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EXHIBIT 4.10
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PREFERRED SECURITIES GUARANTEE AGREEMENT
BETWEEN
CALPINE CORPORATION
AND
WILMINGTON TRUST COMPANY
DATED AS OF
August 9, 2000
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GUARANTEE AGREEMENT, dated as of August 9, 2000, executed and
delivered by Calpine Corporation, a Delaware corporation (the "Guarantor"), and
Wilmington Trust Company, a Delaware banking corporation, as trustee (the
"Guarantee Trustee"), for the benefit of the Holders (as defined herein) from
time to time of the HIGH TIDES (as defined herein) of Calpine Capital Trust III,
a Delaware statutory business trust (the "Trust").
WHEREAS pursuant to an Amended and Restated Declaration of Trust
(the "Declaration"), dated as of August 9, 2000, executed by the Guarantor, as
Depositor, Wilmington Trust Company, as Delaware Trustee, Wilmington Trust
Company, as Property Trustee, and the Administrative Trustees named therein, the
Trust is issuing 5450,000,000 ($517,500,000 including the over-allotment option)
aggregate liquidation amount of its 5% Convertible Preferred Securities,
Remarketable Term Income Deferred Equity Securities (HIGH TIDES)(SM),
liquidation amount $50 per security (the "HIGH TIDES") and $14,000,000
($17,500,000 including the over-allotment option) aggregate liquidation amount
of its Common Securities, liquidation amount $50 per security (the "Common
Securities" and collectively with the HIGH TIDES, the "Trust Securities")
representing undivided beneficial interests in the assets of the Trust and
having the terms set forth in the Declaration;
WHEREAS the Trust Securities will be issued by the Trust and the
proceeds thereof will be used to purchase the Convertible Subordinated
Debentures due August 1, 2030 (the "Debentures") of the Guarantor which will be
deposited with Wilmington Trust Company as Property Trustee under the
Declaration, as trust assets; and
WHEREAS as incentive for the Holders to purchase HIGH TIDES, the
Guarantor desires irrevocably and unconditionally to agree, to the extent set
forth herein, to pay to the Holders of the HIGH TIDES the Guarantee Payments (as
defined herein) and to make certain other payments on the terms and conditions
set forth herein.
NOW, THEREFORE, in consideration of the purchase by each Holder
of HIGH TIDES, which purchase the Guarantor hereby agrees shall benefit the
Guarantor, the Guarantor executes and delivers this Guarantee Agreement for the
benefit of the Holders from time to time of the HIGH TIDES.
ARTICLE I
Definitions
SECTION 1.01. Definitions. As used in this Guarantee Agreement,
the terms-set forth below shall, unless the context otherwise requires, have the
following meanings. Capitalized or otherwise defined terms used but not
otherwise defined herein shall have the meanings assigned to such terms in the
Declaration as in effect on the date hereof.
"Affiliate" of any specified Person means any other Person
directly or indirectly controlling or controlled by or under direct or indirect
common control with such specified Person; provide , however, that the Trust
shall be deemed not to be an Affiliate of the Guarantor. For the purposes of
this definition, "control" when used with respect to any specified Person means
the power to direct the management and policies of such Person, directly or
indirectly, whether through the ownership of voting securities, by contract or
otherwise; the terms "controlling" and "controlled" have meanings correlative to
the foregoing.
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"Common Securities" shall have the meaning specified in the
first recital of this Guarantee Agreement.
"Debentures" shall have the meaning specified in the second
recital of this Guarantee Agreement.
"Debt" means (i) the principal of and premium, if any, and
unpaid interest on indebtedness for money borrowed, (ii) purchase money and
similar obligations, (iii) obligations under capital leases, (iv) guarantees,
assumptions or purchase commitments relating to, or other transactions as a
result of which the Guarantor is responsible for the payment of such
indebtedness of others, (v) renewals, extensions and refunding of any such
indebtedness, (vi) interest or obligations in respect of any such indebtedness
accruing after the commencement of any insolvency or bankruptcy proceedings and
(vii) net obligations associated with derivative products such as interest rate
and currency exchange contracts, foreign exchange contracts, commodity contracts
and similar arrangements.
"Declaration" shall have the meaning specified in the first
recital to this Guarantee Agreement.
"Event of Default" means a default by the Guarantor on any of
its payment or other obligations under this Guarantee Agreement; provided,
however, that, except with respect to a default in payment of any Guarantee
Payments, the Guarantor shall have received notice of default from the Guarantee
Trustee and shall not have cured such default within 60 days after receipt of
such notice.
"Guarantee Payments" means the following payments or
distributions, without duplication, with respect to the HIGH TIDES, to the
extent not paid or made by or on behalf of the Trust: (i) any accrued and unpaid
Distributions required to be paid on the HIGH TIDES, to the extent the Trust
shall have funds on hand available therefor at such time, (ii) the applicable
Redemption Price, with respect to the HIGH TIDES called for redemption by the
Trust to the extent the Trust shall have funds on hand available therefor at
such time, and (iii) upon a voluntary or involuntary dissolution, winding-up or
liquidation of the Trust, unless Debentures are distributed to the Holders of
the HIGH TIDES or all the HIGH TIDES are redeemed, the lesser of (a) the
aggregate of the liquidation amount of $50 per HIGH TIDES plus accrued and
unpaid Distributions on the HIGH TIDES to the date of payment (the "Liquidation
Distribution") to the extent the Trust shall have funds on hand available to
make such payment at such time and (b) the amount of assets of the Trust
remaining available for distribution to Holders of the HIGH TIDES upon
liquidation of the Trust after satisfaction of liabilities to creditors of the
Trust as required by applicable law.
"Guarantee Trustee" means Wilmington Trust Company, a Delaware
banking corporation, until a Successor Guarantee Trustee has been appointed and
has accepted such appointment pursuant to the terms of this Guarantee Agreement
and thereafter means. each such Successor Guarantee Trustee.
"Guarantor" shall have the meaning specified in the first
paragraph of this Guarantee Agreement.
"HIGH TIDES" shall have the meaning specified in the first
recital of this Guarantee Agreement.
"Holder" means any holder, as registered on the books and
records of the Trust, of any HIGH TIDES; provided, however, that in determining
whether the holders of the requisite percentage of HIGH TIDES have given any
request, notice, consent or
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waiver hereunder, "Holder" shall not include the Guarantor, the Guarantee
Trustee, or any Affiliate of the Guarantor or the Guarantee Trustee.
"Indenture" means the Indenture dated as of August 9, 2000 as
amended or supplemented, between the Guarantor and Wilmington Trust Company, as
trustee, relating to the issuance of Debentures.
"List of Holders" has the meaning specified in Section 2.02(a).
"Majority in liquidation amount of the HIGH TIDES" means, except
as provided in the terms of the HIGH TIDES or by the Trust Indenture Act, a vote
by the Holder(s), voting separately as a class, of more than 50% of the
aggregate liquidation amount (including the stated amount that would be paid on
redemption, liquidation or otherwise, plus accrued and unpaid distributions to
the date upon which the voting percentages are determined) of all then
outstanding HIGH TIDES.
"Officers' Certificate" means, with respect to any Person, a
certificate signed by the Chairman and Chief Executive Officer, President or a
Vice President, and by the Treasurer, an Associate Treasurer, an Assistant
Treasurer, the Controller, the Secretary or an Assistant Secretary of such
Person, and delivered to the Guarantee Trustee. Any Officers' Certificate
delivered with respect to compliance with a condition or covenant provided for
in this Guarantee Agreement (other than pursuant to Section 2.04) shall include:
(a) a statement that each officer signing the Officers'
Certificate has read the covenant or condition and the definitions
relating thereto;
(b) a brief statement of the nature and scope of the examination
or investigation undertaken by each officer in rendering the Officers'
Certificate;
(c) a statement that each officer has made such examination or
investigation as, in such officer's opinion, is necessary to enable such
officer to express an informed opinion as to whether or not such
covenant or condition has been complied with; and
(d) a statement as to whether, in the opinion of each officer,
such condition or covenant has been complied with.
"Person" means a legal person, including any individual,
corporation, estate, partnership, joint venture, association, joint stock
company, limited liability company, trust, unincorporated association, or
government or any agency or political subdivision thereof, or any other entity
of whatever nature.
"Responsible Officer" when used with respect to the Guarantee
Trustee means any officer assigned to its corporate trust office, including any
vice president, assistant vice president, assistant treasurer, assistant
secretary or any other officer of the Guarantee Trustee customarily performing
functions similar to those performed by any of the ABOVE DESIGNATED OFFICERS,
and having direct responsibility for the administration of this GUARANTEE
AGREEMENT, and also, with respect to a particular matter, any other officer to
whom such matter is referred because of such officer's knowledge of and
familiarity with the particular subject.
"Senior Debt" means (i) indebtedness evidenced by securities,
debentures, bonds or other similar instruments issued by the Company, (ii) all
obligations to make net payment pursuant to the terns of financial instruments,
such as (a) securities contracts and foreign currency exchange contracts, (b)
derivative instruments, such as swap agreements (including interest rate and
foreign exchange rate swap agreements), cap
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agreements, floor agreements, collar agreements, interest rate agreements,
foreign exchange agreements, options, commodity futures contracts and commodity
options contracts, and (c) similar financial instruments; except, in the case of
(i) above, such indebtedness and obligations that are expressly stated to rank
junior in right of payment to, or p 4d pass in right of payment with, the
Debentures, (iii) and indebtedness or obligations of others of the kind
described in (i) and (ii) above for the payment of which the Company is
responsible or liable as guarantor or otherwise and (iv) deferrals, renewals or
extensions of any such Senior Debt; provided, however, that Senior Debt shall
not be deemed to include (a) any Debt of the Company which, when incurred and
without respect to any election under Section 1111(b) of the United States
Bankruptcy Code of 1978, was without recourse to the Company, (b) trade accounts
payable in the ordinary course of business, which will not constitute debt for
purposes of the HIGH TIDES, (c) any Debt of the Company to any of its
subsidiaries, except to the extent incurred for the benefit of third parties,
(d) Debt to any employee of the Company and (e) Debt that expressly provides
that it is not senior in right of payment to the HIGH TIDES.
"Successor Guarantee Trustee" means a successor Guarantee
Trustee possessing the qualifications to act as Guarantee Trustee under Section
4.01.
"Trust" shall have the meaning specified in the first paragraph
of this Guarantee Agreement.
"Trust Indenture Act" means the Trust Indenture Act of 1939 (15
U.S.C. Sections 77aaa-77bbbb), as amended, and the rules and regulations
promulgated thereunder.
"Trust Securities" shall have the meaning specified in the first
recital of this Guarantee Agreement.
ARTICLE II
Trust Indenture Act
SECTION 2.01. Trust Indenture Act; Application. (a) This
Guarantee Agreement is, or upon qualification under the Trust Indenture Act will
be, subject to the provisions of the Trust Indenture Act that are required to be
part of this Guarantee Agreement, which are incorporated by reference in and
made part of this Guarantee Agreement and shall, to the extent applicable, be
governed by such provisions. This Guarantee Agreement will not be qualified
under the Trust Indenture Act except upon the effectiveness of the Shelf
Registration Statement.
(b) Until such time as this Guarantee Agreement is qualified
under the Trust Indenture Act, the parties hereto agree that the provisions of
Sections 310-317, inclusive, of the Trust Indenture Act shall be incorporated
herein by reference, subject to the provisions of this Guarantee Agreement and
to the extent that any provision of this Guarantee Agreement limits, qualifies
or conflicts with the duties imposed by Sections 310 to 317, inclusive, of the
Trust Indenture Act, such imposed duties shall control.
SECTION 2.02. Lists of Holders of Securities. (a) The Guarantor
shall provide the Guarantee Trustee (i) within 14 days after each record date
for payment of Distributions, a list, in such form as the Guarantee Trustee may
reasonably require, of the names and addresses of the Holders of the HIGH TIDES
("List of Holders") as of such record date, provided that the Guarantor shall
not be obligated to provide such List of Holders at any time the List of Holders
does not differ from the most recent List of Holders given to the Guarantee
Trustee by the Guarantor on behalf of the Trust, and (ii) at any other time,
within 30 days of receipt by the Trust of a written request fort List of Holders
as of a date no more than 14 days before such List of Holders is given to the
Guarantee Trustee.
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(b) The Guarantee Trustee shall comply with its obligations
under Section 311(a), 311 (b) and 312(b) of the Trust Indenture Act.
SECTION 2.03. Reports by the Guarantee Trustee Within 60 days
after March 15 of each year, commencing March 15, 2001, the Guarantee Trustee
shall provide to the Holders of the HIGH TIDES such reports as are required by
Section 313(a) of the Trust Indenture Act, if any, in the form and in the manner
provided by Section 313 of the Trust Indenture Act. The Guarantee Trustee shall
also comply with the other requirements of Section 313 of the Trust Indenture
Act.
SECTION 2.04. Periodic Reports to The Guarantee Trustee The
Guarantor shall provide to the Guarantee Trustee such documents, reports and
information as required by Section 314 of the Trust Indenture Act (if any) and
the compliance certificate required by Section 314(a)(4) of the Trust Indenture
Act in the form, in the manner and at the times required by Section 314 of the
Trust Indenture Act, provided that such certificate shall be delivered no later
than 120 days after the end of each fiscal year of the Guarantor.
SECTION 2.05. Evidence of Compliance with Conditions Precedent.
The Guarantor shall provide to the Guarantee Trustee such evidence of compliance
with such conditions precedent, if any, provided for in this Guarantee Agreement
that relate to any of the matters set forth in Section 314(c) of the Trust
Indenture Act. Any certificate or opinion required to be given by any officer
pursuant to Section 314(c)(1) may be given in the form of an Officers'
Certificate.
SECTION 2.06. Events of Default: Waiver. The Holders of a
Majority in _ liquidation amount of the HIGH TIDES may, by vote, on behalf of
all the Holders, waive' any past Event of Default and its consequences. Upon
such waiver, any such Event of Default shall cease to exist, and any Event of
Default arising therefrom shall be deemed to have been cured, for every purpose
of this Guarantee Agreement, but no such waiver shall extend to any subsequent
or other default or Event of Default or impair any right consequent therefrom.
SECTION 2.07. Event of Default: Notice. (a) The Guarantee
Trustee shall, within 20 days after the occurrence of an Event of Default,
transmit by mail, first class postage prepaid, to the Holders, notices of all
Events of Default known to the Guarantee Trustee, unless such Events of Default
have been cured before the giving of such notice; provided, that, except in the
case of a default in the payment of a Guarantee Payment, the Guarantee Trustee
shall be protected in withholding such notice if and so long as the Board of
Directors, the executive committee or a trust committee of directors and/or
Responsible Officers of the Guarantee Trustee in good faith determine that the
withholding of such notice is in the interests of the Holders.
(b) The Guarantee Trustee shall not be deemed to have knowledge
of any Event of Default unless a Responsible Officer of the Guarantee Trustee
shall have received written notice of such Event of Default from the Guarantor
or a Holder.
SECTION 2.08. Conflicting Interests. The Declaration and the
Indenture shall be deemed to be specifically described in this Guarantee
Agreement for the purposes of clause (i) of the first proviso contained in
Section 310(b) of the Trust Indenture Act.
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ARTICLE III
Powers, Duties and Rights of the
Guarantee Trustee
SECTION 3.01. Powers and Duties of the Guarantee Trustee (a)
This Guarantee Agreement shall be held by the Guarantee Trustee for the benefit
of the Holders, and the Guarantee Trustee shall not transfer this Guarantee
Agreement to any Person except a Holder exercising his or her rights pursuant to
Section 5.04(iv) or to a Successor Guarantee Trustee on acceptance by such
Successor Guarantee Trustee of its appointment to act as Successor Guarantee
Trustee. The right, title and interest of the Guarantee Trustee shall
automatically vest in any Successor Guarantee Trustee, upon acceptance by such
Successor Guarantee Trustee of its appointment hereunder, and such vesting and
cessation of title shall be effective whether or not conveyancing documents have
been executed and delivered pursuant to the appointment of such Successor
Guarantee Trustee.
(b) If an Event of Default has occurred and is continuing, the
Guarantee Trustee shall be entitled to enforce this Guarantee Agreement for the
benefit of the Holders.
(c) The Guarantee Trustee, before the occurrence of any Event of
Default and after the curing of all Events of Default that may have occurred,
shall undertake to perform only such duties as are specifically set forth in
this Guarantee Agreement, and no implied covenants shall be read into this
Guarantee Agreement against the Guarantee Trustee. In case an Event of Default
has occurred (that has not been cured or waived pursuant to Section 2.06), the
Guarantee Trustee shall exercise such of the rights and powers vested in it by
this Guarantee Agreement, and use the same degree of care and skill in its
exercise thereof, as a prudent person would exercise or use under the
circumstances in the conduct of his or her own affairs.
(d) No provision of this Guarantee Agreement shall be construed
to relieve the Guarantee Trustee from liability for its own negligent action,
its own negligent failure to act or its own wilful misconduct, except that:
(i) prior to the occurrence of any Event of Default and after
the curing or waiving of all such Events of Default that may have
occurred:
(A) the duties and obligations of the Guarantee Trustee
shall be determined solely by the express provisions of this
Guarantee Agreement, and the Guarantee Trustee shall not be
liable except for the performance of such duties and
obligations as are specifically set forth in this Guarantee
Agreement; and
(B) in the absence of bad faith on the part of the Guarantee
Trustee, the Guarantee Trustee may conclusively rely, as to
the truth of the statements and the correctness of the
opinions expressed therein, upon any certificates or opinions
furnished to the Guarantee Trustee and conforming to the
requirements of this Guarantee Agreement; but in the case of
any such certificates or opinions that by any provision hereof
or of the Trust Indenture Act are specifically required to be
furnished to the Guarantee Trustee, the Guarantee Trustee
shall be under a duty to examine the same to determine whether
or not they conform to the requirements of this Guarantee
Agreement;
(ii) the Guarantee Trustee shall not be liable for any error of
judgment made in good faith by a Responsible Officer of the Guarantee
Trustee, unless it
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shall be proved that the Guarantee Trustee was negligent in ascertaining
the pertinent facts upon which such judgment was made;
(iii) the Guarantee Trustee shall not be liable with respect to
any action taken or omitted to be taken by it in good faith in
accordance with the direction of the Holders of not less than a Majority
in liquidation amount of the HIGH TIDES relating to the time, method and
place of conducting any proceeding for any remedy available to the
Guarantee Trustee, or exercising any trust or power conferred upon the
Guarantee Trustee under this Guarantee Agreement; and
(iv) no provision of this Guarantee Agreement shall require the
Guarantee Trustee to expend or risk its own funds or otherwise incur
personal financial liability in the performance of any of its duties or
in the exercise of any of its rights or powers.
SECTION 3.02. Certain Rights of Guarantee Trustee. (a) Subject
to the provisions of Section 3.01:
(i) The Guarantee Trustee may conclusively rely and shall be
fully protected in acting or refraining from acting upon any resolution,
certificate, statement, instrument, opinion, report, notice, request,
direction, consent, order, bond, debenture, note, other evidence of
indebtedness or other paper or document reasonably believed by it to be
genuine and to have been signed, sent or presented by the proper party
or parties.
(ii) Any direction or act of the Guarantor contemplated by this
Guarantee Agreement shall be sufficiently evidenced by an Officers'
Certificate unless otherwise prescribed herein.
(iii) Whenever, in the administration of this Guarantee
Agreement, the Guarantee Trustee shall deem it desirable that a matter
relating to compliance by the Guarantor with any of its obligations
contained in this Guarantee Agreement be proved or established before
taking, suffering or omitting to take any action hereunder, the
Guarantee Trustee (unless other evidence is herein specifically
prescribed) may, in the absence of bad faith on its part, request and
conclusively rely upon an Officers' Certificate (with respect to the
Guarantor) which, upon receipt of such request from the Guarantee
Trustee, shall be promptly delivered by the Guarantor.
(iv) The Guarantee Trustee may consult with legal counsel of its
selection, and the advice or opinion of such legal counsel with respect
to legal matters shall be full and complete authorization and protection
in respect of any action taken, suffered or omitted to be taken by it
hereunder in good faith and in accordance with such advice or opinion.
Such legal counsel may be legal counsel to the Guarantor, the Guarantee
Trustee or any of its Affiliates and may be one of its employees. The
Guarantee Trustee shall have the right at any time to seek instructions
concerning the administration of this Guarantee Agreement from any court
of competent jurisdiction.
(v) The Guarantee Trustee shall be under no obligation to
exercise any of the rights or powers vested in it by this Guarantee
Agreement at the request or direction of any Holder, unless such Holder
shall have provided to the Guarantee Trustee such security and indemnity
reasonably satisfactory to it, against the costs, expenses (including
attorneys' fees and expenses) and liabilities that might be incurred by
it in complying with such request or direction, including such
reasonable advances as may be requested by the Guarantee Trustee;
provided, a that nothing contained in this Section 3.02(a)(v) shall be
taken to relieve the Guarantee
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Trustee, upon the occurrence of an Event of Default, of its obligation
to exercise the rights and powers vested in it by this Guarantee
Agreement and use the same degree of care and skill in the exercise
thereof as a prudent person would exercise or use under the
circumstances in the conduct of his or her own affairs.
(vi) The Guarantee Trustee shall not be bound to make any
investigation into the facts or matters stated in any resolution,
certificate, statement, instrument, opinion, report, notice, request,
direction, consent, order, bond, debenture, note, other evidence of
indebtedness or other paper or document, but the Guarantee Trustee, in
its discretion, may make such further inquiry or investigation into such
facts or matters as it may see fit.
(vii) The Guarantee Trustee may execute any of the trusts or
powers hereunder or perform any duties hereunder either directly or by
or through its agents or attorneys, and the Guarantee Trustee shall not
be responsible for any misconduct or negligence on the part of any such
agent or attorney appointed with due care by it hereunder.
(viii) Whenever in the administration of this Guarantee
Agreement the Guarantee Trustee shall deem it desirable to receive
instructions with respect to enforcing any remedy or right or taking any
other action hereunder, the Guarantee Trustee (A) may request
instructions from the Holders, (B) may refrain from enforcing such
remedy or right or taking such other action until such instructions are
received and (C) shall be fully protected in acting in accordance with
such instructions.
(b) No provision of this Guarantee Agreement shall be deemed to
impose any duty or obligation on the Guarantee Trustee to perform any act or
acts or exercise any right, power, duty or obligation conferred or imposed on it
in any jurisdiction in which it shall be illegal, or in which the Guarantee
Trustee shall be unqualified or incompetent in accordance with applicable law,
to perform any such act or acts or to exercise any such right, power, duty or
obligation. No permissive power or authority available to the Guarantee Trustee
shall be construed to be a duty to act in accordance with such power and
authority.
SECTION 3.03. Indemnity. The Guarantor agrees to indemnify the
Guarantee Trustee and its directors, officers, agents and employees for, and to
hold them harmless against, any and all loss, damage, claim, liability or
expense incurred without negligence or bad faith on the part of the Guarantee
Trustee, arising out of or in connection with the acceptance or administration
of this Guarantee Agreement, including the costs and expenses of defending
itself against any claim or liability in connection with the exercise or
performance of any of its powers or duties hereunder. The Guarantor shall be
entitled to participate in the defense of any action arising hereunder and, to
the extent it may wish, assume the defense thereof, with counsel satisfactory to
the Guarantee Trustee (who shall not, except with the consent of the Guarantee
Trustee, be counsel to Guarantor). Upon assuming such defense, the Guarantor
shall not be liable for any legal or other expenses subsequently incurred by the
Guarantee Trustee in connection with the defense thereof, other than reasonable
costs of investigation. The Guarantor shall not, without the prior written
consent of the Guarantee Trustee, effect any settlement of any pending or
threatened action in respect of which the Guarantee Trustee is or could have
been a party and indemnity could have been sought hereunder by the Guarantee
Trustee unless such settlement (i) includes an unconditional release of the
Guarantee Trustee from all liability on any claims that are the subject matter
of such action and (ii) does not include a statement as to, or an admission of,
fault, culpability or a failure to act by or on behalf of the Guarantee Trustee.
The Guarantee Trustee will not claim or exact any lien or charge on any
Guarantee Payments as a result of any amount due to it under this
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Guarantee Agreement. This indemnity shall survive the termination of this
Guarantee Agreement or the resignation or removal of the Guarantee Trustee.
SECTION 3.04. Compensation and Expenses. The Guarantor agrees to
pay to the Guarantee Trustee from time to time reasonable compensation for all
services rendered by it hereunder (which compensation shall not be limited by
any provision of law in regard to the compensation of a trustee of an express
trust) and to reimburse the Guarantee Trustee upon request for all reasonable
expenses, disbursements and advances (including the reasonable fees and expenses
of its attorneys and agents) incurred or made by the Guarantee Trustee in
accordance with any provision of this Guarantee Agreement, except any such
expense, disbursement or advance as may be attributable to its negligence or bad
faith. The obligations of the Guarantor under this Section shall survive the
termination of this Guarantee Agreement and the resignation or removal of the
Guarantee Trustee.
ARTICLE IV
Guarantee Trustee
SECTION 4.01. Guarantee Trustee: Eligibility. (a) There shall at
all times be a Guarantee Trustee which shall:
(i) not be an Affiliate of the Guarantor; and
(ii) be a Person that is eligible pursuant to the Trust
Indenture Act to act as such and has a combined capital and surplus of
at least $50,000,000, and shall be a corporation meeting the
requirements of Section 310(a) of the Trust Indenture Act. If such
corporation publishes reports of condition at least annually, pursuant
to law or to the requirements of the supervising or examining authority,
then, for the purposes of this Section and to the extent permitted by
the Trust Indenture Act, the combined capital and surplus of such
corporation shall be deemed to be its combined capital and surplus as
set forth in its most recent report of condition so published.
(b) If at any time the Guarantee Trustee shall cease to be
eligible to so act under Section 4.01(a), the Guarantee Trustee shall
immediately resign in the manner and with the effect set out in Section 4.02(c).
(c) If the Guarantee Trustee has or shall acquire any
"conflicting interest" within the meaning of Section 310(b) of the Trust
Indenture Act, the Guarantee Trustee and Guarantor shall in all respects comply
with the provisions of Section 310(b) of the Trust Indenture Act, subject to the
penultimate paragraph thereof.
SECTION 4.02. Appointment, Removal and Resignation of the
Guarantee Trustee. (a) Subject to Section 4.02(b), in the absence of the
existence of an Event of Default, the Guarantee Trustee may be appointed or
removed without cause at any time by the Guarantor.
(b) The Guarantee Trustee shall not be removed until a Successor
Guarantee Trustee has been appointed and has accepted such appointment by
written instrument executed by such Successor Guarantee Trustee and delivered to
the Guarantor.
(c) The Guarantee Trustee appointed hereunder shall hold office
until a Successor Guarantee Trustee shall have been appointed or until its
removal or resignation. The Guarantee Trustee may resign from office (without
need for prior or subsequent accounting) by an instrument in writing executed by
the Guarantee Trustee and delivered to the Guarantor, which resignation shall
not take effect until a Successor
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Guarantee Trustee has been appointed and has accepted such appointment by
instrument in writing executed by such Successor Guarantee Trustee and delivered
to the Guarantor and the resigning Guarantee Trustee.
(d) Upon the resignation or removal of the Guarantee Trustee,
the Guarantor shall promptly appoint a Successor Guarantee Trustee.
(e) If no Successor Guarantee Trustee shall have been appointed
and accepted appointment as provided in this Section 4.02 within 30 days after
delivery to the Guarantor of an instrument of resignation or notice of removal
by the Guarantor, the retiring Guarantee Trustee may petition, at the expense of
the Guarantor, any court of competent jurisdiction for appointment of a
Successor Guarantee Trustee. Such court may thereupon, after prescribing such
notice, if any, as it may deem proper, appoint a Successor Guarantee Trustee.
ARTICLE V
Guarantee
SECTION 5.01. Guarantee. The Guarantor irrevocably and
unconditionally agrees to pay in full to the Holders the Guarantee Payments
(without duplication of amounts theretofore paid by or on behalf of the Trust),
as and when due, regardless of any defense, right of set-off or counterclaim
which the Trust may have or assert. The Guarantor's obligation to make a
Guarantee Payment may be satisfied. by direct payment of the required amounts by
the Guarantor to the Holders or by causing the Trust to pay such amounts to the
Holders. The Guarantor shall give written notice to the Guarantee Trustee as
promptly as practicable in the event it makes any direct payment hereunder.
SECTION 5.02. Waiver of Notice and Demand. The Guarantor hereby
waives notice of acceptance of the Guarantee Agreement and, with respect to its
obligations under Section 5.01, hereby waives presentment, demand for payment,
any right to require a proceeding first against the Guarantee Trustee, Trust or
any other Person before proceeding against the Guarantor, protest, notice of
nonpayment, notice of dishonor, notice of redemption and all other notices and
demands.
SECTION 5.03. Obligations Not Affected. The obligations,
covenants, agreements and duties of the Guarantor under this Guarantee Agreement
shall in no way be affected or impaired by reason of the happening from time to
time of any of the following:
(a) the release or waiver, by operation of law or otherwise, of
the performance or observance by the Trust of any express or implied
agreement, covenant, term or condition relating to the HIGH TIDES to be
performed or observed by the Trust;
(b) the extension of time for the payment by the Trust of all or
any portion of the Distributions (other than any extension of time for
payment of Distributions that results from the extension of any interest
payment period on the Debentures as so provided in the Indenture),
Redemption Price, Liquidation Distribution or any other sums payable
under the terms of the HIGH TIDES or the extension of time for the
performance of any other obligation under, arising out of, or in
connection with, the HIGH TIDES;
(c) any failure, omission, delay or lack of diligence on the
part of the Holders to enforce, assert or exercise any right, privilege,
power or remedy
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conferred on the Holders pursuant to the terms of the HIGH TIDES, or
any action on the part of the Trust granting indulgence or extension of
any kind;
(d) the voluntary or involuntary liquidation, dissolution, sale
of any collateral, receivership, insolvency, bankruptcy, assignment for
the benefit of creditors, reorganization, arrangement, composition or
readjustment of debt of, or other similar proceedings affecting, the
Trust or any of the assets of the Trust;
(e) any invalidity of, or defect or deficiency in, the HIGH
TIDES;
(f) the settlement or compromise of any obligation guaranteed
hereby or hereby incurred; or
(g) any other circumstance whatsoever that might otherwise
constitute a legal or equitable discharge or defense of a guarantor, it
being the intent of this Section 5.03 that the obligations of the
Guarantor hereunder shall be absolute and unconditional under any and
all circumstances.
There shall be no obligation of the Holders to give notice to,
or obtain the consent of, the Guarantor with respect to the happening of any of
the foregoing.
SECTION 5.04. Rights of Holders. The Guarantor expressly
acknowledges that: (i) this Guarantee Agreement will be deposited with the
Guarantee Trustee to be held for the benefit of the Holders; (ii) the Guarantee
Trustee has the right to enforce this Guarantee Agreement on behalf of the
Holders; (iii) the Holders of a Majority in liquidation amount of the HIGH TIDES
have the right among themselves, the other Holders, if any, and the Guarantee
Trustee to direct the time, method and place of conducting any proceeding for
any remedy available to the Guarantee Trustee in respect of this Guarantee
Agreement or exercising any trust or power conferred upon the Guarantee Trustee
under this Guarantee Agreement, provided, that, subject to Section 3.1, the
Guarantee Trustee shall have the right to decline to follow any such direction
if the Guarantee Trustee being advised by counsel determines that the action or
proceeding so directed may not lawfully be taken or if the Guarantee Trustee in
good faith by its board of directors or trustees, executive committee, or a
trust committee of directors or trustees and/or Responsible Officers of the
Guarantee Trustee shall determine that the action or proceeding so directed
would involve the Guarantee Trustee in personal liability; and (iv) any Holder
may institute a legal proceeding directly against the Guarantor to enforce,
subject to the subordination provisions hereof, its rights under this Guarantee
Agreement, without first instituting a legal proceeding against the Trust or any
other Person.
SECTION 5.05. Guarantee of Payment. This Guarantee Agreement
creates a guarantee of payment and not of collection. This Guarantee Agreement
will not be discharged except by payment of the Guarantee Payments in full
(without duplication of amounts theretofore paid by the Trust) or upon
distribution of Debentures to Holders as provided in the Declaration.
SECTION 5.06. Subrogation. The Guarantor shall be subrogated to
all (if any) rights of the Holders against the Trust in respect of any amounts
paid to the Holders by the Guarantor under this Guarantee Agreement and shall
have the right to waive payment by the Trust pursuant to Section 5.01; provided,
w v that the Guarantor shall not (except to the extent required by mandatory
provisions of law) be entitled to enforce or exercise any rights which it may
acquire by way of subrogation or any indemnity, reimbursement or other
agreement, in all cases as a result of payment under this Guarantee Agreement,
if at the time of any such payment, any amounts are due and unpaid under this
Guarantee Agreement. If any amount shall be paid to the Guarantor in violation
of the preceding sentence, the Guarantor agrees to hold such amount in trust for
the Holders and to pay over such amount to the Holders. Any amounts paid over to
and
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not subsequently recovered from the Holders pursuant to any insolvency law shall
be deemed to have been applied by the Holders to the Guarantee Payments.
SECTION 5.07. Independent Obligations. The Guarantor
acknowledges that its obligations hereunder are independent of the obligations
of the Trust with respect to the HIGH TIDES and that the Guarantor shall
(without duplication of amounts paid by or on behalf of the Trust) be liable as
principal and as debtor hereunder to make Guarantee Payments pursuant to the
terms of this Guarantee Agreement notwithstanding the occurrence of any event
referred to in subsections (a) through (g), inclusive, of Section 5.03 hereof,
but subject to Section 6.01 hereof.
ARTICLE VI
Covenants and Subordination
SECTION 6.01. Subordination. This Guarantee Agreement will
constitute an unsecured obligation of the Guarantor and will rank subordinate
and junior in right of payment to all Senior Debt of the Guarantor in accordance
with the terms of Article XII of the Indenture, which terms (including the
definitions of all defined terms used therein) are incorporated herein, mutatis
mutandis, by this reference (it being understood and agreed that each notice
from holders of Senior Debt (or their agent or representative) to the Trustee
under the Indenture shall constitute a notice to the Guarantee Trustee
hereunder.
SECTION 6.02. Pari Passu Guarantees. This Guarantee Agreement
shall rank xxxx passu with any similar guarantee agreements issued by the
Guarantor on behalf of the holders of trust securities issued by a trust created
by the Guarantor similar to Calpine Capital Trust III.
ARTICLE VII
Termination
SECTION 7.01. Termination. This Guarantee Agreement shall
terminate and be of no further force and effect upon (i) full payment of the
Redemption Price of all HIGH TIDES, (ii) the distribution of Debentures to the
Holders in exchange for all of the HIGH TIDES, (iii) full payment of the amounts
payable in accordance with the Declaration upon liquidation of the Trust or (iv)
distribution of the Guarantor's common stock to the Holders in respect of the
conversion of all of the HIGH TIDES. Notwithstanding the foregoing, this
Guarantee Agreement will continue to be effective or will be reinstated, as the
case may be, if at any time any Holder must repay any sums paid with respect to
HIGH TIDES or this Guarantee Agreement.
ARTICLE VIII
Miscellaneous
SECTION 8.01. Successors and Assigns. All guarantees and
agreements contained in this Guarantee Agreement shall bind the successors,
assigns, receivers, trustees and representatives of the Guarantor and shall
inure to the benefit of the Holders of the HIGH TIDES then outstanding. Except
in connection with a consolidation, merger or sale involving the Guarantor that
is permitted under Article VIII of the Indenture and pursuant to which the
assignee agrees in writing to perform the Guarantor's obligations hereunder, the
Guarantor shall not assign its obligations hereunder.
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SECTION 8.02. Amendments. Except with respect to any changes
which do not adversely affect the rights of the Holders in any material respect
(in which case no consent of the Holders will be required), this Guarantee
Agreement may only be amended with the prior approval of the Holders of not less
than a Majority in liquidation amount of the HIGH TIDES. The provisions of
Article XII of the Declaration concerning meetings or consents of the Holders
shall apply to the giving of such approval.
SECTION 8.03. Notices. Any notice, request or other
communication required or permitted to be given hereunder shall be in writing,
duly signed by the party giving such notice, and delivered, telecopied
(confirmed by delivery of the original) or mailed by first class mail as
follows:
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(a) if given to the Guarantor, to the address set forth below or
such other address, facsimile number or to the attention of such other
Person as the Guarantor may give notice to the Holders and the Guarantee
Trustee:
Calpine Corporation
00 Xxxx Xxx Xxxxxxxx Xxxxxx
Xxx Xxxx, Xxxxxxxxxx 00000
Telephone: (000) 000-0000
Facsimile No.: (000) 000-0000
Attention: Xxxx X. Xxxxxxxxxxxx, Esq.
(b) if given to the Trust, in care of the Guarantor, at the
Trust's (and the Guarantee Trustee's) address set forth below or such
other address as the Trust may, at the Trusts's direction, give notice
to the Holders and the Guarantee Trustee:
Calpine Capital Trust III
c/o Calpine Corporation
00 Xxxx Xxx Xxxxxxxx Xxxxxx
Xxx Xxxx, Xxxxxxxxxx 00000
Telephone: (000) 000-0000
Facsimile No.: (000) 000-0000
Attention: Xxxx X. Xxxxxxxxxxxx, Esq.
with a copy to:
Wilmington Trust Company
Xxxxxx Square North
0000 Xxxxx Xxxxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxxx 00000
Attention: Corporate Trust Administration
(c) if given to the Guarantee Trustee, at the Guarantee
Trustee's address set forth below or such other address as the Guarantee
Trustee may give notice to the Guarantor and the Holders:
Wilmington Trust Company
Xxxxxx Square North
0000 Xxxxx Xxxxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxxx 00000
Attention: Corporate Trust Administration
(d) if given to any Holder, at the address set forth on the
books and records of the Trust.
All notices hereunder shall be deemed to have been given when
received in person, telecopied with receipt confirmed, or mailed by first class
mail, postage prepaid, except that if a notice or other document is refused
delivery or cannot be delivered because of a changed address of which no notice
was given, such. notice or other document shall be deemed to have been delivered
on the date of such refusal or inability to deliver.
SECTION 8.04. Benefit. This Guarantee Agreement is solely for
the benefit of the Holders (subject to the benefits inuring to the holders of
Senior Debt
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pursuant to the subordination provisions hereof) and is not separately
transferable from the HIGH TIDES.
SECTION 8.05. Interpretation. In this Guarantee Agreement,
unless the context otherwise requires:
(a) capitalized terms used in this Guarantee Agreement but not
defined in the preamble hereto have the respective meanings assigned to
them in Section 1.01;
(b) a term defined anywhere in this Guarantee Agreement has the
same meaning throughout;
(c) all references to "the Guarantee Agreement" or "this
Guarantee Agreement" are to this Guarantee Agreement as modified,
supplemented or amended from time to time;
(d) all references in this Guarantee Agreement to Articles and
Sections are to Articles and Sections of this Guarantee Agreement unless
otherwise specified;
(e) a term defined in the Trust Indenture Act has the same
meaning when used in this Guarantee Agreement unless otherwise defined
in this Guarantee Agreement or unless the context otherwise requires;
(f) a reference to the singular includes the plural and vice
versa; and
(g) the masculine, feminine or neuter genders used herein shall
include the masculine, feminine and neuter genders.
SECTION 8.06 Governing Law. THIS GUARANTEE AGREEMENT SHALL BE
GOVERNED BY AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK WITHOUT REGARD TO THE CONFLICT OF LAW PRINCIPLES THEREOF.
This instrument may be executed in any number of counterparts,
each of which so executed shall be deemed to be an original, but all such
counterparts shall together constitute but one and the same instrument.
[SIGNATURE PAGE FOLLOWS)
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THIS GUARANTEE AGREEMENT is executed as of the day and year
first above written.
Calpine Corporation
by /s/ XXX X. XXXXXX
---------------------------------------
Name: Xxx X. Xxxxxx
Title: Executive Vice President and
Chief Financial Officer
Wilmington Trust Company, as Guarantee
Trustee,
by
---------------------------------------
Name:
Title:
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THIS GUARANTEE AGREEMENT is executed as of the day and year
first above written.
Calpine Corporation
by
---------------------------------------
Name:
Title:
Wilmington Trust Company, as Guarantee
Trustee,
by /s/ XXXXX X. XXXXX
---------------------------------------
Name: Xxxxx X. Xxxxx
Title: Authorized Signer
