GUARANTEE AGREEMENT
made by
CALPINE CORPORATION
as Guarantor of Debt Securities Issued by
CALPINE CANADA ENERGY FINANCE II ULC
dated as of
October 18, 2001
TABLE OF CONTENTS
PAGE
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ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION.................. 1
SECTION 1.01. Definitions.............................................................. 1
ARTICLE TWO
GUARANTEE...................................... 3
SECTION 2.01. Unconditional Guarantee................................................. 3
SECTION 2.02. Execution of Guarantee.................................................. 3
SECTION 2.03. Subordination of Subrogation and Other Rights........................... 4
SECTION 2.04. Termination of Guarantee with Respect to Series......................... 4
ARTICLE THREE
CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE................ 4
SECTION 3.01. Guarantor May Consolidate, Etc., Only on Certain Terms.................. 4
SECTION 3.02. Successor Substituted................................................... 4
SECTION 3.03. Assignment to the Guarantor of the Company's Obligations................ 4
ARTICLE FOUR
AMENDMENTS...................................... 5
SECTION 4.01. Amendments Without Consent of Holders................................... 5
SECTION 4.02. Amendments With Consent of Holders...................................... 5
SECTION 4.03. Execution of Amendments................................................. 5
SECTION 4.04. Effect of Amendments.................................................... 6
SECTION 4.05. Conformity With Trust Indenture Act..................................... 6
SECTION 4.06. Reference in Guarantees to Amendments................................... 6
ARTICLE FIVE
COVENANTS....................................... 6
SECTION 5.01. Money for Security Payments To Be Held in Trust......................... 6
SECTION 5.02. Limitation on Sale/Leaseback Transactions............................... 6
SECTION 5.03. Limitation on Liens..................................................... 6
SECTION 5.04. Waiver of Certain Covenants............................................. 7
SECTION 5.05. Reports by Guarantor.................................................... 7
ARTICLE SIX
MISCELLANEOUS..................................... 8
SECTION 6.01. Trust Indenture Act..................................................... 8
SECTION 6.02. Effect of Headings and Table of Contents................................ 8
SECTION 6.03. Successors and Assigns.................................................. 8
SECTION 6.04. Separability Clause..................................................... 8
SECTION 6.05. Benefits of Agreement................................................... 8
SECTION 6.06. Governing Law........................................................... 8
SECTION 6.07. Notices, Etc., to the Guarantor......................................... 8
GUARANTEE AGREEMENT (this "Agreement"), dated as of October 18, 2001,
made by Calpine Corporation, a Delaware corporation (the "Guarantor"), whose
principal place of business is 00 Xxxx Xxx Xxxxxxxx Xxxxxx, Xxx Xxxx, XX 00000,
the parent of Calpine Canada Energy Finance II ULC, an unlimited liability
company organized under the laws of Nova Scotia, Canada (the "Company"), in
favor of the Holders (as defined in the Indenture referred to below) and the
Trustee (as defined below).
Reference is made to the Indenture (as the same may be amended,
restated, supplemented or modified from time to time, the "Indenture") between
the Company and Wilmington Trust Company, as trustee (the "Trustee") dated as of
October 18, 2001, relating to the securities issued thereunder (the
"Securities").
RECITALS OF THE GUARANTOR
The Guarantor has duly authorized the execution and delivery of this
Agreement and has agreed to guarantee Securities issued under the Indenture
pursuant to the terms of the Indenture and this Agreement;
All things necessary to make this Agreement a valid agreement of the
Guarantor, in accordance with its terms, have been done.
NOW, THEREFORE, THIS AGREEMENT WITNESSETH:
That in order to declare the terms and conditions upon which the
guarantee of the Securities (the "Guarantee") is made, executed, authenticated
and delivered, the Guarantor covenants and agrees, for the equal and
proportionate benefit of all Holders (as defined below) of the Securities or of
any Series thereof and for the benefit of the Trustee, as follows:
ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
SECTION 1.01. Definitions.
For all purposes of this Agreement hereto, except as otherwise expressly
provided or unless the context otherwise requires:
(1) the terms defined in this Article One have the meanings assigned to
them in this Article One and include the plural as well as the singular;
(2) the capitalized terms not defined in this Agreement have the
meanings assigned to them in the Indenture;
(3) all accounting terms not otherwise defined herein have the meanings
assigned to them in accordance with generally accepted accounting principles,
and, except as otherwise herein expressly provided, the term "generally accepted
accounting principles" with respect to any computation required or permitted
hereunder shall mean such accounting principles as are generally accepted at the
date of this Agreement; and
(4) the words "herein," "hereof" and "hereunder" and other words of
similar import refer to this Agreement as a whole and not to any particular
Article, Section or other subdivision.
"Attributable Debt" in respect of a Sale/Leaseback Transaction means, as
at the time of determination, the present value (discounted at the rate of
interest set forth or implicit in the terms of such lease (or, if not
practicable to determine such rate, the weighted average rate of interest borne
by the Securities outstanding under the Indenture (calculated, in the event of
the issuance of any original issue discount Securities, based on the imputed
interest rate with respect thereto)), compounded annually) of the total
obligations of the lessee for rental payments during the remaining term of the
lease included in such Sale/Leaseback Transaction (including any period for
which such lease has been extended).
"Average Life" means, as of the date of determination, with respect to
any Indebtedness or Preferred Stock, the quotient obtained by dividing (i) the
sum of the products of (A) the numbers of years from the date of determination
to the dates of each successive scheduled principal payment of such Indebtedness
or scheduled redemption or similar payment with respect to such Indebtedness or
Preferred Stock multiplied by (B) the amount of such payment by (ii) the sum of
all such payments.
"Board of Directors" means the Board of Directors of the Guarantor or
any authorized committee thereof.
"Board Resolution" means a copy of a resolution certified by the
Secretary or an Assistant Secretary of the Guarantor to have been duly adopted
by the Board of Directors and to be in full force and effect on the date of such
certification, and delivered to the Trustee.
"Consolidated Current Liabilities," as of the date of determination,
means the aggregate amount of consolidated liabilities of the Guarantor and its
consolidated Restricted Subsidiaries which may properly be classified as current
liabilities (including taxes accrued as estimated), after eliminating (i) all
inter-company items between the Guarantor and its Subsidiaries and (ii) all
current maturities of long-term Indebtedness, all as determined in accordance
with GAAP.
"Consolidated Net Tangible Assets" means, as of any date of
determination, the total amount of Consolidated assets (less accumulated
depreciation or amortization, allowances for doubtful receivables, other
applicable reserves and other properly deductible items) under GAAP which would
appear on a Consolidated balance sheet of the Guarantor and its Subsidiaries,
determined in accordance with GAAP, and after giving effect to purchase
accounting and after deducting therefrom, to the extent otherwise included, the
amounts of: (i) Consolidated Current Liabilities; (ii) minority interests in
consolidated Restricted Subsidiaries of the Guarantor held by Persons other than
the Guarantor or a Restricted Subsidiary of the Guarantor; (iii) excess of cost
over fair value of assets of businesses acquired, as determined in good faith by
the Board of Directors; (iv) any revaluation or other write-up in value of
assets subsequent to December 31, 1993 as a result of a change in the method of
valuation in accordance with GAAP; (v) unamortized debt discount and expenses
and other unamortized deferred charges, goodwill, patents, trademarks, service
marks, trade names, copyrights, licenses, organization or developmental expenses
and other intangible items; (vi) treasury stock; and (vii) any cash set apart
and held in a sinking or other analogous fund established for the purpose of
redemption or other retirement of Capital Stock to the extent such obligation is
not reflected in Consolidated Current Liabilities.
"Consolidation" means, with respect to any Person, the consolidation of
accounts of such Person and each of its subsidiaries if and to the extent the
accounts of such Person and such subsidiaries are consolidated in accordance
with GAAP. The term "Consolidated" shall have a correlative meaning.
"Refinancing Indebtedness" means Indebtedness that refunds, refinances,
replaces, renews, repays or extends (including pursuant to any defeasance or
discharge mechanism) (collectively, "refinances," and "refinanced" shall have a
correlative meaning) any Indebtedness of the Guarantor or a Restricted
Subsidiary (including Indebtedness of the Guarantor that refinances Indebtedness
of any Restricted Subsidiary and Indebtedness of any Restricted Subsidiary that
refinances Indebtedness of another Restricted Subsidiary) including Indebtedness
that refinances Refinancing Indebtedness; provided, however, that (i) if the
Indebtedness being refinanced is contractually subordinated in right of payment
to the Securities, the Refinancing Indebtedness shall be contractually
subordinated in right of payment to the Securities to at least the same extent
as the Indebtedness being refinanced, (ii) the Refinancing Indebtedness is
scheduled to mature either (a) no earlier than the Indebtedness being refinanced
or (b) after the Stated Maturity of the Securities, (iii) the Refinancing
Indebtedness has an Average Life at the time such Refinancing Indebtedness is
Incurred that is equal to or greater than the Average Life of the Indebtedness
being refinanced and (iv) such Refinancing Indebtedness is in an aggregate
principal amount (or if issued with original issue discount, an aggregate issue
price) that is equal to or less than the aggregate principal amount (or if
issued with original issue discount, the aggregate accreted value) then
outstanding (plus fees and expenses, including any premium, swap breakage and
defeasance costs) under the Indebtedness being refinanced; and provided,
further, that Refinancing Indebtedness shall not include (x) Indebtedness of a
Subsidiary of the Guarantor that refinances Indebtedness of the Guarantor or (y)
Indebtedness of the Guarantor or a Restricted Subsidiary that refinances
Indebtedness of an Unrestricted Subsidiary.
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"Restricted Subsidiary" means any Subsidiary of the Guarantor that is
not designated an Unrestricted Subsidiary by the Board of Directors of the
Guarantor.
"Sale/Leaseback Transaction" means an arrangement relating to property
now owned or hereafter acquired whereby the Guarantor or a Subsidiary transfers
such property to a Person and leases it back from such Person, other than leases
for a term of not more than 36 months or between the Guarantor and a Wholly
Owned Subsidiary or between Wholly Owned Subsidiaries.
"Subsidiary" means, as applied to any Person, any corporation,
partnership, trust, association or other business entity of which an aggregate
of at least 50% of the outstanding Voting Shares or an equivalent controlling
interest therein, of such Person is, at the time, directly or indirectly, owned
by such Person and/or one or more Subsidiaries of such Person.
"Unrestricted Subsidiary" means (i) any Subsidiary that at the time of
determination shall be designated an Unrestricted Subsidiary by the Board of
Directors in the manner provided below and (ii) any Subsidiary of an
Unrestricted Subsidiary. The Board of Directors may designate any Subsidiary
(including any newly acquired or newly formed Subsidiary) to be an Unrestricted
Subsidiary unless such Subsidiary owns any Capital Stock of, or owns or holds
any Lien on any property of, the Guarantor or any other Subsidiary that is not a
Subsidiary of the Subsidiary to be so designated; provided, that the Subsidiary
to be so designated and all other Subsidiaries previously so designated at the
time of any determination hereunder shall, in the aggregate, have total assets
not greater than 5% of Consolidated Net Tangible Assets as determined based on
the Consolidated balance sheet of the Guarantor as of the end of the most recent
fiscal quarter for which financial statements are available. The Board of
Directors may designate any Unrestricted Subsidiary to be a Restricted
Subsidiary of the Guarantor; provided, however, that immediately after giving
effect to such designation no Default or Event of Default shall have occurred
and be continuing. Any such designation by the Board of Directors shall be
evidenced to the Trustee by promptly filing with the Trustee a Board Resolution
giving effect to such designation and an Officers' Certificate certifying that
such designation complied with the foregoing provision; provided, however, that
the failure to so file such resolution and/or Officers' Certificate with the
Trustee shall not impair or affect the validity of such designation.
"Wholly Owned Subsidiary" means a Subsidiary (other than an Unrestricted
Subsidiary) all the Capital Stock of which (other than directors' qualifying
shares) is owned by the Guarantor or another Wholly Owned Subsidiary.
ARTICLE TWO
GUARANTEE
SECTION 2.01. Unconditional Guarantee.
The Guarantor hereby unconditionally guarantees to each Holder of a
Security authenticated by the Trustee and to the Trustee and its successors and
assigns that: the principal of, premium thereon (if any) and interest on the
Securities of each Series will be promptly paid in full when due, subject to any
applicable grace period, whether at maturity, by acceleration or otherwise, and
interest on the overdue principal and interest on any overdue interest on the
Securities of each Series and all other obligations of the Company to the
Holders or the Trustee hereunder or under the Indenture or the Securities of
such Series will be promptly paid in full or performed, all in accordance with
the terms hereof and thereof. The Guarantor hereby agrees that its obligations
hereunder shall be unconditional, irrespective of the validity, regularity or
enforceability of the Securities of each Series or of the Indenture, the absence
of any action to enforce the same, any waiver or consent by any Holder of the
Securities of any Series or the Trustee with respect to any provisions hereof,
of the Indenture or of the Securities, the recovery of any judgment against the
Company, any action to enforce the same or any other circumstance which might
otherwise constitute a legal or equitable discharge or defense of the Guarantor.
The Guarantor hereby waives diligence, presentment, demand of payment, filing of
claims with a court in the event of insolvency or bankruptcy of the Company, any
right to require proceeding first against the Company, protest, notice and all
demands whatsoever and covenants that the Guarantee will not be discharged
except by complete performance of the obligations contained in the Indenture and
the Securities of each Series. If any Holder or the Trustee is required by any
court or otherwise to return to the Company or the Guarantor, or any custodian,
trustee, liquidator or other similar official acting in relation to the Company
or the Guarantor, any amount paid by the Company or the Guarantor to the Trustee
or such Holder, the
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Guarantee, to the extent theretofore discharged, shall be reinstated in full
force and effect. The Guarantee constitutes a guarantee of payment and not of
collection.
SECTION 2.02. Execution of Guarantee.
To further evidence the Guarantee to the Holders, the Guarantor hereby
agrees to execute a Guarantee substantially in the form of Exhibit A hereto, to
be endorsed on and made a part of each Security ordered to be authenticated and
delivered by the Trustee. The Guarantor hereby agrees that its Guarantee set
forth in Section 2.01 shall remain in full force and effect notwithstanding any
failure to endorse on each Security a Guarantee. Each such Guarantee shall be
signed on behalf of the Guarantor by its Chairman of the Board, its President or
one of its Vice Presidents prior to the authentication of the Security on which
it is endorsed, and the delivery of such Security by the Trustee, after the
authentication thereof hereunder, shall constitute due delivery of such
Guarantee on behalf of the Guarantor. Such signature upon the Guarantee may be a
manual or facsimile signature of such officer and may be imprinted or otherwise
reproduced on the Guarantee, and in case such officer who shall have signed the
Guarantee shall cease to be such officer before the Security on which Guarantee
is endorsed shall have been authenticated and delivered by the Trustee or
disposed of by the Company, the Security nevertheless may be authenticated and
delivered or disposed of as though the Person who signed the Guarantee had not
ceased to be such officer of the Guarantor.
SECTION 2.03. Subordination of Subrogation and Other Rights.
The Guarantor hereby agrees that any claim against the Company that
arises from the payment, performance or enforcement of the Guarantor's
obligations under the Guarantee or the Indenture, including, without limitation,
any right of subrogation, shall be subject and subordinate to, and no payment
with respect to any such claim of the Guarantor shall be made before, the
payment in full in cash of all outstanding Securities of each Series in
accordance with the provisions provided therefor in the Indenture.
SECTION 2.04. Termination of Guarantee with Respect to Series.
If all outstanding Securities of a Series are paid or discharged by the
Company pursuant to the Indenture, or if the Company otherwise terminates its
obligations with respect to all Securities of such Series pursuant to the
Indenture (including by defeasance thereof), then the Guarantee with respect to
the Securities of such Series and this Guarantee Agreement insofar as it relates
to the Securities of such Series, shall also and concurrently terminate.
ARTICLE THREE
CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE
SECTION 3.01. Guarantor May Consolidate, Etc., Only on Certain Terms.
The Guarantor shall not in a single transaction or through a series of
related transactions consolidate with or merge with or into any other
corporation or sell, assign, convey, transfer or lease or otherwise dispose of
all or substantially all of its properties and assets to any Person or group of
affiliated Persons, unless:
(i) either (A) the Guarantor shall be the continuing Person, or
(B) the Person (if other than the Guarantor) formed by such
consolidation or into which the Guarantor is merged or to which the
properties and assets of the Guarantor are sold, assigned, conveyed,
transferred, disposed of or leased as aforesaid (the "Successor
Corporation") shall be a corporation organized and existing under the
laws of the United States or any State thereof or the District of
Columbia and shall expressly assume, by an agreement supplemental
hereto, executed and delivered to the Trustee, in form reasonably
satisfactory to the Trustee, all the obligations of the Guarantor under
this Agreement;
(ii) immediately after giving effect to such transaction, no
Default shall have occurred and be continuing;
(iii) the Guarantor shall have delivered, or caused to be
delivered, to the Trustee an Officers' Certificate and, as to legal
matters, an Opinion of Counsel, each in form reasonably satisfactory to
the Trustee, each stating that
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such consolidation, merger, sale, assignment, conveyance, transfer,
disposition or lease and such supplemental agreement comply with this
Agreement and that all conditions precedent herein provided for relating
to such transaction have been complied with;
Notwithstanding the foregoing paragraph (ii), any Restricted Subsidiary,
the Guarantor or any Wholly Owned Subsidiary or Wholly Owned Subsidiaries may
consolidate with or merge with or into the Guarantor or any Wholly Owned
Subsidiary and no violation of this Section shall be deemed to have occurred as
a consequence thereof, as long as the requirements of paragraphs (i) and (iii)
are satisfied in connection therewith.
SECTION 3.02. Successor Substituted.
Upon any such consolidation or merger, or any sale, assignment,
conveyance, transfer, disposition or lease of all or substantially all of the
properties or assets of the Guarantor in accordance with Section 3.01, the
Successor Corporation shall succeed to and be substituted for the Guarantor
under this Agreement, and the Guarantor shall (except in the case of a lease)
thereupon be released from all obligations hereunder and under this Agreement
and the Guarantor, as the predecessor corporation, may thereupon or at any time
thereafter be dissolved, wound up or liquidated.
SECTION 3.03. Assignment to the Guarantor of the Company's Obligations.
It is acknowledged that, pursuant to Section 4.3 of the Indenture, the
Company may assign its obligations under any Series of Securities and the
Indenture to the Guarantor or any Subsidiary of the Guarantor in accordance with
such Section 4.3 and, if the Company assigns its obligations to the Guarantor in
accordance with such Section 4.3 with respect to any Series of Securities, all
Guarantees of outstanding Securities of such Series shall automatically
terminate and be discharged.
ARTICLE FOUR
AMENDMENTS
SECTION 4.01. Amendments Without Consent of Holders.
The Guarantor, when authorized by a Board Resolution, and the Trustee
may enter into one or more agreements, in form satisfactory to the Trustee,
without notice to or the consent of any Securityholder for any of the following
purposes:
(1) to evidence the succession of another corporation to the Guarantor
and the assumption by any such successor of the covenants of the Guarantor
herein; or
(2) to add to the covenants of the Guarantor for the benefit of the
Holders of all or any Series of Securities, or to surrender any right or power
herein conferred upon the Guarantor; or
(3) to comply with Article Three; or
(4) to cure any ambiguity, to correct or supplement any provision herein
which may be inconsistent with any other provision herein, or to make any other
provisions with respect to matters or questions arising under this Agreement;
provided such action shall not adversely affect the interests of the Holders in
any material respect.
SECTION 4.02. Amendments With Consent of Holders.
The Guarantor, when authorized by a Board Resolution, and the Trustee
may enter into an amendment to this Agreement for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions of
this Agreement or of modifying in any manner the rights of the Holders of
Securities of any Series under this Agreement with the written consent of the
Holders of a majority in principal amount of the Securities of each Series
affected by such amendment. However, without the consent of each Securityholder
affected, an amendment under this Section may not:
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(1) modify Article Two or the definitions used in Article Two in a
manner which adversely affects the Holders of Outstanding Securities in any
material respect, or
(2) modify any of the provisions of this Section 4.02, except to
increase any such percentage or to provide that certain other provisions of this
Agreement cannot be modified or waived without the consent of the Holder of each
Outstanding Security affected thereby.
An amendment that changes or eliminates any covenant or other provision
of this Agreement which has expressly been included solely for the benefit of
one or more particular Series of Securities, or that modifies the rights of the
Holders of Securities of such Series with respect to such covenant or other
provision, shall be deemed not to affect the rights under this Agreement of the
Holders of Securities of any other Series.
It shall not be necessary for any Act of Holders under this Section 4.02
to approve the particular form of any proposed amendment, but it shall be
sufficient if such Act shall approve the substance thereof.
SECTION 4.03. Execution of Amendments.
In executing any amendment permitted by this Article Four, the Trustee
shall be entitled to receive, and shall be fully protected in relying upon, an
Opinion of Counsel stating that the execution of such amendment is authorized or
permitted by this Agreement. The Trustee may, but shall not be obligated to,
enter into any such amendment which affects the Trustee's own rights, duties or
immunities under this Agreement or otherwise.
SECTION 4.04. Effect of Amendments.
Upon the execution of any amendment under this Article Four, this
Agreement shall be modified in accordance therewith, and such amendment shall
form a part of this Agreement for all purposes; and every Holder of Securities
theretofore or thereafter authenticated and delivered hereunder shall be bound
thereby.
SECTION 4.05. Conformity With Trust Indenture Act.
Every amendment executed pursuant to this Article Four shall conform to
the requirements of the TIA as then in effect.
SECTION 4.06. Reference in Guarantees to Amendments.
The Guarantees endorsed on Securities authenticated and delivered after
the execution of any amendment pursuant to this Article Four may, and shall, if
required by the Trustee, bear a notation in form approved by the Trustee as to
any matter provided for in such amendment. If the Guarantor shall so determine,
new Securities so modified as to conform, in the opinion of the Trustee and the
Board of Directors, to any such amendment may be prepared and executed by the
Guarantor and authenticated and delivered by the Trustee in exchange for
outstanding Securities.
ARTICLE FIVE
COVENANTS
SECTION 5.01. Money for Security Payments To Be Held in Trust.
If the Guarantor shall at any time act as Paying Agent with respect to
any Series of Securities, it will, on or before each due date of the principal
of (or premium, if any) or interest, if any, on any of the securities of that
Series, segregate and hold in trust for the benefit of the Persons entitled
thereto a sum sufficient to pay the principal (or premium, if any) or interest,
if any, so becoming due until such sums shall be paid to such Persons or
otherwise disposed of as herein provided and will promptly notify the Trustee of
its action or failure so to act.
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SECTION 5.02. Limitation on Sale/Leaseback Transactions.
The Guarantor shall not, and shall not permit any Restricted Subsidiary
to, enter into any Sale/ Leaseback Transaction unless (i) the Guarantor or such
Restricted Subsidiary would be entitled to create a Lien on such property
securing Indebtedness in an amount equal to the Attributable Debt with respect
to such transaction without equally and ratably securing the Securities pursuant
to Section 5.03 or (ii) the net proceeds of such sale are at least equal to the
fair value (as determined by the Board of Directors) of such property or asset
and the Guarantor or such Restricted Subsidiary shall apply or cause to be
applied an amount in cash equal to the net proceeds of such sale to the
retirement, within 180 days of the effective date of any such arrangement, of
Indebtedness of the Guarantor or any Restricted Subsidiary; provided, however,
that in addition to the transactions permitted pursuant to the foregoing clauses
(i) and (ii), the Guarantor or any Restricted Subsidiary may enter into a
Sale/Leaseback Transaction as long as the sum of (x) the Attributable Debt with
respect to such Sale/Leaseback Transaction and all other Sale/Leaseback
Transactions entered into pursuant to this proviso plus (y) the amount of
outstanding Indebtedness secured by Liens Incurred pursuant to the final proviso
to Section 5.03 does not exceed 15% of Consolidated Net Tangible Assets as
determined based on the consolidated balance sheet of the Guarantor as of the
end of the most recent fiscal quarter for which financial statements are
available; and provided, further, that a Restricted Subsidiary may enter into a
Sale/Leaseback Transaction with respect to property or assets owned by such
Restricted Subsidiary, the proceeds of which are used to explore, drill,
develop, construct, purchase, repair, improve or add to property or assets of
any Restricted Subsidiary, or to repay (within 365 days of the commencement of
full commercial operation of any such property) Indebtedness Incurred to
explore, drill, develop, construct, purchase, repair, improve or add to property
or assets of any Restricted Subsidiary.
SECTION 5.03. Limitation on Liens.
The Guarantor shall not, and shall not permit any Restricted Subsidiary
to, directly or indirectly, incur any Lien on any of its properties or assets
(including Capital Stock), whether owned at the date of issuance of any Series
of Securities pursuant to the Indenture or thereafter acquired, in each case to
secure Indebtedness of the Guarantor or any Restricted Subsidiary, other than
(a)(1) Liens incurred by the Guarantor or any Restricted Subsidiary securing
Indebtedness Incurred by the Guarantor or such Restricted Subsidiary, as the
case may be, to finance the exploration, drilling, development, construction or
purchase of or by, or repairs, improvements or additions to, property or assets
of the Guarantor or such Restricted Subsidiary, as the case may be, which Liens
may include Liens on the Capital Stock of such Restricted Subsidiary or (2)
Liens incurred by any Restricted Subsidiary that does not own, directly or
indirectly, at the time of such original incurrence of such Lien under this
clause (2) any operating properties or assets, securing Indebtedness Incurred to
finance the exploration, drilling, development, construction or purchase of or
by, or repairs, improvements or additions to, property or assets of any
Restricted Subsidiary that does not, directly or indirectly, own any operating
properties or assets at the time of such original incurrence of such Lien, which
Liens may include Liens on the Capital Stock of one or more Restricted
Subsidiaries that do not, directly or indirectly, own any operating properties
or assets at the time of such original incurrence of such Lien, provided,
however, that the Indebtedness secured by any such Lien may not be issued more
than 365 days after the later of the exploration, drilling, development,
completion of construction, purchase, repair, improvement, addition or
commencement of full commercial operation of the property or assets being so
financed; (b) Liens existing on the date of the issuance of such series of
Securities (other than Liens relating to Indebtedness or other obligations being
repaid or Liens that are otherwise extinguished with the proceeds of any
offering of Securities pursuant to this Indenture); (c) Liens on property,
assets or shares of stock of a Person at the time such Person becomes a
Subsidiary; provided, however, that any such Lien may not extend to any other
property or assets owned by the Guarantor or any Restricted Subsidiary; (d)
Liens on property or assets at the time the Guarantor or a Subsidiary acquires
the property or asset, including any acquisition by means of a merger or
consolidation with or into the Guarantor or a Subsidiary; provided, however,
that such Liens are not incurred in connection with, or in contemplation of,
such merger or consolidation; and provided, further, that the Lien may not
extend to any other property or asset owned by the Guarantor or any Restricted
Subsidiary; (e) Liens securing Indebtedness or other obligations of a Subsidiary
owing to the Guarantor or a Restricted Subsidiary or of the Guarantor owing to a
Subsidiary; (f) Liens incurred on assets that are the subject of a Capitalized
Lease Obligation to which the Guarantor or a Subsidiary is a party, which shall
include, Liens on the stock or other ownership interest in one or more
Restricted Subsidiaries leasing such assets; (g) Liens to secure any
refinancing, refunding, extension, renewal or replacement (or successive
refinancings, refundings, extensions, renewals or replacements) as a whole, or
in part, of any Indebtedness secured by any Lien referred to in the foregoing
clauses (a), (b), (c), (d) and (f), provided,
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however, that (x) such new Lien shall be limited to all or part of the same
property or assets that secured the original Lien (plus repairs, improvements or
additions to such property or assets and Liens on the stock or other ownership
interest in one or more Restricted Subsidiaries beneficially owning such
property or assets) and (y) the amount of the Indebtedness secured by such Lien
at such time (or, if the amount that may be realized in respect of such Lien is
limited, by contract or otherwise, such limited lesser amount) is not increased
(other than by an amount necessary to pay fees and expenses, including premiums,
related to the refinancing, refunding, extension, renewal or replacement of such
Indebtedness); and (h) Liens by which the Securities are secured equally and
ratably with other Indebtedness pursuant to this Section 5.03; in any such case
without effectively providing that the Securities shall be secured equally and
ratably with (or prior to) the obligations so secured for so long as such
obligations are so secured; provided, however, that the Guarantor or a
Restricted Subsidiary may Incur other Liens to secure outstanding Indebtedness
as long as the sum of (x) the lesser of (A) the amount of outstanding
Indebtedness secured by Liens Incurred pursuant to this proviso (or, if the
amount that may be realized in respect of such Lien is limited, by contract or
otherwise, such limited lesser amount) and (B) the fair value (as determined by
the Board of Directors) of the property securing such item of Indebtedness, plus
(y) the Attributable Debt with respect to all Sale/Leaseback Transactions
entered into pursuant to the first proviso to Section 5.02 does not exceed 15%
of Consolidated Net Tangible Assets as determined based on the Consolidated
balance sheet of the Guarantor as of the end of the most recent fiscal quarter
for which financial statements are available.
SECTION 5.04. Waiver of Certain Covenants.
The Guarantor may omit in any particular instance to comply with any
covenant or condition set forth in Sections 5.02 and 5.03, inclusive, if before
or after the time for such compliance the Holders of at least 50% in principal
amount of the Securities of each Series at the time outstanding, shall either
waive such compliance in such instance or generally waive compliance with such
covenant or condition, but no such waiver shall extend to or affect such
covenant or condition except to the extent so expressly waived, and, until such
waiver shall become effective, the obligations of the Guarantor and the duties
of the Trustee in respect of any such covenant or condition shall remain in full
force and effect.
SECTION 5.05. Reports by Guarantor.
(a) The Guarantor shall file with the Trustee, within 15 days after the
Guarantor is required to file the same with the SEC, copies of the annual
reports and of the information, documents and other reports (or copies of such
portions of any of the foregoing as the SEC may from time to time by rules and
regulations prescribe) which the Guarantor is required to file with the SEC
pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of 1934,
as amended and shall otherwise comply with Section 314(a) of the Trust Indenture
Act.
(b) The Guarantor shall furnish to the Trustee, within 120 days after
the end of each fiscal year, a brief certificate from the principal executive
officer, principal financial officer or principal accounting officer as to his
or her knowledge of the Guarantor's compliance with all conditions and covenants
under this Agreement. For purposes of this paragraph (b), such compliance shall
be determined without regard to any period of grace or requirement of notice
provided under this Agreement or the Indenture.
ARTICLE SIX
MISCELLANEOUS
SECTION 6.01. Trust Indenture Act.
The Guarantor understands that this Agreement is to be qualified under
the TIA and any provision of the Indenture required by the TIA is hereby
incorporated by reference. If any provision of this Agreement limits, qualifies
or conflicts with the duties imposed by any of TIA Sections 310 to 317,
inclusive, through operation of TIA Section 318(c), such imposed duties shall
control. If any provision of this Agreement modifies or excludes any provision
of the TIA that may be so modified or excluded, the latter provision shall be
deemed to apply to this Agreement as so modified or to be excluded, as the case
may be.
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SECTION 6.02. Effect of Headings and Table of Contents.
The Article and Section headings herein are for convenience only and
shall not affect the construction hereof.
SECTION 6.03. Successors and Assigns.
All covenants and agreements in this Agreement by the Guarantor shall
bind its successors and assigns, whether so expressed or not.
SECTION 6.04. Separability Clause.
In case any provision in this Agreement or in the Guarantee shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
SECTION 6.05. Benefits of Agreement.
Nothing in this Agreement or in the Guarantee, express or implied, shall
give to any Person, other the Guarantor and its successors hereunder and the
Holders of Securities, any benefit or any legal or equitable right, remedy or
claim under this Agreement.
SECTION 6.06. Governing Law.
This Agreement and the Guarantee shall be governed by and construed in
accordance with the laws of the State of New York, without regard to the
conflicts of laws rules thereof.
SECTION 6.07. Notices, Etc., to the Guarantor.
Any request, demand, authorization, direction, notice, consent, waiver
or Act of Holders or other document provided or permitted by this Agreement to
be made upon, given or furnished to, or filed with the Guarantor by the Trustee
or by any Holder shall be sufficient for every purpose hereunder (unless
otherwise herein expressly provided) if in writing and mailed, first-class
postage prepaid, to the Guarantor addressed to it at the address of its
principal office specified in the first paragraph of this Agreement or at any
other address previously furnished in writing to the Trustee by the Guarantor,
Attention: Assistant Treasurer; provided, however, that any failure to provide
such notice to the Guarantor shall not release the Guarantor from its guarantee
obligations hereunder. Notices to the Trustee shall be given as provided in the
Indenture.
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IN WITNESS WHEREOF, the Guarantor has duly executed this Agreement as of
the date first above written.
CALPINE CORPORATION, as Guarantor
By: /s/ XXXX XXXXX
--------------------------------
Name: Xxxx Xxxxx
Title: Senior Vice President
Agreed and Accepted:
WILMINGTON TRUST COMPANY,
as Trustee under the Indenture
By: /s/ XXXXX X. XXXXXX
--------------------------------
Name:
Title: Vice President
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EXHIBIT A
FORM OF GUARANTEE
For value received, CALPINE CORPORATION, a Delaware corporation
(including any successor under the Guarantee Agreement referred to in the
Security upon which this Guarantee is endorsed, the "Guarantor") hereby
unconditionally guarantees to the Holder of the Security upon which this
Guarantee is endorsed, and to the Trustee and its successors and assigns on
behalf of such Holder, that: the principal of, premium thereon (if any) and
interest on such Security will be promptly paid in full when due, subject to any
applicable grace period, whether at maturity, by acceleration or otherwise, and
interest on the overdue principal and interest on any overdue interest on such
Security and all other obligations of the Company to the Holder of such Security
or the Trustee or under the Indenture will be promptly paid in full or
performed, all in accordance with the terms hereof and thereof.
The Guarantor hereby agrees that its obligations hereunder shall be
unconditional, irrespective of the validity, regularity or enforceability of the
Security upon which this Guarantee is endorsed or of the Indenture, the absence
of any action to enforce the same, any waiver or consent by the Holder of such
Security or the Trustee with respect to any provisions hereof or of the
Indenture, the Guarantee Agreement or the Securities, the recovery of any
judgment against the Company, any action to enforce the same or any other
circumstance which might otherwise constitute a legal or equitable discharge or
defense of the Guarantor.
The Guarantor hereby waives diligence, presentment, demand of payment,
filing of claims with a court in the event of insolvency or bankruptcy of the
Company, any right to require proceeding first against the Company, protest,
notice and all demands whatsoever and covenants that this Guarantee will not be
discharged except by complete performance of the obligations contained in the
Indenture and the Security upon which this Guarantee is endorsed. This is a
guarantee of payment and not of collection.
If the Holder of such Security or the Trustee is required by any court
or otherwise to return to the Company or the Guarantor, or any custodian,
trustee, liquidator or other similar official acting in relation to the Company
or the Guarantor, any amount paid by the Company or the Guarantor to the Trustee
or such Holder, the Guarantee, to the extent theretofore discharged, shall be
reinstated in full force and effect.
The Guarantor hereby agrees that any claim against the Company that
arises from the payment, performance or enforcement of the Guarantor's
obligations under the Guarantee or the Indenture, including, without limitation,
any right of subrogation, shall be subject and subordinate to, and no payment
with respect to any such claim of the Guarantor shall be made before, the
payment in full in cash of the Security upon which this Guarantee is endorsed in
accordance with the provisions provided therefor in the Indenture.
All capitalized terms used without definition in this Guarantee shall
have the respective meanings assigned to such terms in the Guarantee Agreement.
This Guarantee shall not be valid or obligatory for any purpose until
the certificate of authentication on the Security upon which this Guarantee is
endorsed shall have been executed by the Trustee under the Indenture by the
manual signature of one of its authorized officers.
CALPINE CORPORATION
By:
--------------------------------
Name:
Title:
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