer shall, if the Issuer receives an Interest Reset Notice which it does
not accept, prepay all (but not less than all) of the Principal Amount to the
Holder (the "Prepayment Right") on the Initial Reset Date or next Reset Date, as
applicable. The Issuer shall be deemed to have exercised the Prepayment Right
if, as provided for in Section 2.2(b), the Issuer delivers, at least ten (10)
Business Days in advance of the Initial Reset Date or next Reset Date, as the
case may be, an Interest Advisory Notice (in this Section the "Prepayment
Notice") to the Holder pursuant to Section 2.2(b) rejecting the proposed Premium
and Reference Rate; such Prepayment Notice shall be deemed to provide that the
Issuer irrevocably elects to exercise the Prepayment Right. Upon such election,
the Issuer shall be obligated to pay the Principal Amount and all accrued
interest (but no amount on account of Holder's breakage costs or other costs or
expenses arising from prepayment) to the Holder on the Initial Reset Date or
next Reset Date, as the case may be. Except as set out above, the Issuer shall
not prepay the Principal Amount without Holder's consent.
2.4 Partial Prepayment
If the Issuer is permitted by Holder to make a partial prepayment of Principal,
the Principal Amount of this Debenture shall, upon receipt by the Holder of the
amount being prepaid (the "Prepayment Amount"), be automatically restated at the
date of prepayment (the "Prepayment Date") to be an amount equal to the original
Principal Amount less the Prepayment Amount (the "Restated Principal Amount")
and the Issuer shall forthwith record such prepayment and the Restated Principal
Amount in the Register. The Holder
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shall deliver this Debenture to the Issuer on or as soon as practicable after
the Prepayment Date and the Issuer shall, in exchange therefor, issue a restated
Debenture to the Holder reflecting the Restated Principal Amount; such restated
Debenture shall represent the continuation of this Debenture and the
indebtedness hereby except that the Principal Amount owing under the restated
Debenture shall be the Restated Principal Amount.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES
The Issuer represents and warrants to and in favour of the Holder that, on the
date of this Debenture:
3.1 Incorporation
The Issuer is a corporation duly organized, validly existing and in good
standing under the laws of its jurisdiction of organization, and no proceedings
for the liquidation, dissolution or winding up of the Issuer are pending or
contemplated by the Issuer.
3.2 Corporate Power
The Issuer has the power, capacity, legal right and authority, and has taken all
necessary corporate action, to issue and perform this Debenture.
3.3 Licenses
The Issuer has all necessary power, capacity, legal right and authority, and
holds all material licenses, permits and consents which it requires, to own its
property and to carry on its current business in each relevant jurisdiction, in
each case, where the failure to hold such licenses, permits and consents would
cause a material adverse effect to the business and operations of the Issuer.
3.4 No Conflict
Neither the issuance nor the performance of this Debenture requires the approval
of any regulatory agency having jurisdiction over the Issuer where the failure
to obtain such approval would be materially prejudicial to the enforcement
hereof, nor is this Debenture in contravention of or in conflict with the
constating documents or resolutions of the directors or shareholders of the
Issuer or of the provisions of any Agreement to which the Issuer is a party or
by which any of its property may be bound or of any statute, regulation, by-law,
ordinance or other law where such contravention or conflict would be materially
prejudicial to the enforcement hereof, or of any judgment, decree, award, ruling
or order to which the Issuer or any of its property may be subject, where such
contravention or conflict would be materially prejudicial to the enforcement
hereof. No such action will oblige the Issuer to grant any Encumbrance to any
Person other than the Holder.
3.5 No Default
To the best knowledge of the Issuer, the Issuer is not in breach of any material
Agreement to which it is a party.
3.6 Enforceability
This Debenture constitutes a valid and legally binding obligation of the Issuer
enforceable against the Issuer in accordance with its terms, subject only to
bankruptcy, insolvency or other statutes or judicial decisions affecting the
enforcement of creditors' rights in general, and to general principles of equity
under which specific performance and injunctive relief may be refused by a court
in its discretion.
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3.7 Financial Information
In all written information and financial statements supplied by the Issuer for
the benefit of the Holder, the Issuer has made no untrue statement of any
material fact and has revealed all material facts of which it is aware, the
omission of which would make such information and statements misleading. The
Issuer has disclosed all facts which materially adversely affect the business,
properties, prospects or financial condition of the Issuer, or the ability of
the Issuer to perform its obligations hereunder. All accounting information and
financial statements of the Issuer supplied for the benefit of the Holder have
been prepared in accordance with generally accepted accounting principles.
3.8 No Actions
There are no material actions, suits or judicial or arbitral proceedings pending
or, to the knowledge of the Issuer, threatened against the Issuer in any court
or other authority which the Issuer expects would result in a material adverse
change in the business or financial condition of the Issuer.
3.9 Compliance with Laws
The Issuer is not in breach of any material by-law, law, statute, regulation,
rule or order, of any authority relating in any way to the operation of its
business, except where such breach would not have a material adverse effect on
the business and affairs of the Issuer.
3.10 Judgments and Executions
There are no material judgments or executions filed or pending against the
Issuer.
3.11 Insolvency Proceedings
The Issuer has not made any general assignment for the benefit of creditors nor
has any receiving order been made against it under the provisions of the
Bankruptcy and Insolvency Act (Canada) (or any analogous legislation in any
other jurisdiction), nor has any petition for such an order been served upon it
nor are there any proceedings in effect under the provision of the Winding-Up
Act (Canada) or the Companies' Creditors Arrangement Act (Canada) (or any
analogous legislation in any other jurisdiction), nor has any Receiver,
administrator, monitor, custodian or official with similar powers been appointed
by court order or privately respecting the Issuer or any of its assets or
property.
3.12 Taxation Procedures
The Issuer has duly and timely filed all tax returns required to be filed by it,
and has, other than such Taxes as are being contested in good faith, paid all
Taxes which are due and payable where the failure to make such payments would
cause a material adverse effect to the business or operations of the Issuer. The
Issuer has paid all assessments and reassessments, and all other governmental
charges, governmental royalties, penalties, interest and fines claimed against
it on or before the date hereof other than such payments as are being contested
in good faith. Adequate provision and installment payments have been made by the
Issuer for Taxes and governmental royalties payable for the current period for
which returns are not yet required to be filed. There are no agreements, waivers
or other arrangements providing for an extension of time with respect to the
filing of any tax return by, or payment of, any Taxes, governmental charges,
governmental royalties or deficiency against the Issuer.
3.13 Material Liabilities
To the knowledge of the Issuer, there are no material liabilities of the Issuer,
whether or not accrued and whether or not determined or determinable, in respect
of which the Issuer is liable on the date of this Debenture which are not fully
and properly reflected in the financial information of the Issuer delivered to
the Holder or of which the Holder is not aware.
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3.14 Intellectual Property
The Issuer owns or holds all material licenses, patents, trademarks, copyright,
industrial design, know how, trade secrets and other industrial and intellectual
property reasonably necessary for the conduct of its business and all such
licenses are in good standing.
3.15 Reliance and Survival
All representations and warranties of the Issuer made herein or in any
certificate or other document delivered by or on behalf of the Issuer for the
benefit of the Holder shall survive the issuance of this Debenture and shall
continue in full force and effect until the Obligations are discharged in full.
The Holder shall be deemed to have relied upon each such representation and
warranty notwithstanding any investigation made by or on behalf of the Holder at
any time.
ARTICLE 4
COVENANTS OF THE ISSUER
4.1 Conduct of Business
The Issuer shall diligently conduct its business in a proper and efficient
manner so as to preserve and protect its business and assets.
4.2 Register of Holders
The Issuer shall, as part of its corporate records in its minute books, cause to
be kept a register of Holders (the "Register") at the place where the Issuer may
from time to time keep its minute book as required by applicable law. The
register shall contain all particulars concerning the Debenture and the Holders
as are required by applicable law or this Debenture, including the name and last
known address of each Holder, the principal amount outstanding hereunder and a
record of all sales, transfers and assignments (whether absolute or for the
purpose of giving security) of this Debenture, in whole or in part. The initial
registered Holder shall be Calpine Canada Energy Corp.
4.3 Books of Account
The Issuer shall keep proper books of account in accordance with generally
accepted accounting principles and, provided that the Holder shall treat all
such information as confidential and proprietary to the Issuer and shall not
disclose such information to any Person (except to a governmental authority or
judicial or quasi-judicial body having jurisdiction over the Holder or the
Issuer on an as required basis or to an actual or potential assignee or
purchaser of this Debenture on a need to know basis after obtaining such
Person's agreement to treat such information as confidential and proprietary to
the Issuer), the Issuer shall:
(a) furnish to the Holder all information and statements relating to its
business which the Holder reasonably requests; and
(b) permit the Holder or its authorized agent at any time to have access
to all premises occupied by the Issuer in order to examine the books
of account and other financial records and reports of the Issuer and
to have temporary custody of, make copies of and take extracts from
such books, records and reports.
4.4 Taxes
The Issuer shall pay all material Taxes when due, other than such payments as
are, at the relevant time, being contested in good faith.
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4.5 Further Assurances
The Issuer shall at all times do, execute, acknowledge and deliver or cause to
be done, executed, acknowledged or delivered all such further acts, deeds,
transfers, mortgages, pledges and charges, security agreements, assignments,
debentures and assurances as the Holder may reasonably require in order to give
effect to the provisions of this Debenture.
4.6 Amalgamation
The Issuer shall not effect any amalgamation, merger or statutory arrangement
with any Person (other than an affiliate of the Issuer as provided in the
Business Corporations Act (Alberta)) without the prior written consent of the
Holder, which consent shall not be unreasonably withheld.
4.7 Costs
The Issuer shall pay, or forthwith on demand reimburse, the Holder for all
reasonable interest, commissions, costs of realization and other costs and
expenses (including legal fees and expenses on a solicitor and his own client
scale) incurred by the Holder or any Receiver in connection with the
preparation, issuance, protection, enforcement of and advice with respect to
this Debenture.
4.8 Reimbursements as Obligations
All amounts for which the Issuer is required hereunder to reimburse the Holder
or any Receiver shall, from the date of disbursement until the date the Holder
or such Receiver receives reimbursement, be deemed advanced to the Issuer by the
Holder, shall be deemed to be Obligations and shall bear interest, accruing
daily, at the rate then applicable to the Principal Amount.
4.9 General Indemnity
The Issuer will indemnify the Holder and save it fully harmless of and from all
loss, cost, damage, expense, claims and liability which it may suffer or incur
in connection with (i) the exercise by the Holder of its remedies and powers
hereunder, (ii) any breach of the representations or warranties contained
herein, or (iii) any failure by the Issuer to perform any of its covenants or
obligations under this Debenture.
4.10 Financial Statements
The Issuer shall furnish or shall cause to be furnished to the Holder:
(a) within ninety (90) days after the end of each of its fiscal years,
financial statements as follows:
(i) an audited unconsolidated balance sheet, prepared in accordance
with Canadian generally accepted accounting principles applied on
a consistent basis, of the Issuer as at the end of such year; and
(ii) audited unconsolidated statements of profit and loss, surplus and
source and use of funds, prepared in accordance with Canadian
generally accepted accounting principles applied on a consistent
basis, of the Issuer for such year;
(b) within ninety (90) Business Days after the end of each fiscal quarter
of the Issuer, in the form customarily prepared by management for
internal purposes, unaudited financial statements for such quarter as
follows:
(i) an unconsolidated balance sheet of the Issuer; and
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(ii) unconsolidated statements of profit or loss, surplus and source
and use of funds of the Issuer.
4.11 Maintain Existence
The Issuer will at all times maintain its corporate existence and carry on its
business in a proper and efficient manner.
4.12 Default
The Issuer will promptly notify the Holder of the occurrence of any event which
with notice or lapse of time or both would result in an Event of Default.
4.13 Use of Proceeds
The Issuer will use the proceeds of amounts borrowed pursuant to this Debenture
for general corporate purposes.
4.14 Indebtedness
The Issuer shall not incur any Indebtedness unless such Indebtedness contains
express terms, or is issued under a deed, indenture or other instrument which
contains express terms, providing that it is unsecured and either subordinate to
or ranks pari passu with the Indebtedness evidenced by this Debenture. The term
"Indebtedness" means, with respect to the Issuer: (i) the principal (including
redemption payments), premium, if any, interest and other payment obligations in
respect of (x) indebtedness of the Issuer for money borrowed, and (y)
indebtedness evidenced by securities, debentures, bonds, notes or other similar
instruments issued by the Issuer, including any such securities issued under any
deed, indenture or other instrument to which the Issuer is a party (including,
for the avoidance of doubt, indentures pursuant to which subordinated debentures
have been or may be issued), (ii) any capital, operating or other lease
obligations of the Issuer, (iii) any obligations of the Issuer issued or assumed
as the deferred purchase price of property, any conditional sale obligations of
the Issuer, any hedging agreements and agreements of a similar nature thereto
and all agreements relating to any such agreements, and all obligations of the
Issuer under any title retention agreement (but excluding trade accounts payable
arising in the ordinary course of business), (iv) any obligations of the Issuer
for reimbursement on any letter of credit, banker's acceptance, security
purchase facility or similar credit transaction, (v) all obligations of the type
referred to in clauses (i) through (iv) above of other persons for the payment
of which the Issuer is responsible or liable as obligor, guarantor, surety or
otherwise, and (vi) all obligations of the type referred to in clauses (i)
through (v) above of other persons secured by any lien on any property or asset
of the Issuer (whether or not such obligation is assumed by the Issuer), in each
case whether outstanding at the date of original issue of this Debenture or
thereafter incurred.
ARTICLE 5
EVENTS OF DEFAULT
5.1 Acceleration
Whenever any Event of Default, as defined in any of Sections 5.2(f), (g), (h),
(i) or (j) occurs and is continuing and not waived by the Holder in writing, the
Obligations shall be accelerated and immediately become due and payable in full
without the necessity for any further action or notice by the Holder. Whenever
any other Event of Default occurs and while it is continuing, the Holder may, at
its option, declare the Obligations accelerated and immediately due and payable
in full.
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5.2 Events of Default
Each of the following events constitutes an "Event of Default":
(a) the Issuer fails to make any payment of any of the Obligations when
due and such default is not remedied within fifteen (15) Business Days
of receipt of written notice by the Issuer of such non-payment;
(b) the Issuer commits a breach of, or fails to observe or perform, any
material covenant (other than those covered by subsection (a) above)
under this Debenture or any other Agreement from time to time in
effect between the Issuer and the Holder, whether relating to the
Obligations or not, and such breach or failure is not cured within
fifteen (15) Business Days of the date on which the Issuer receives
written notice from the Holder that the Issuer must cure such breach
or failure;
(c) any representation and warranty made or deemed to be made by the
Issuer under this Debenture shall prove to have been materially
inaccurate when made or deemed to be made and such inaccuracy is not
cured within fifteen (15) Business Days of the date on which the
Issuer receives written notice from the Holder that the Issuer must
cure such default;
(d) the Issuer ceases or threatens to cease to carry on its business;
(e) the Issuer fails to discharge or obtain a stay of any judgment for the
payment of money in excess of $25 million United States dollars
rendered against it within forty-five (45) days of receiving notice of
such judgment;
(f) the Issuer commits any act of bankruptcy, becomes insolvent or admits
its insolvency (as defined or provided for in any applicable statute);
(g) any proceeding, voluntary or involuntary, is commenced respecting the
Issuer pursuant to any statute relating to bankruptcy, insolvency,
reorganization of debts, liquidation, winding up or dissolution,
including, without limitation, any proceedings under the Bankruptcy
and Insolvency Act (Canada), the Companies' Creditors Arrangement Act
(Canada) or the Winding-up Act (Canada);
(h) the Issuer passes any resolution for its liquidation, winding up or
dissolution;
(i) any Receiver, trustee, sequestor, custodian or liquidator or Person
with similar powers is appointed judicially or extra-judicially for
the Issuer or for any material part of its properties;
(j) the Issuer, or any property of the Issuer valued in excess of $25
million United States dollars, becomes subject to any execution,
sequestration or other analogous process of any court or to distress
or any analogous process; or
(k) the Issuer defaults under any Agreement with respect to any
indebtedness to any Person other than the Holder and (i) the aggregate
principal amount of such indebtedness exceeds $25 million United
States dollars; and (ii) such default (A) continues beyond the
applicable grace period, (B) is not waived by the relevant creditor,
and (C) has resulted in the acceleration of any such indebtedness or
obligation or the right of such Person to realize upon any collateral.
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5.3 Cure Period
If an Event of Default referred to in Section 5.2(g), (i) or (j), (for purposes
of this Section 5.3, a "Cure Period Event of Default") occurs and (i) the Issuer
has not voluntarily initiated or co-operated in the initiation of such event;
(ii) immediately upon becoming aware of such event, the Issuer diligently and in
good faith seeks to have such event discharged, discontinued or otherwise put to
an end; and (iii) no other Event of Default (other than an Event of Default
arising solely as the result of a Cure Period Event of Default) has then
occurred and is continuing, then, during the thirty (30) day period after the
Issuer first becomes aware of the Cure Period Event of Default, the Holder shall
only enforce its rights arising from such Cure Period Event of Default to the
extent reasonably necessary to protect its interests and shall, in its
reasonable discretion, grant such waivers as it (in its sole discretion)
determines are necessary or desirable. If, during such thirty (30) day period,
the Issuer successfully and completely discharges, discontinues or otherwise
puts to an end the event or circumstance giving rise to such Cure Period Event
of Default, in each case, to the reasonable satisfaction of the Holder, and,
provided no other Event of Default (other than an Event of Default arising
solely as the result of such Cure Period Event of Default) or event (other than
an event arising solely as the result of such Cure Period Event of Default)
which, with notice or lapse of time or both, would become an Event of Default is
then existing, such Cure Period Event of Default shall, to the extent not
previously waived, be deemed to be cured and the Holder shall use reasonable
efforts to return the Issuer to its position before such Event of Default
(excluding past due interest). If the Cure Period Event of Default is not
discharged, discontinued or otherwise put to an end as contemplated hereby, or
if any other condition contemplated by this Section 5.3 is not satisfied at any
relevant time, then the provisions of this Section 5.3 shall be deemed to be
terminated and shall be of no further force or effect, and the relevant Cure
Period Event of Default shall have and be deemed to have occurred as and from
the date of its original occurrence.
5.4 Waiver
The Holder may waive any Event of Default or any breach by the Issuer of any of
the provisions of this Debenture. No waiver, however, shall be deemed to extend
to a subsequent breach or Event of Default, whether or not the same as or
similar to the breach or Event of Default waived, and no act or omission by the
Holder shall extend to, or be taken in any manner whatsoever to affect, any
subsequent breach or Event of Default or the rights of the Holder arising
therefrom. Any such waiver must be in writing and signed by the Holder to be
effective.
ARTICLE 6
REMEDIES ON DEFAULT
6.1 Remedies
Upon the occurrence of an Event of Default, the Holder shall have all
remedies at law or in equity available to it under this Debenture or applicable
law. If the Holder demands payment of any Obligations due by maturity or
acceleration, it shall be deemed reasonable for the Holder to exercise its
remedies immediately if such payment is not made, and any days of grace or any
time for payment which might otherwise be required to be afforded to the Issuer
by applicable law, other than as set forth herein, is hereby irrevocably waived.
6.2 Remedies Cumulative
The rights, remedies and powers conferred by this Article 6 are in addition to,
and not in substitution for, any other rights, remedies or powers the Holder may
have under this Debenture at law, in equity or by or under any statute. The
Holder may proceed by way of any action, suit or other proceeding at law or in
equity and no right, remedy or power of the Holder shall be exclusive of or
dependent on any other. Any right, remedy or power may be exercised separately
or in combination, and at any time.
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ARTICLE 7
GENERAL
7.1 Additional Covenants
The Issuer and the Holder agree, for so long as any event of default under the
Bridge Credit Agreement or any renewal, refinancing or extension thereof or
replacement therefore, including without limitation any debt securities issued
in a public offering or private placement by the Holder, has occurred and is
continuing (giving effect to all applicable grace and cure periods), as follows:
(a) the Issuer and the Holder shall take all actions and do all things
necessary within its control to ensure that the Holder remains an
unlimited liability company subsisting under the laws of Nova Scotia,
and shall not amend the constating documents of the Holder or enter
into (or cause the Holder to enter into) any amalgamation, merger,
statutory arrangement or other transaction pursuant to which the
Holder would cease to be an unlimited liability company subsisting
under the laws of Nova Scotia;
(b) the Issuer shall remain the beneficial and record owner of 100% of the
issued and outstanding shares and other equity interests in the
Holder; and
(c) in connection with any default or event of default that occurs or is
declared pursuant to the terms of the Bridge Credit Agreement or any
agreement, indenture or instrument relating to indebtedness incurred
by the Holder in connection with any renewal, refinancing or extension
thereof or replacement therefor (including without limitation any debt
securities issued in a public offering or private placement by the
Holder), the Holder, failing which, the Issuer, shall promptly take
all actions and do all things necessary within their respective
control to effect or cooperate with the filing of a petition for the
winding-up or liquidation of the Holder under applicable law.
7.2 Assignment
Subject to the proposed assignment of its rights referred to in Section 7.8
(wherein the assignee shall be recognized), the Holder (or Holders) of this
Debenture, as from time to time registered as such in the Register, will be
regarded as exclusively entitled to the benefit of this Debenture and all
Persons may act accordingly. This Debenture may be sold or otherwise assigned by
the Holder, in whole or in part. No assignment of this Debenture shall be valid
unless recorded on the Register pursuant to the direction in writing of the
assignor Holder (or such Holder's executors, administrators or other legal
representatives) or his or their attorney duly appointed by an instrument in
writing, in any such case in form and execution satisfactory to the Issuer
acting reasonably. Upon such sale, the purchaser of the Debenture shall have all
rights as Debenture Holder (unless otherwise agreed).
7.3 Notice
Any notice, demand or other communication (in this Section, a "notice") required
or permitted to be given or made hereunder shall be in writing and shall be
sufficiently given or made if:
(a) delivered in person during normal business hours of the recipient on a
Business Day and left with a receptionist or other responsible
employee of the recipient at the relevant address set forth below;
(b) except during any period of actual or imminent interruption of postal
services due to strike, lockout or other cause, sent by registered
mail (or, if no registered mail is available, by prepaid first class
mail); or
(c) sent by Transmission, charges prepaid and receipt confirmed;
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to the Holder at the address recorded from time to time in the Register, which
shall initially be in the case of Calpine Canada Energy Finance II ULC:
Calpine Canada Energy Finance II ULC
Suite 800,
Purdy's Wharf, Tower One
1959 Upper Water Street
P.O. Box 997 Halifax, Nova Scotia B3J 2X2
Fax Number: (902) 420-1417
Attention: Charles Reagh
and to the Issuer at:
Calpine Canada Resources Ltd.
Suite 1000, 350 - 7th Avenue S.W.
Calgary, Alberta T2P 3N9
Fax Number: (403) 298-8943
Attention: Controller
Each notice sent in accordance with this Section shall be deemed to have been
received:
(i) at the time on the day it was delivered in person;
(ii) at the beginning of business on the third Business
Day after it was mailed by registered mail (excluding
each day on which there is any interruption of postal
services due to strike, lockout or other cause);
(iii) one hour after they were sent on the same day that it
was sent by Transmission, or at the start of business
on the first Business Day thereafter if the day on
which it was sent by Transmission was not a Business
Day or if the time at which it was sent was not
during or prior to normal business hours on a
Business Day.
Addresses for notice may be changed by giving notice in accordance with this
section.
7.4 Time of the Essence
Time is of the essence of this Debenture and each of its provisions.
7.5 Performance on Holidays
If any action is required to be taken pursuant to this Debenture on or by a
specified date which is not a Business Day, then such action shall be valid if
taken on or by the next succeeding Business Day.
7.6 Governing Law
This Debenture shall be governed by, and interpreted and enforced in accordance
with, the laws in force in the Province of Alberta (excluding any conflict of
laws rule or principle which might refer such construction to the laws of
another jurisdiction). Each party hereto irrevocably submits to the
non-exclusive jurisdiction of the courts of Alberta with respect to any matter
arising hereunder or related hereto.
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7.7 Entire Agreement
There are no representations, warranties, conditions, other agreements or
acknowledgments, whether direct or collateral, express or implied, (including
any representation, warranty, condition, agreement or acknowledgment in any
other agreement or document delivered in connection with or in any manner
related to this Debenture, unless expressly otherwise provided herein), that
form part of or affect this Debenture or the Obligations, other than as set
forth herein.
7.8 Successors and Assigns
This Debenture shall enure to the benefit of the Holder and its successors and
assigns and be binding on the Issuer and its successors (including any successor
by reason of amalgamation or statutory arrangement). The Holder confirms, and
the Issuer acknowledges, that the Holder intends to assign the Holder's rights
under Section 7.1 of this Debenture to the indenture trustee in relation to the
indebtedness incurred to refinance the indebtedness outstanding under the Bridge
Credit Agreement (as defined in Schedule "B").
7.9 Provisions Reasonable
The Issuer acknowledges that the provisions of this Debenture and, in
particular, those respecting rights, remedies and powers of the Holder or any
Receiver against the Issuer and its business upon the occurrence of an Event of
Default which is continuing, are commercially reasonable and not manifestly
unreasonable.
7.10 Invalidity
If any provision of this Debenture is determined to be invalid or unenforceable
by a court of competent jurisdiction, that provision shall be deemed to be
severed herefrom, and the remaining provisions of this Debenture shall not be
affected thereby and shall remain valid and enforceable.
7.11 Debenture Lost or Stolen
If this Debenture is mutilated, lost, stolen or destroyed, the Issuer shall,
upon being furnished with evidence satisfactory to it of such mutilation, loss,
theft or destruction:
(a) issue and deliver a replacement Debenture of like date and tenor as
the one mutilated, lost, stolen or destroyed, in exchange for, in
place of and upon cancellation of the mutilated Debenture, or in lieu
of and in substitution for the lost, stolen or destroyed Debenture;
and
(b) record such replacement Debenture in the Register.
7.12 Statutory Waivers
To the fullest extent permitted by law, the Issuer waives all of the rights,
benefits and protections given by the provisions of any existing or future
statute which imposes limitations upon the powers, rights or remedies of a
secured party or upon the methods of realization of security, including any
seize or sue or anti-deficiency statute or any similar provisions of any other
statute.
7.13 Amendment
No Agreement purporting to amend, supplement or otherwise vary this Debenture
shall be binding upon either the Issuer or the Holder unless that agreement is
in writing and signed by the Issuer and the Holder, and is noted in the
Register.
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7.14 Receipt of Copy
The Issuer acknowledges receipt of a photocopy of this Debenture.
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IN WITNESS WHEREOF the Issuer has, through its duly authorized
representative(s), executed and delivered this Debenture on the date first
written above.
CALPINE CANADA RESOURCES LTD.
By: /s/ David D. Johnson c/s
------------------------------
Name:
Title:
Acknowledged and Agreed:
CALPINE CANADA ENERGY FINANCE II
ULC
By: /s/ David D. Johnson c/s
------------------------------
Name:
Title:
SCHEDULE "A"
Definitions
"Agreement" means any written agreement, indenture, instrument or undertaking.
"Business Day" means any day of the week except Saturday, Sunday or any
statutory or civic holiday observed in Calgary, Alberta, Canada or San Jose,
California, USA.
"Cure Period of Default" has the meaning ascribed thereto in Section 5.3 hereof.
"Debenture" means this debenture and all schedules attached hereto as the same
may be amended, supplemented, restated, replaced, extended or renewed from time
to time, and all references to "hereto", "herein", "hereof", "hereby" and
"hereunder", including similar expressions, refer to this Debenture and not to
any particular section or portion of it. References to "Article", "Section", or
"Schedule" refer to the applicable article, section or schedule of this
Debenture, as the case may be.
"Encumbrance" means any encumbrance of any kind whatever, choate or inchoate,
and includes, without limitation, a security interest, mortgage, lien, charge,
hypothec, pledge, hypothecation, security interest, trust or deemed trust,
whether contractual, statutory or otherwise arising.
"Event of Default" means any of the events set out in Section 5.2.
"Holder" means, initially, Calpine Canada Energy Finance II ULC and means, at
any time thereafter, the registered holder or holders of the Debenture according
to the Register.
"including" means "including without limitation" and the term "including" shall
not be construed to limit any general statement which it follows to the specific
or similar items or matters immediately following it.
"Initial Reset Date" means May 2, 2008, being the first date in which the
Interest Rate under this Debenture is reset pursuant to the provisions of
Section 2.2.
"Interest Advisory Notice" has the meaning ascribed thereto in Section 2.2
hereof.
"Interest Payment Date" has the meaning ascribed thereto in Section 2.1 hereof.
"Interest Period" has the meaning set forth on Schedule "B".
"Interest Rate" on any date means the rate per annum determined by adding the
Premium to the Reference Rate in effect on such date. Interest shall be
calculated hereunder on the basis of the actual number of days elapsed divided
by 360 (the 360 day year being comprised of twelve 30 day months). The interest
rate hereunder which is expressed as an annual rate for the purposes of the
Interest Act (Canada) is equivalent to such determined rate multiplied by the
actual number of days in the year in which same is to be ascertained and divided
by 360 days.
"Interest Reset" means the change of Premium and/or Reference Rate proposed in
an Interest Reset Notice by Holder to the Issuer given pursuant to Section 2.2
to the effect that Holder shall, effective the next Reset Date, unless the
Issuer exercises its Prepayment Right, calculate the Interest Rate based upon
such proposed Premium or Reference Rate.
"Interest Reset Notice" has the meaning ascribed thereto in Section 2.2 hereof.
"Maturity Date" means April 25, 2021.
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"Obligations" means the Principal Amount of this Debenture, all interest due
thereon and all other monies from time to time owing pursuant to this Debenture,
together with the observance and performance by the Issuer of its covenants and
obligations hereunder, including, without limitation, all expenses, costs and
charges incurred by or on behalf of the Holder in connection with this Debenture
or the enforcement thereof.
"Parties" means the parties to this Debenture and "Party" means any one of them.
"Person" includes an individual, corporation, partnership, joint venture, trust,
unincorporated organization, the Crown or any agency or instrumentality thereof
or any other entity recognized by law.
"Premium" means, for the initial sixty (60) month period commencing on the
Bridge Refinancing Date (as defined in Schedule "B"), 45 basis points, and,
commencing on the Initial Reset Date, until further altered by an Interest
Reset, 25 basis points.
"Prepayment Amount" has the meaning ascribed thereto in Section 2.4 hereof.
"Prepayment Date" has the meaning ascribed thereto in Section 2.4 hereof.
"Prepayment Notice" has the meaning ascribed thereto in Section 2.3 hereof.
"Prepayment Right" has the meaning ascribed thereto in Section 2.3 hereof.
"Principal Amount" has the meaning ascribed thereto in Section 2.1 hereof.
"Receiver" means receiver, manager or receiver and manager.
"Reference Rate" has the meaning set forth on Schedule "B".
"Register" has the meaning ascribed thereto in Section 4.2 hereof.
"Reset Date" means the Initial Reset Date and, thereafter, the day following the
last day of every Interest Period.
"Restated Principal Amount" has the meaning ascribed thereto in Section 2.4
hereof.
"Taxes" means all taxes, imposts, rates, levies, assessments and government fees
or dues lawfully levied, assessed or imposed in respect of any Person or in
respect of the Debenture (including in respect of any payment thereunder),
including, without limitation, income, sales, excise, use, goods and services,
property, business transfer and value added taxes.
"Transmission" means any electronic means of sending messages, including telex
or facsimile transmission, which produces a permanent written record.
SCHEDULE "B"
Interest Rate Determinations
"Bridge Credit Agreement" means the Bridge Credit Agreement, dated as of August
22, 2001, among Calpine Canada Energy Finance II ULC, as Borrower, the
commercial lending institutions party thereto, as Lenders, Credit Suisse First
Boston, as Co-Arranger and Documentation Agent, Bayerische Landesbank
Girozentrale, as Lead Arranger and Syndication Agent, and The Bank of Nova
Scotia, as Lead Arranger and Administrative Agent, as amended from time to time.
"Bridge Refinancing Date" means the date on which the indebtedness outstanding
under the Bridge Credit Agreement is repaid in full using the proceeds of a
public offering or private placement of debt securities of Calpine Canada Energy
Finance II ULC (the "Refinancing Securities").
"Interest Period" (i) from the date hereof until the Bridge Refinancing Date,
has the meaning given in the Bridge Credit Agreement and (ii) after the Bridge
Refinancing Date, means (x) the period from and including the Bridge Refinancing
Date through and including the first interest payment date under the Refinancing
Securities to occur after the Bridge Refinancing Date (together with all
successive interest payment dates thereunder, "Refinancing Payment Dates") and
(y) thereafter, each six-month period commencing on (but excluding) a
Refinancing Payment Date and ending (and including) on the next succeeding
Refinancing Payment Date.
"Reference Rate" means (i) in respect of all Interest Periods through and
including the Interest Period ending on the Bridge Refinancing Date, the rate of
interest borne by loans outstanding under the Bridge Credit Agreement during
each such Interest Period, which rate shall be communicated to the Issuer by the
Holder promptly after each determination thereof, (ii) in respect of the
Interest Period commencing on the Bridge Refinancing Date and all Interest
Periods thereafter through and including the Interest Period ending on the
Initial Reset Date, the rate per annum borne by the debt securities issued by
Calpine Canada Energy Finance II ULC in the issuance which results in the
occurrence of the Bridge Refinancing Date, which rate shall be communicated by
the Holder to the Issuer promptly after the determination thereof, and (iii) in
respect of the Interest Period commencing on the Initial Reset Date and all
Interest Periods thereafter, until altered by an Interest Reset, the per annum
interest rate established from time to time by the Holder from time to time
pursuant to an Interest Reset Notice.