<SUBMISSION>
<ACCESSION-NUMBER>0000950123-01-500278
<TYPE>S-3
<PUBLIC-DOCUMENT-COUNT>7
<FILING-DATE>20010321
<FILER>
<COMPANY-DATA>
<CONFORMED-NAME>CALPINE CORP
<CIK>0000916457
<ASSIGNED-SIC>4911
<IRS-NUMBER>770212977
<STATE-OF-INCORPORATION>DE
<FISCAL-YEAR-END>1231
</COMPANY-DATA>
<FILING-VALUES>
<FORM-TYPE>S-3
<ACT>33
<FILE-NUMBER>333-57338
<FILM-NUMBER>1573068
</FILING-VALUES>
<BUSINESS-ADDRESS>
<STREET1>50 WEST SAN FERNANDO ST
<CITY>SAN JOSE
<STATE>CA
<ZIP>95113
<PHONE>4089955115
</BUSINESS-ADDRESS>
<MAIL-ADDRESS>
<STREET1>50 W SAN FERNANDO
<STREET2>SUITE 500
<CITY>SAN JOSE
<STATE>CA
<ZIP>95113
</MAIL-ADDRESS>
</FILER>
<FILER>
<COMPANY-DATA>
<CONFORMED-NAME>CALPINE CANADA ENERGY FINANCE ULC
<CIK>0001137032
<ASSIGNED-SIC>
<IRS-NUMBER>000000000
<STATE-OF-INCORPORATION>A5
<FISCAL-YEAR-END>1231
</COMPANY-DATA>
<FILING-VALUES>
<FORM-TYPE>S-3
<ACT>33
<FILE-NUMBER>333-57338-01
<FILM-NUMBER>1573069
</FILING-VALUES>
<BUSINESS-ADDRESS>
<STREET1>50 WEST SAN FERNANDO ST
<CITY>SAN JOSE
<STATE>CA
<ZIP>95113
</BUSINESS-ADDRESS>
<MAIL-ADDRESS>
<STREET1>50 WEST SAN FERNANDO ST
<CITY>SAN JOSE
<STATE>CA
<ZIP>95113
</MAIL-ADDRESS>
</FILER>
<DOCUMENT>
<TYPE>S-3
<SEQUENCE>1
<FILENAME>f70590ms-3.txt
<DESCRIPTION>REGISTRATION ON FORM S-3
<TEXT>

<PAGE>   1

     AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MARCH 21, 2001

                                                      REGISTRATION NO. 333-
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                            ------------------------

                                    FORM S-3
                             REGISTRATION STATEMENT
                                     UNDER
                           THE SECURITIES ACT OF 1933
                            ------------------------

                              CALPINE CORPORATION
                       CALPINE CANADA ENERGY FINANCE ULC
             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

<TABLE>
<S>                                        <C>                                        <C>
                 DELAWARE                                     4911                                    77-0212977
               NOVA SCOTIA                                    4911                                  NOT APPLICABLE
      (STATES OR OTHER JURISDICTIONS              (PRIMARY STANDARD INDUSTRIAL                     (I.R.S. EMPLOYER
    OF INCORPORATION OR ORGANIZATION)             CLASSIFICATION CODE NUMBERS)                 IDENTIFICATION NUMBERS)
</TABLE>

<TABLE>
<S>                                                          <C>
                    CALPINE CORPORATION                                   CALPINE CANADA ENERGY FINANCE ULC
                50 WEST SAN FERNANDO STREET                                  50 WEST SAN FERNANDO STREET
                 SAN JOSE, CALIFORNIA 95113                                   SAN JOSE, CALIFORNIA 95113
                       (408) 995-5115                                               (408) 995-5115
    (ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,          (ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
                         INCLUDING                                                    INCLUDING
  AREA CODE, OF REGISTRANTS' PRINCIPAL EXECUTIVE OFFICES)      AREA CODE, OF REGISTRANTS' PRINCIPAL EXECUTIVE OFFICES)
</TABLE>

<TABLE>
<S>                                                          <C>
                  ------------------------                                     ------------------------
                         COPIES TO:                                                   COPIES TO:
                      PETER CARTWRIGHT                                              ANN B. CURTIS
      CHAIRMAN, PRESIDENT AND CHIEF EXECUTIVE OFFICER,                  EXECUTIVE VICE PRESIDENT AND SECRETARY
                    CALPINE CORPORATION                                   CALPINE CANADA ENERGY FINANCE ULC
                50 WEST SAN FERNANDO STREET                                  50 WEST SAN FERNANDO STREET
                 SAN JOSE, CALIFORNIA 95113                                   SAN JOSE, CALIFORNIA 95113
                       (408) 995-5115                                               (408) 995-5115
 (NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,    (NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
                         INCLUDING                                                    INCLUDING
              AREA CODE, OF AGENT FOR SERVICE)                             AREA CODE, OF AGENT FOR SERVICE)
                      BRUCE C. BENNETT                                              JOSEPH A. COCO
                    COVINGTON & BURLING                                SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP
                1330 AVENUE OF THE AMERICAS                                       FOUR TIMES SQUARE
                  NEW YORK, NEW YORK 10019                                     NEW YORK, NEW YORK 10036
                       (212) 841-1000                                               (212) 735-3000
</TABLE>

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

        APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:

  From time to time after the effective date of this Registration Statement as
                        determined by market conditions.

    If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box:  [ ]

    If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, please check the following box:  [X]

    If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering:  [ ]

    If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering:  [ ]

    If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box:  [ ]
                            ------------------------
                        CALCULATION OF REGISTRATION FEE

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------------------
                                                                    PROPOSED MAXIMUM     PROPOSED MAXIMUM
           TITLE OF EACH CLASS OF                AMOUNT TO BE      OFFERING PRICE PER   AGGREGATE OFFERING       AMOUNT OF
        SECURITIES TO BE REGISTERED          REGISTERED(1)(2)(3)     UNIT(1)(2)(3)        PRICE(1)(2)(3)      REGISTRATION FEE
--------------------------------------------------------------------------------------------------------------------------------
<S>                                          <C>                  <C>                  <C>                  <C>
Common Stock, par value $.001 per share, of
  Calpine Corporation.......................
--------------------------------------------------------------------------------------------------------------------------------
Preferred Stock, par value $.001 per share,
  of Calpine Corporation(4).................
--------------------------------------------------------------------------------------------------------------------------------
Debt Securities of Calpine Corporation(4)...
--------------------------------------------------------------------------------------------------------------------------------
Debt Securities of Calpine Canada Energy
  Finance ULC...............................
--------------------------------------------------------------------------------------------------------------------------------
Guarantees of Calpine Corporation(5)........
--------------------------------------------------------------------------------------------------------------------------------
Total.......................................    $2,500,000,000            100%            $2,500,000,000          $625,000
--------------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------------------
</TABLE>

(1) Includes such indeterminate number of shares of our common stock and
    preferred stock and principal amount of our debt securities as may be
    periodically issued at indeterminate prices or, if any debt securities are
    issued with original issue discount, such greater principal amount as shall
    be equal to the principal amount at maturity thereof.
(2) In United States dollars or the equivalent thereof in any other currency,
    currency unit or units, or composite currency or currencies.
(3) Estimated solely for the purposes of calculating the registration fee
    pursuant to Rule 457. The aggregate public offering price of Calpine's
    registered common stock, preferred stock and Calpine's and Calpine Canada
    Energy Finance's debt securities (or, in the case of debt securities issued
    with original issue discount, the principal amount at maturity thereof) will
    not exceed $2,500,000,000. There will be no registration fee nor offering
    price in respect of the guarantees of Calpine Corporation -- see footnote 5
    below.
(4) To the extent convertible preferred stock and/or convertible debt securities
    are issued hereunder, shares of common stock issuable upon conversion
    thereof will be issued without the payment of additional consideration.
    Pursuant to Rule 457(i) under the Securities Act, no registration fee is
    attributable to the common stock which may be issued upon conversion of such
    preferred stock or debt securities.
(5) The debt securities to be issued by Calpine Canada Energy Finance will be
    irrevocably and unconditionally guaranteed on an unsecured senior basis by
    Calpine Corporation. No separate consideration will be received for the
    guarantees of Calpine Corporation and, therefore, no additional registration
    fee is payable in respect of the registration of such guarantees.
    THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANTS
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME EFFECTIVE
ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a), MAY
DETERMINE.
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
<PAGE>   2

        THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED.
        WE MAY NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED
        WITH THE SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS
        PROSPECTUS IS NOT AN OFFER TO SELL THESE SECURITIES AND IS NOT
        SOLICITING AN OFFER TO BUY THESE SECURITIES IN ANY STATE WHERE THE OFFER
        OR SALE IS NOT PERMITTED.

                  SUBJECT TO COMPLETION, DATED MARCH 21, 2001

PROSPECTUS

CALPINE CORP. LOGO
                              CALPINE CORPORATION

                                  Common Stock
                                Preferred Stock
                                Debt Securities

                       CALPINE CANADA ENERGY FINANCE ULC

                   Debt Securities Fully and Unconditionally
                       Guaranteed by Calpine Corporation

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

     Calpine Corporation may periodically sell common stock, preferred stock and
debt securities to the public. We will provide specific terms of such securities
in supplements to this prospectus. You should read this prospectus and each
applicable supplement carefully before you invest.

     Calpine Canada Energy Finance ULC may periodically sell debt securities to
the public. Such debt securities will be fully and unconditionally guaranteed by
Calpine Corporation. Calpine Canada Energy Finance ULC will provide specific
terms of such debt securities in supplements to this prospectus. You should read
this prospectus and each applicable supplement carefully before you invest.

 INVESTING IN OUR SECURITIES INVOLVES CERTAIN RISKS. SEE "RISK FACTORS" ON PAGE
                                       9.

     NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.

     This prospectus may not be used to sell our securities unless it is
accompanied by a prospectus supplement.

                     Prospectus dated                , 2001
<PAGE>   3

     No person is authorized to give any information or to make any
representations other than those contained or incorporated by reference in this
prospectus or the accompanying prospectus supplement and, if given or made, such
information or representations must not be relied upon as having been
authorized. This prospectus and accompanying prospectus supplement do not
constitute an offer to sell or the solicitation of an offer to buy any
securities other than the securities described in this prospectus and the
accompanying prospectus supplement or an offer to sell or the solicitation of an
offer to buy such securities in any circumstance in which such offer or
solicitation is unlawful. Neither the delivery of this prospectus or the
accompanying prospectus supplement, nor any sale made under this prospectus or
accompanying prospectus supplement shall, under any circumstances, create any
implication that there has been no change in our affairs since the date of the
prospectus supplement accompanying this prospectus or that the information
contained or incorporated by reference in this prospectus or accompanying
prospectus supplement is correct as of any time subsequent to the date of such
information.

                               TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                        PAGE
                                        ----
<S>                                     <C>
About This Prospectus.................    3
Calpine...............................    4
Calpine Canada Energy Finance.........    8
Risk Factors..........................    9
Where You Can Find More Information...    9
Forward-Looking Statements............   11
Consolidated Ratio of Earnings to
  Fixed Charges.......................   12
Use of Proceeds.......................   12
</TABLE>

<TABLE>
<CAPTION>
                                        PAGE
                                        ----
<S>                                     <C>
Plan of Distribution..................   12
Description of Capital Stock..........   14
Description of the Debt Securities....   19
Certain United States Federal Income
  Tax Consequences....................   33
Notice to Canadian Residents..........   43
Legal Matters.........................   44
Experts...............................   44
</TABLE>
<PAGE>   4

                             ABOUT THIS PROSPECTUS

     This document is called a prospectus and is part of a joint registration
statement that we filed with the SEC using a "shelf" registration or continuous
offering process. Under this shelf process, Calpine may from time to time sell
any combination of the common stock, the preferred stock and the debt securities
of Calpine described in this prospectus, and Calpine Canada Energy Finance may
from time to time sell the debt securities of Calpine Canada Energy Finance
fully and unconditionally guaranteed by Calpine Corporation described in this
prospectus, in one or more offerings which will aggregate up to a total dollar
amount of $2,500,000,000, which amount includes over-allotment options with
regard to certain securities.

     Pursuant to Rule 3-10 of Regulation S-X promulgated by the SEC, we are not
required to include separate financial statements of Calpine Canada Energy
Finance in this prospectus, because:

     - all of the voting rights of Calpine Canada Energy Finance will be owned
       by Calpine, either directly or through wholly-owned subsidiaries of
       Calpine, which files regular reports with the SEC,

     - Calpine Canada Energy Finance has no operations other than the transfer
       of funds to Calpine or its subsidiaries, and

     - Calpine will fully and unconditionally guarantee Calpine Canada Energy
       Finance's obligations and the rights of holders and no subsidiary of
       Calpine will guarantee the obligations of Calpine Canada Energy Finance.

     This prospectus provides you with a general description of the common
stock, the preferred stock and the debt securities we may offer. Each time we
sell such securities, whether by Calpine or Calpine Canada Energy Finance, we
will provide a prospectus supplement containing specific information about the
terms of the securities being offered, including any guarantees. That prospectus
supplement may include a discussion of any risk factors or other special
considerations applicable to those securities. The prospectus supplement may
also add, update or change information in this prospectus. If there is any
inconsistency between the information in this prospectus and any prospectus
supplement, you should rely on the information in that prospectus supplement.
You should read both this prospectus and any prospectus supplement together with
the additional information described under the heading "Where You Can Find More
Information."

     The registration statement containing this prospectus, including the
exhibits to the registration statement, provides additional information about us
and the securities offered under this prospectus. The registration statement,
including the exhibits, can be read at the SEC website or at the SEC offices
mentioned under the heading "Where You Can Find More Information."

     You should rely only on the information incorporated by reference or
provided in this prospectus and the accompanying prospectus supplement. We have
not authorized anyone to provide you with different information. We are not
making an offer or soliciting a purchase of these securities in any jurisdiction
in which the offer or solicitation is not authorized or in which the person
making the offer or solicitation is not qualified to do so or to anyone to whom
it is unlawful to make the offer or solicitation. You should not assume that the
information in this prospectus or the accompanying prospectus supplement is
accurate as of any date other than the date on the front of the document.

     The prospectus incorporates business and financial information about us
that is not included or delivered with this document. YOU MAY REQUEST AND OBTAIN
THIS INFORMATION FREE OF CHARGE BY WRITING OR TELEPHONING US AT THE FOLLOWING
ADDRESS: CALPINE CORPORATION, 50 WEST SAN FERNANDO STREET, SAN JOSE, CALIFORNIA
95113, ATTENTION: LISA M. BODENSTEINER, ASSISTANT SECRETARY, TELEPHONE (408)
995-5115.

     Unless we have indicated otherwise, in this prospectus references to
"Calpine" are to Calpine Corporation, references to "Calpine Canada Energy
Finance" are to Calpine Canada Energy Finance ULC and references to "we," "us"
and "our" or similar terms are, collectively, to Calpine Corporation and its
consolidated subsidiaries excluding Calpine Capital Trust III, Calpine Capital
Trust II and Calpine Capital Trust.

                                        3
<PAGE>   5

                                    CALPINE

     Calpine is a leading independent power company engaged in the development,
acquisition, ownership and operation of power generation facilities and the sale
of electricity predominantly in the United States. We have experienced
significant growth in all aspects of our business over the last five years.
Currently, we own interests in 50 power plants having a net capacity of 5,849
megawatts. We also have 25 gas-fired projects under construction having a net
capacity of 14,028 megawatts and have announced plans to develop 29 gas-fired
projects (power plants and expansions of current facilities) with a net capacity
of 15,478 megawatts. Upon completion of the projects under construction, we will
have interests in 74 power plants located in 21 states having a net capacity of
19,877 megawatts. Of this total generating capacity, 96% will be attributable to
gas-fired facilities and 4% will be attributable to geothermal facilities. As a
result of our expansion program, our revenues, cash flow, earnings and assets
have grown significantly over the last five years, as shown in the table below.

<TABLE>
<CAPTION>
                                                                                 COMPOUND ANNUAL
                                                           1996        2000        GROWTH RATE
                                                         --------    --------    ---------------
                                                                  (DOLLARS IN MILLIONS)
<S>                                                      <C>         <C>         <C>
Total Revenue..........................................  $  214.6    $2,282.8           81%
EBITDA.................................................     110.7       825.9           65%
Net Income.............................................      18.7       323.5          104%
Total Assets...........................................   1,031.4     9,737.3           75%
</TABLE>

     Since our inception in 1984, we have developed substantial expertise in all
aspects of the development, acquisition and operation of power generation
facilities. We believe that the vertical integration of our extensive
engineering, construction management, operations, fuel management and financing
capabilities provides us with a competitive advantage to successfully implement
our acquisition and development program and has contributed to our significant
growth over the past five years.

CAPITALIZATION

     The following table sets forth, as of December 31, 2000 (1) the actual
consolidated capitalization of Calpine; and (2) the consolidated capitalization
of Calpine as adjusted to reflect the net effect of the sale of the 8 1/2%
Senior Notes due 2011. This table should be read in conjunction with the
consolidated financial statements and related notes thereto incorporated by
reference in this prospectus.

<TABLE>
<CAPTION>
                                                                  DECEMBER 31, 2000
                                                              -------------------------
                                                                ACTUAL      AS ADJUSTED
                                                              ----------    -----------
                                                                     (UNAUDITED)
                                                                   (IN THOUSANDS,
                                                                EXCEPT SHARE AMOUNTS)
<S>                                                           <C>           <C>
CASH:
  Cash and cash equivalents.................................  $  588,698    $1,720,955
                                                              ==========    ==========
LONG-TERM DEBT:
Notes payable, net of current portion.......................  $  195,862    $  195,862
Project financing, net of current portion...................   1,473,869     1,473,869
Senior notes................................................   2,551,750     3,701,750
Capital lease obligation, net of current portion............     208,876       208,876
                                                              ----------    ----------
  Total long-term debt......................................   4,430,357     5,580,357
                                                              ----------    ----------
Company-obligated mandatorily redeemable convertible
  preferred securities of subsidiary trusts.................   1,122,490     1,122,490
Minority interests..........................................      37,576        37,576
                                                              ----------    ----------
</TABLE>

                                        4
<PAGE>   6

<TABLE>
<CAPTION>
                                                                  DECEMBER 31, 2000
                                                              -------------------------
                                                                ACTUAL      AS ADJUSTED
                                                              ----------    -----------
                                                                     (UNAUDITED)
                                                                   (IN THOUSANDS,
                                                                EXCEPT SHARE AMOUNTS)
<S>                                                           <C>           <C>
STOCKHOLDERS' EQUITY:
Preferred stock, $0.001 par value:
  10,000,000 shares authorized; no shares outstanding,
     actual and as adjusted.................................          --            --
                                                              ----------    ----------
Common stock, $0.001 par value:
  500,000,000 shares authorized; 283,715,058 shares
     outstanding, actual and as adjusted....................         284           284
Additional paid-in capital..................................   1,700,505     1,700,505
Retained earnings...........................................     536,617       536,617
Accumulated other comprehensive loss........................        (632)         (632)
                                                              ----------    ----------
  Total stockholders' equity................................   2,236,774     2,236,774
                                                              ----------    ----------
  Total capitalization......................................  $7,827,197    $8,977,197
                                                              ==========    ==========
</TABLE>

THE MARKET

     The power industry represents the third largest industry in the United
States, with an estimated end-user market of over $215 billion of electricity
sales in 2000 produced by an aggregate base of power generation facilities with
a capacity of approximately 860,000 megawatts. In response to increasing
customer demand for access to low-cost electricity and enhanced services, new
regulatory initiatives have been and are continuing to be adopted at both the
state and federal level to increase competition in the domestic power generation
industry. The power generation industry historically has been largely
characterized by electric utility monopolies producing electricity from old,
inefficient, high-cost generating facilities selling to a captive customer base.
Industry trends and regulatory initiatives have transformed the existing market
into a more competitive market where end users purchase electricity from a
variety of suppliers, including non-utility generators, power marketers, public
utilities and others.

     There is a significant need for additional power generating capacity
throughout the United States, both to satisfy increasing demand and to replace
old and inefficient generating facilities. Due to environmental and economic
considerations, we believe this new capacity will be provided predominantly by
gas-fired facilities. We believe that these market trends will create
substantial opportunities for efficient, low-cost power producers that can
produce and sell energy to customers at competitive rates.

     In addition, as a result of a variety of factors, including deregulation of
the power generation market, utilities, independent power producers and
industrial companies are disposing of power generation facilities. To date,
numerous utilities have sold or announced their intentions to sell their power
generation facilities and have focused their resources on the transmission and
distribution business segments. Many independent producers operating a limited
number of power plants are also seeking to dispose of their plants in response
to competitive pressures and industrial companies are selling their power plants
to redeploy capital in their core businesses.

STRATEGY

     Our strategy is to continue our rapid growth by capitalizing on the
significant opportunities in the power market, primarily through our active
development and acquisition programs. In pursuing our growth strategy, we
utilize our management and technical knowledge to implement a fully integrated
approach to the acquisition, development and operation of power generation
facilities. This approach uses our expertise in design, engineering,
procurement, finance, construction management, fuel and resource production and
acquisition, operations and power marketing, which we believe provides us with a
competitive advantage. The key elements of our strategy are as follows:

     - Development of new and expansion of existing power plants.  We are
       actively pursuing the development of new and expansion of our existing
       highly efficient, low-cost, gas-fired power plants to replace old and
       inefficient generating facilities and meet the demand for new generation.

                                        5
<PAGE>   7

     - Acquisition of power plants.  Our strategy is to acquire power generating
       facilities that meet our stringent criteria, provide significant
       potential for revenue, cash flow and earnings growth and provide the
       opportunity to enhance the operating efficiencies of the plants.

     - Enhancement of existing power plants.  We continually seek to maximize
       the power generation and revenue potential of our operating assets and
       minimize our operating and maintenance expenses and fuel costs.

RECENT DEVELOPMENTS

     Project Development and Construction.  On February 12, 2001, we announced
that the Florida Public Service Commission approved a joint application filed by
Calpine and Seminole Electric Cooperative, Inc. ("Seminole"), under which we
will build the Osprey Energy Center to supply electric power to help meet
Seminole's members' power needs.

     On March 16, 2001, we announced that our wholly-owned subsidiary, Skygen
Energy LLC, has entered into a ten-year agreement to supply Xcel Energy,
formerly Public Service Co. of Colorado, with 336 megawatts of peaking capacity.
Power will be delivered to our proposed Colorado Energy Center, a $100 million
electric generating facility to be located in an industrial area east of Denver
in the city of Aurora.

     Issuance of Securities.  On February 15, 2001, we completed a public
offering of $1.15 billion of our 8 1/2% Senior Noes due 2011. The Senior Notes
due 2011 bear interest at 8 1/2% per year, payable semi-annually, and mature on
February 15, 2011.

     California Power Market.  The deregulation of the California power market
has produced significant unanticipated results in the past year. The
deregulation froze the rates that utilities can charge their retail and business
customers in California and prohibited the utilities from buying power on a
forward basis, while wholesale power prices were not subjected to limits.

     In the past year, a series of factors have reduced the supply of power to
California, which has resulted in wholesale power prices that have been
significantly higher than historical levels. Several factors contributed to this
increase. These included:

     - significantly increased volatility in prices and supplies of natural gas;

     - an unusually dry fall and winter in the Pacific Northwest, which reduced
       the amount of available hydroelectric power from that region (typically,
       California imports a portion of its power from this source);

     - the large number of power generating facilities in California nearing the
       end of their useful lives, resulting in increased downtime (either for
       repairs or because they have exhausted their air pollution credits and
       replacement credits have become too costly to acquire on the secondary
       market); and

     - continued obstacles to new power plant construction in California, which
       deprived the market of new power sources that could have, in part,
       ameliorated the adverse effects of the foregoing factors.

     As a result of this situation, two major California utilities that are
subject to the retail rate freeze, including Pacific Gas & Electric Company
("PG&E"), have faced wholesale prices that far exceed the retail prices they are
permitted to charge. This has led to significant underrecovery of costs by these
utilities; and they have been widely reported to be facing the prospect of
insolvency. As a consequence, these utilities have defaulted under a variety of
contractual obligations, including payment obligations to power generators. PG&E
has defaulted on payment obligations to us. For additional information,
including information on certain receivables, see Notes 15 and 19 of the Notes
to Consolidated Financial Statements incorporated by reference from Calpine's
Annual Report on Form 10-K for the year ended December 31, 2000.

     We have historically sold power to PG&E, which is one of the California
utilities that is subject to the rate freeze. We are currently selling power to
PG&E pursuant to long-term qualifying facility ("QF") contracts, which are
subject to federal regulation under the Public Utility Regulatory Policies Act
of 1978, as amended ("PURPA") (16 U.S.C. sec. 796 et seq.). The QF contracts
provide that the California Public Utilities Commission ("CPUC") has the
authority to determine the appropriate utility "avoided cost" to be used to set
energy payments for certain QF contracts, including those for all of our QF
plants in California which sell power to PG&E. Section 390 of the California
Public Utility Code provided QFs the option to elect

                                        6
<PAGE>   8

to receive energy payments based on the California Power Exchange ("PX") market
clearing price. In mid-2000, our QF facilities elected this option and were paid
based upon the PX zonal day ahead clearing price ("PX Price") from summer 2000
until January 19, 2001, when the PX ceased operating a day ahead market. Since
that time, the CPUC has ordered that the price to be paid for energy deliveries
by QFs electing the PX Price shall be based on a natural gas cost-based
"transition formula." The CPUC has conducted proceedings (R. 99-11-022) to
determine whether the PX Price was the appropriate price for the energy
component upon which to base payments to QFs which had elected the PX based
pricing option. It is possible that the CPUC could order a payment adjustment
based on a different energy price determination. We believe that the PX Price
was the appropriate price for energy payments but there can be no assurance that
this will be the outcome of the CPUC proceedings. Legislation has recently been
introduced in the California legislature (SB 47X) that would establish a fixed
price for the QF contracts for a 5 year period and would eliminate any PX Price
adjustment prior to December 31, 2000. There can be no assurances that this
legislation will be enacted.

     We have continued to honor our contractual obligations to PG&E under our QF
contracts. To date, we have refrained from pursuing our collection remedies with
respect to PG&E's default, however, we have been actively involved with the
California utilities, the California legislature, and other interested parties
to develop legislation designed to stabilize energy prices through the
application of a long-term energy pricing methodology (for a five-year period)
in place of the short-term pricing methodology currently utilized under the QF
contracts, as discussed above. We also expect further legislation to enable the
California utilities to finance over a longer term the difference between the
wholesale prices that have been paid and the retail prices they received during
last fall and into this winter. We believe that this should enhance PG&E's
ability to make payment of all past due amounts. However, management cannot
predict the timing or ultimate outcome of the legislative process or the payment
of amounts due under our contracts.

     As this situation has deteriorated, California has taken steps to restore a
predictable and reliable power market to the State. Recently, California adopted
legislation permitting it to issue long-term revenue bonds to provide funding
for wholesale purchases of power. The bonds will be repaid with the proceeds of
payments by retail customers over time. The California Department of Water
Resources ("DWR") sought bids for long-term power supply contracts. We
successfully bid in that auction, and announced, as indicated below, that we
have signed three significant long-term power supply contracts with DWR.

     On February 7, 2001, we announced the signing of a 10-year, $4.6 billion
fixed-price contract with DWR to provide electricity to the State of California.
We committed to sell up to 1,000 megawatts of electricity, with initial
deliveries of 200 megawatts starting October 1, 2001, and increasing to 1,000
megawatts by January 1, 2004. This contract will continue through 2011. The
electricity will be sold directly to DWR on a 24-hour, 7-day-a-week basis.

     On February 28, 2001, we announced the signing of two long-term power sales
contracts with DWR. Under the terms of the first contract, a $5.2 billion,
10-year, fixed-price contract, we commit to sell up to 1,000 megawatts of
generation. Initial deliveries are scheduled to begin July 1, 2001 with 200
megawatts and increase to 1,000 megawatts by as early as July 2002. Under the
terms of the second contract, a 20-year contract totaling up to $3.1 billion, we
will supply DWR with up to 495 megawatts of peaking generation, beginning with
90 megawatts as early as August 2001, and increasing up to 495 megawatts as
early as August 2002.

     On March 31, 2001, we announced the signing of a two-month deal to provide
555 megawatts of electricity to DWR from our new South Point Energy Center
during plant testing, effective immediately through May 15, 2001.

     FERC Investigation into California Wholesale Markets.  Beginning in May
2000, wholesale energy prices in the California markets increased to levels well
above 1999 levels. In response, on June 28, 2000, the ISO Board of Governors
reduced the price cap applicable to the ISO's wholesale energy and ancillary
services markets from $750/MWh to $500/MWh. The ISO subsequently reduced the
price cap to $250/MWh on August 1, 2000. During this period, however, the
California Power Exchange Corporation ("PX") maintained a separate price cap set
at a much higher level applicable to the "day-ahead" and "day-of" markets
administered by the PX. On August 23, 2000, the Federal Energy Regulatory
Commission ("FERC") denied a complaint filed August 2, 2000 by San Diego Gas &
Electric Company ("SDG&E") that sought to extend

                                        7
<PAGE>   9

the ISO's $250 price cap to all California energy and ancillary service markets,
not just the markets administered by the ISO. However, in its order denying the
relief sought by SDG&E, the FERC instructed its staff to initiate an
investigation of the California power markets and to report its findings to the
FERC and held further hearing procedures in abeyance pending the outcome of this
investigation.

     On November 1, 2000, the FERC released a Staff Report detailing the results
of the Staff investigation, together with an "Order Proposing Remedies for
California Wholesale Markets" ("November 1 Order"). In the November 1 Order, the
FERC found that the California power market structure and market rules were
seriously flawed, and that these flaws, together with short supply relative to
demand, resulted in unusually high energy prices. The November 1 Order proposed
specific remedies to the identified market flaws, including: (a) imposition of a
so-called "soft" price cap at $150/MWh to be applied to both the PX and ISO
markets, which would allow bids above $150/MWh to be accepted, but will subject
such bids to certain reporting obligations requiring sellers to provide cost
data and/or identify applicable opportunity costs and specifying that such bids
may not set the overall market clearing price, (b) elimination of the
requirement that the California utilities sell into and buy from the PX, (c)
establishment of independent non-stakeholder governing boards for the ISO and
the PX, and (d) establishment of penalty charges for scheduling deviations
outside of a prescribed range. In the November 1 Order the FERC established
October 2, 2000, the date 60 days after the filing of the SDG&E complaint, as
the "refund effective date." Under the November 1 Order, rates charged for
service after that date through December 31, 2002 will remain subject to refund
if determined by the FERC not to be just and reasonable. While the FERC
concluded that the Federal Power Act and prior court decisions interpreting that
act strongly suggested that refunds would not be permissible for charges in the
period prior to October 2, 2000, it noted that it was willing to explore
proposals for equitable relief with respect to charges made in that period. All
of the Company's receivables from PG&E relate to energy generated by QF
facilities. Under FERC regulations, QF contracts are exempt from regulation
under the Federal Power Act, which is the legislation that provides the
authority for the FERC to compel refunds or frame other equitable relief with
respect to the California wholesale markets. Therefore, the Company believes
that any refund or other equitable remedy that the FERC may impose with respect
to the California wholesale markets will not affect the Company's ability to
pursue payment by PG&E of all past due amounts as described above.

     On December 15, 2000, the FERC issued a subsequent order that affirmed in
large measure the November 1 Order (the "December 15 Order"). Various parties
have filed requests for administrative rehearing and for judicial review of
aspects of the FERC's December 15 Order. The outcome of these proceedings, and
the extent to which the FERC or a reviewing court may revise aspects of the
December 15 Order or the extent to which these proceedings may result in a
refund of or reduction in the amounts charged by the Company's subsidiaries for
power sold in the ISO and PX markets, cannot be determined at this time.

                         CALPINE CANADA ENERGY FINANCE

     Calpine Canada Energy Finance ULC is an unlimited liability company
organized in March 2001 under the laws of Nova Scotia, Canada. Calpine Canada
Energy Finance is a wholly-owned special purpose finance subsidiary of Calpine
Corporation that engages in financing activities to raise funds for the business
operations of Calpine and its subsidiaries. Calpine Canada Energy Finance will
issue debt securities which will be fully and unconditionally guaranteed by
Calpine.

     The principal place of business of Calpine Canada Energy Finance ULC is 50
West San Fernando Street, San Jose, California 95113, telephone: (408) 995-5115.

                                        8
<PAGE>   10

                                  RISK FACTORS

     Investing in our securities involves risk. Please see the risk factors
described in our Annual Report on Form 10-K for the year ended December 31,
2000, which is incorporated by reference in this prospectus.

     Before making an investment decision, you should carefully consider these
risks as well as other information contained or incorporated by reference in
this prospectus. The risks and uncertainties described are not the only ones
facing our company. Additional risks and uncertainties not presently known to us
or that we currently deem immaterial may also impair our business operations.

                      WHERE YOU CAN FIND MORE INFORMATION

     Calpine files annual, quarterly and special reports, proxy statements and
other information with the Securities and Exchange Commission (the "SEC"). You
may obtain any document we file with the SEC at the SEC's public reference room
in Washington, D.C., Chicago, Illinois and New York, New York. You may obtain
information on the operation of the SEC's public reference facilities by calling
the SEC at 1-800-SEC-0330. You can request copies of these documents, upon
payment of a duplicating fee, by writing to the SEC at its principal office at
450 Fifth Street, N.W., Washington, D.C. 20549-1004. Our SEC filings are also
accessible through the Internet at the SEC's website at http://www.sec.gov.

     Calpine Canada Energy Finance is not currently subject to the information
reporting requirements of the Securities Exchange Act of 1934. Although Calpine
Canada Energy Finance will become subject to such requirements upon the
effectiveness of this Registration Statement, it is not expected that Calpine
Canada Energy Finance will be required to file separate reports under the
Securities Exchange Act of 1934 because, in reliance upon the applicable
exemption to such requirements:

     - all of the voting rights of Calpine Canada Energy Finance will be owned
       by Calpine, either directly or through wholly-owned subsidiaries of
       Calpine, which files regular reports with the SEC,

     - Calpine Canada Energy Finance has no operations other than transferring
       funds to Calpine or its subsidiaries, and

     - Calpine will fully and unconditionally guarantee Calpine Canada Energy
       Finance's obligations and the rights of holders and no subsidiary of
       Calpine will guarantee the obligations of Calpine Canada Energy Finance.

     The SEC permits us to "incorporate by reference" into this prospectus the
information in documents we file with it, which means that we can disclose
important information to you by referring you to those documents. The
information incorporated by reference is considered to be a part of this
prospectus and later information that we file with the SEC will update and
supersede this information. We incorporate by reference the documents listed
below and any future filings made with the SEC under Sections 13(a), 13(c), 14
or 15(d) of the Securities Exchange Act of 1934, as amended, until we sell all
of the securities being registered or until this offering is otherwise
terminated:

     - Calpine's Annual Report on Form 10-K for the year ended December 31,
       2000; and

     - Calpine's Current Reports on Form 8-K dated February 9, 2001.

                                        9
<PAGE>   11

     If you request a copy of any or all of the documents incorporated by
reference, then we will send to you the copies you requested at no charge.
However, we will not send exhibits to such documents, unless such exhibits are
specifically incorporated by reference in such documents. You should direct
requests for such copies to Calpine Corporation, 50 West San Fernando Street,
San Jose, California 95113, attention: Lisa M. Bodensteiner, Assistant
Secretary, telephone: (408) 995-5115.

     We have filed with the SEC a joint registration statement on Form S-3 under
the Securities Act, covering the securities described in this prospectus. This
prospectus does not contain all of the information included in the registration
statement. Any statement made in this prospectus concerning the contents of any
contract, agreement or other document is only a summary of the actual contract,
agreement or other document. If we have filed any contract, agreement or other
document as an exhibit to the registration statement, you should read the
exhibit for a more complete understanding of the document or matter involved.
Each statement regarding a contract, agreement or other document is qualified in
its entirety by reference to the actual document.

                                        10
<PAGE>   12

                           FORWARD-LOOKING STATEMENTS

     Some of the statements contained in this prospectus or any prospectus
supplement and incorporated by reference into this prospectus or any prospectus
supplement are forward-looking statements within the meaning of Section 27A of
the Securities Act and Section 21E of the Securities Exchange Act and are
subject to the safe harbor created by the Private Securities Litigation Reform
Act of 1995. These statements include declarations regarding our or our
management's intents, beliefs or current expectations. In some cases, you can
identify forward-looking statements by terminology such as "may," "will,"
"should," "expects," "plans," "anticipates," "believes," "estimates,"
"predicts," "potential," or "continue" or the negative of such terms or other
comparable terminology. Any forward-looking statements are not guarantees of
future performance and actual results could differ materially from those
indicated by the forward-looking statements. Forward-looking statements involve
known and unknown risks, uncertainties, and other factors that may cause our or
our industry's actual results, levels of activity, performance, or achievements
to be materially different from any future results, levels of activity,
performance, or achievements expressed or implied by such forward-looking
statements.

     Among the important factors that could cause actual results to differ
materially from those indicated by such forward-looking statements are:

     - the information is of a preliminary nature and may be subject to further
       adjustment,

     - the possible unavailability of financing,

     - risks related to the development, acquisition, construction and operation
       of power plants,

     - the impact of electricity and gas price fluctuations,

     - the impact of curtailment of power plant generation due to constrained
       transmission capacity or other causes,

     - the seasonal nature of our business,

     - start-up risks,

     - general operating risks,

     - dependence on third parties,

     - risks associated with international investments,

     - risks associated with the power marketing business,

     - changes in government regulation,

     - availability of natural gas,

     - the effects of competition,

     - dependence on senior management,

     - volatility in our stock price,

     - fluctuations in quarterly results and seasonality,

     - the recent disarray of the California power market, which has led to
       various efforts by federal, state and local regulators and government
       officials to remedy this situation. This is an ongoing process, the
       outcome of which cannot be predicted. However, it is possible that any
       such outcome will include changes in government regulations, business and
       contractual relationships or other factors that could materially
       adversely affect Calpine, and

     - other risks identified from time to time in our reports and registration
       statements filed with the SEC, including the risk factors identified in
       our Annual Report on Form 10-K for the year ended December 31, 2000,
       which is incorporated by reference in this prospectus.

                                        11
<PAGE>   13

Although we believe that the expectations reflected in the forward-looking
statements are reasonable, we cannot guarantee future results, levels of
activity, performance or achievements. Moreover, neither we nor any other person
assumes responsibility for the accuracy and completeness of such statements. We
are under no duty to update any of the forward-looking statements after the date
of this prospectus to conform such statements to actual results.

                CONSOLIDATED RATIO OF EARNINGS TO FIXED CHARGES

     The following table sets forth Calpine's consolidated ratios of earnings to
fixed charges for the indicated periods.

<TABLE>
<CAPTION>
      YEAR ENDED DECEMBER 31,
  --------------------------------
  1996   1997   1998   1999   2000
  ----   ----   ----   ----   ----
  <S>    <C>    <C>    <C>    <C>
  1.46x  1.72x  1.69x  1.77x  2.04x
</TABLE>

     For purposes of computing the consolidated ratio of earnings to fixed
charges, earnings consist of pretax income before adjustment for minority
interests in consolidated subsidiaries or income or loss from equity investees,
plus fixed charges, amortization of capitalized interest, and distributed income
of equity investees, reduced by interest capitalized, distributions on the
company-obligated mandatorily redeemable convertible preferred securities of its
subsidiary trusts ("HIGH TIDES"(SM)) and the minority interest in pretax income
of subsidiaries that have not incurred fixed charges. Fixed charges consist of
interest expensed and capitalized (including amortized premiums, discounts and
capitalized expenses related to indebtedness), an estimate of the interest
within rental expense, and the distributions on the HIGH TIDES(SM).

                                USE OF PROCEEDS

     Unless otherwise specified in a prospectus supplement accompanying this
prospectus, we will add the net proceeds from the sale of the securities to
which this prospectus and the prospectus supplement relate to our general funds,
which we will use for financing power projects under development or
construction, working capital, general corporate purposes and any other purpose
specified in a prospectus supplement. We may conduct concurrent or additional
financings at any time. The net proceeds from the sale of debt securities by
Calpine Canada Energy Finance to which this prospectus relates will be lent to
Calpine and its affiliates by Calpine Canada Energy Finance pursuant to an
intercompany loan.

                              PLAN OF DISTRIBUTION

     We may sell our securities through agents, underwriters, dealers or
directly to purchasers.

     - Unless we indicate otherwise in our prospectus supplement, our agents
       will act on a best efforts basis for the period of their appointment.

     - Our agents may be deemed to be underwriters under the Securities Act of
       any of our securities that they offer or sell.

     We may use an underwriter or underwriters in the offer or sale of our
securities.

     - If we use an underwriter or underwriters, we will execute an underwriting
       agreement with the underwriter or underwriters at the time that we reach
       an agreement for the sale of our securities.

     - We will include the names of the specific managing underwriter or
       underwriters, as well as any other underwriters, and the terms of the
       transactions, including the compensation the underwriters and dealers
       will receive, in our prospectus supplement.

     - The underwriters will use our prospectus supplement to sell our
       securities.

     We may use a dealer to sell our securities.

                                        12
<PAGE>   14

     - If we use a dealer, we, as principal, will sell our securities to the
       dealer.

     - The dealer will then sell our securities to the public at varying prices
       that the dealer will determine at the time it sells our securities.

     - We will include the name of the dealer and the terms of our transactions
       with the dealer in our prospectus supplement.

     We may directly solicit offers to purchase our securities, and we may
directly sell our securities to institutional or other investors. We will
describe the terms of our direct sales in our prospectus supplement.

     Agents, underwriters, and dealers may be entitled, under agreements entered
into with us, to indemnification by Calpine and, if applicable, Calpine Canada
Energy Finance against certain liabilities, including liabilities under the
Securities Act. Our agents, underwriters, and dealers, or their affiliates, may
be customers of, engage in transactions with or perform services for us, in the
ordinary course of business.

     We may authorize our agents and underwriters to solicit offers by certain
institutions to purchase our securities at the public offering price under
delayed delivery contracts.

     - If we used delayed delivery contracts, we will disclose that we are using
       them in our prospectus supplement and will tell you when we will demand
       payment and delivery of the securities under the delayed delivery
       contracts.

     - These delayed delivery contracts will be subject only to the conditions
       that we set forth in our prospectus supplement.

     - We will indicate in our prospectus supplement the commission that
       underwriters and agents soliciting purchases of our securities under
       delayed contracts will be entitled to receive.

                                        13
<PAGE>   15

                          DESCRIPTION OF CAPITAL STOCK

     Calpine's authorized capital stock consists of 500,000,000 shares of common
stock, $.001 par value, and 10,000,000 shares of preferred stock, $.001 par
value. The following summary is qualified in its entirety by the provisions of
Calpine's certificate of incorporation and by-laws, which have been filed as
exhibits to the Registration Statement of which this prospectus constitutes a
part. The information provided below reflects the 2 for 1 split of Calpine's
common stock that became effective on October 7, 1999, the 2 for 1 split of
Calpine's common stock that became effective on June 8, 2000 and the 2 for 1
split of Calpine's common stock that became effective on November 14, 2000.

COMMON STOCK

     The holders of common stock are entitled to one vote per share on all
matters to be voted upon by the stockholders. Subject to preferences that may be
applicable to any outstanding preferred stock, the holders of common stock are
entitled to receive ratably such dividends, if any, as may be declared from time
to time by the board of directors out of legally available funds. See "Dividend
Policy." In the event of our liquidation, dissolution or winding up, the holders
of common stock are entitled to share ratably in all assets remaining after
payment of liabilities, subject to prior liquidation rights of preferred stock,
if any, then outstanding. The common stock has no preemptive or conversion
rights or other subscription rights. There are no redemption or sinking fund
provisions applicable to the common stock. All shares of common stock to be
outstanding upon the redemption or exchange of the exchangeable shares will be
fully paid and non-assessable. Pursuant to a rights agreement entered into in
June of 1997, Calpine's shares of common stock outstanding prior to the
occurrence of events specified in the rights agreement have certain preferred
share purchase rights, which are set forth in more detail in the rights
agreement incorporated by reference as an exhibit to the Registration Statement
of which this prospectus constitutes a part. See "-- Anti-Takeover Effects of
Provisions of the Certificate of Incorporation, Bylaws, Rights Plan and Delaware
Law -- Rights Plan."

PRICE RANGE OF COMMON STOCK

     Calpine's common stock is traded on the New York Stock Exchange under the
symbol "CPN." Public trading of the common stock commenced on September 20,
1996. Prior to that, there was no public market for the common stock. The
following table sets forth, for the periods indicated, the high and low sale
price per share of the common stock on the New York Stock Exchange.

<TABLE>
<CAPTION>
                                                               HIGH        LOW
                                                              -------    -------
<S>                                                           <C>        <C>
1999
First Quarter...............................................  $ 4.672    $ 3.157
Second Quarter..............................................    7.375      4.391
Third Quarter...............................................   11.969      6.852
Fourth Quarter..............................................   16.375     10.633
2000
First Quarter...............................................  $30.750    $16.094
Second Quarter..............................................   35.219     18.125
Third Quarter...............................................   52.250     32.250
Fourth Quarter..............................................   52.969     32.250
2001
First Quarter (through March 19, 2001)......................   29.500     49.050
</TABLE>

                                        14
<PAGE>   16

     As of March 19, 2001, there were approximately 632 holders of record of our
common stock. On March 19, 2001, the last sale price reported on the New York
Stock Exchange for our common stock was $49.00 per share.

DIVIDEND POLICY

     We do not anticipate paying any cash dividends on Calpine's common stock in
the foreseeable future because we intend to retain our earnings to finance the
expansion of our business and for general corporate purposes. In addition, our
ability to pay cash dividends is restricted under our indentures and our other
debt agreements. Future cash dividends, if any, will be at the discretion of our
board of directors and will depend upon, among other things, our future
operations and earnings, capital requirements, general financial condition,
contractual restrictions and such other factors as the board of directors may
deem relevant.

PREFERRED STOCK

     The following description of preferred stock and the description of the
terms of a particular series of preferred stock that will be set forth in the
related prospectus supplement are not complete. These descriptions are qualified
in their entirety by reference to the certificate of designation relating to
that series. The rights, preferences, privileges and restrictions of the
preferred stock of each series will be fixed by the certificate of designation
relating to that series that will be filed as an amendment to this registration
statement at the time such series of preferred stock is offered. The prospectus
supplement also will contain a description of certain United States federal
income tax consequences relating to the purchase and ownership of the series of
preferred stock that is described in the prospectus supplement.

     As of March 19, 2001, there were no shares of preferred stock outstanding.
The board of directors has the authority, without further vote or action by the
stockholders, to issue from time to time up to 10,000,000 shares of preferred
stock in one or more series, and to fix the rights, preferences, privileges,
qualifications, limitations and restrictions granted to or imposed upon any
wholly unissued shares of undesignated preferred stock, including without
limitation dividend rights, if any, voting rights, if any, and liquidation and
conversion rights, if any. The board of directors has the authority to fix the
number of shares constituting any series and the designations of such series
without any further vote or action by the stockholders. The board of directors,
without stockholder approval, can issue preferred stock with voting and
conversion rights which could adversely affect the voting power of the holders
of common stock. The issuance of preferred stock may have the effect of
delaying, deferring or preventing a change in control of Calpine's company, or
could delay or prevent a transaction that might otherwise give Calpine's
stockholders an opportunity to realize a premium over the then prevailing market
price of the common stock.

     Calpine's board of directors has authorized the issuance of up to 500,000
shares of Series A Participating Preferred Stock, par value $.001 per share,
pursuant to a rights plan adopted by Calpine's board of directors on June 5,
1997. On March 19, 2001, no shares of Calpine's participating preferred stock
were outstanding. A description of the rights plan and the participating
preferred stock is set forth under "-- Anti-Takeover Effects of Provisions of
the Certificate of Incorporation, Bylaws, Rights Plan and Delaware -- Rights
Plan," below.

     Upon consummation of the Encal acquisition, a series of preferred stock,
consisting of one share, will be designated as special voting preferred stock,
having a par value of $.001 per share and a liquidation preference of $.01.
Except as otherwise required by law or Calpine's certificate of incorporation,
the one share of special voting preferred stock will possess a number of votes
for the election of directors and on all other matters submitted to a vote of
Calpine's stockholders equal to the number of outstanding Calpine common stock
equivalent shares issued by Calpine's wholly-owned subsidiary from time to time
and not owned by Calpine or any entity controlled by Calpine. The holders of
Calpine common stock and the holder of the special voting preferred stock will
vote together as a single class on all matters on which holders of Calpine's
common stock are eligible to vote. In the event of Calpine's liquidation,
dissolution or winding-up, all outstanding Calpine common stock equivalent
shares will automatically be exchanged for shares of Calpine's common stock, and
the holder of the special voting preferred stock will not be entitled to receive
any assets available for distribution to Calpine's stockholders. The holder of
the special voting preferred stock will not be

                                        15
<PAGE>   17

entitled to receive dividends. The share of special voting preferred stock will
be issued to a Canadian trust company, as trustee under a voting and exchange
trust agreement among Calpine, Calpine Canada and the trustee. At such time as
the one share of special voting preferred stock has no votes attached to it
because there are no Calpine common stock equivalent shares outstanding not
owned by Calpine or an entity controlled by Calpine, the share of special voting
preferred stock will be canceled.

     A prospectus supplement with respect to the issuance of a series of
preferred stock will specify:

     - the maximum number of shares,

     - the designation of the shares,

     - the annual dividend rate, if any, whether the dividend rate is fixed or
       variable, whether the series of preferred stock will be issued with
       original issue discount and, if so, the computed dividend rate thereon,
       the date dividends will accrue, the dividend payment dates, and whether
       dividends will be cumulative,

     - the price and the terms and conditions for redemption, if any, including
       redemption at our option or at the option of the holders, including the
       time period for redemption, and any accumulated dividends or premiums,

     - the liquidation preference, if any, and any accumulated dividends upon
       the liquidation, dissolution or winding up Calpine's affairs,

     - any sinking fund or similar provision, and, if so, the terms and
       provisions relating to the purpose and operation of the fund,

     - the terms and conditions, if any, for conversion or exchange of shares of
       any other class or classes of our capital stock or any series of any
       other class or classes, or of any other series of the same class, or any
       other securities or assets, including the price or the rate of conversion
       or exchange and the method, if any, of adjustment,

     - the voting rights, if any, and

     - any or all other preferences and relative, participating, optional or
       other special rights, privileges or qualifications, limitations or
       restrictions.

     Preferred stock will be fully paid and nonassessable upon issuance. The
preferred stock or any series of preferred stock may be represented, in whole or
in part, by one or more global certificates, which will have an aggregate
liquidation preference equal to that of the preferred stock represented by the
global certificate.

     Each global certificate will:

     - be registered in the name of a depositary or a nominee of the depositary
       identified in the prospectus supplement,

     - be deposited with such depositary or nominee or a custodian for the
       depositary, and

     - bear a legend regarding the restrictions on exchanges and registration of
       transfer and any other matters as may be provided for under the
       certificate of designation.

ANTI-TAKEOVER EFFECTS OF PROVISIONS OF THE CERTIFICATE OF INCORPORATION, BYLAWS
AND DELAWARE LAW

CERTIFICATE OF INCORPORATION AND BYLAWS

     Calpine's certificate of incorporation provides that Calpine's board of
directors is classified into three classes of directors serving staggered,
three-year terms. The certificate of incorporation also provides that directors
may be removed only by the affirmative vote of the holders of two-thirds of the
shares of Calpine's capital stock entitled to vote, voting together as single
class. Any vacancy on the board of directors may be filled only by vote of the
majority of directors then in office. Further, the certificate of incorporation
provides that any business combination (as defined therein) requires the
affirmative vote of the holders of two-thirds of

                                        16
<PAGE>   18

the shares of Calpine's capital stock entitled to vote, voting together as a
single class. The certificate of incorporation also provides that all
stockholder actions must be effected at a duly called meeting and not by a
consent in writing. The bylaws provide that Calpine's stockholders may call a
special meeting of stockholders only upon a request of stockholders owning at
least 50% of Calpine's capital stock. These provisions of the certificate of
incorporation and bylaws could discourage potential acquisition proposals and
could delay or prevent a change in control of Calpine's company. These
provisions are intended to enhance the likelihood of continuity and stability in
the composition of the board of directors and in the policies formulated by the
board of directors and to discourage certain types of transactions that may
involve an actual or threatened change of control of Calpine's company. These
provisions are designed to reduce Calpine's vulnerability to an unsolicited
acquisition proposal. The provisions also are intended to discourage certain
tactics that may be used in proxy fights. However, such provisions could have
the effect of discouraging others from making tender offers for Calpine's shares
and, as a consequence, they also may inhibit fluctuations in the market price of
Calpine's shares that could result from actual or rumored takeover attempts.
Such provisions also may have the effect of preventing changes in Calpine's
management.

     Rights Plan.  On June 5, 1997, Calpine adopted a stockholders' rights plan
to strengthen Calpine's ability to protect Calpine's stockholders. The rights
plan is designed to protect against abusive or coercive takeover tactics that
are not in the best interests of Calpine or its stockholders. To implement the
rights plan, Calpine declared a dividend of one preferred share purchase right
for each outstanding share of Calpine's common stock held on record as of June
18, 1997, and directed the issuance of one preferred share purchase right with
respect to each share of Calpine's common stock that shall become outstanding
thereafter until the rights become exercisable or they expire as described
below. Each right initially represents a contingent right to purchase, under
certain circumstances, one one-thousandth of a share, called a "unit," of
Calpine's Series A Participating Preferred Stock, par value $.001 per share, at
a price of $80.00 per unit, subject to adjustment. The rights become exercisable
and trade independently from Calpine's common stock upon the public announcement
of the acquisition by a person or group of 15% or more of Calpine's common
stock, or ten days after commencement of a tender or exchange offer that would
result in the acquisition of 15% or more of Calpine's common stock. Each unit
purchased upon exercise of the rights will be entitled to a dividend equal to
any dividend declared per share of common stock and will have one vote, voting
together with the common stock. In the event of Calpine's liquidation, each
share of the participating preferred stock will be entitled to any payment made
per share of common stock.

     If Calpine is acquired in a merger or other business combination
transaction after a person or group has acquired 15% or more of Calpine's common
stock, each right will entitle its holder to purchase at the right's exercise
price a number of the acquiring company's shares of common stock having a market
value of twice the right's exercise price. In addition, if a person or group
acquires 15% or more of Calpine's common stock, each right will entitle its
holder (other than the acquiring person or group) to purchase, at the right's
exercise price, a number of fractional shares of Calpine's participating
preferred stock or shares of Calpine's common stock having a market value of
twice the right's exercise price.

     The rights expire on June 18, 2007, unless redeemed earlier by Calpine.
Calpine can redeem the rights at a price of $0.01 per right at any time before
the rights become exercisable, and thereafter only in limited circumstances.

DELAWARE ANTI-TAKEOVER STATUTE

     Calpine is subject to Section 203 of the Delaware General Corporation Law
("Section 203"), which, subject to certain exceptions, prohibits a Delaware
corporation from engaging in any business combination with any interested
stockholder for a period of three years following the date that such stockholder
became an interested stockholder, unless: (1) prior to such date, the board of
directors of the corporation approved either the business combination or the
transaction that resulted in the stockholder becoming an interested stockholder;
(2) upon consummation of the transaction that resulted in the stockholder
becoming an interested stockholder, the interested stockholder owned at least
85% of the voting stock of the corporation outstanding at the time the
transaction commenced, excluding for purposes of determining the number of
shares outstanding those shares owned (x) by persons who are directors and also
officers and (y) by employee

                                        17
<PAGE>   19

stock plans in which employee participants do not have the right to determine
confidentially whether shares held subject to the plan will be tendered in a
tender or exchange offer; or (3) on or subsequent to such date, the business
combination is approved by the board of directors and authorized at an annual or
special meeting of stockholders, and not by written consent, by the affirmative
vote of at least 66 2/3% of the outstanding voting stock that is not owned by
the interested stockholder.

     Section 203 defines the term business combination to include: (1) any
merger or consolidation involving the corporation or any of its direct of
indirect majority-owned subsidiaries and the interested stockholder; (2) any
sale, transfer, pledge or other disposition of 10% or more of the assets of the
corporation or any of its direct of indirect majority-owned subsidiaries
involving the interested stockholder; (3) subject to certain exceptions, any
transaction that results in the issuance or transfer by the corporation of any
stock of the corporation or any of its direct of indirect majority-owned
subsidiaries of any stock of the corporation or that subsidiary to the
interested stockholder; (4) any transaction involving the corporation or any of
its direct of indirect majority-owned subsidiaries that has the effect of
increasing the proportionate share of the stock of any class or series of the
corporation or that subsidiary beneficially owned by the interested stockholder;
or (5) the receipt by the interested stockholder of the benefit of any loans,
advances, guarantees, pledges or other financial benefits provided by or through
the corporation or any of its direct of indirect majority-owned subsidiaries. In
general, Section 203 defines an interested stockholder as any entity or person
beneficially owning 15% or more of the outstanding voting stock of the
corporation and any entity or person affiliated with or controlling or
controlled by such entity or person.

                                        18
<PAGE>   20

                       DESCRIPTION OF THE DEBT SECURITIES

     The following is a general description of the debt securities to which this
prospectus and any prospectus supplement may relate. The particular terms
relating to each debt security will be set forth in a prospectus supplement.
Unless otherwise stated, the senior debt securities and the subordinated debt
securities are together referred to as the "debt securities."

GENERAL

     Calpine may issue from time to time one or more series of debt securities
under one or more separate indentures between Calpine and Wilmington Trust
Company, as trustee, and Calpine Canada Energy Finance may issue from time to
time one or more series of debt securities under an indenture between Calpine
Canada Energy Finance and Wilmington Trust Company, as trustee.

     For purposes of this section, references to the "issuer" are to Calpine, in
the case of debt securities issued by Calpine, and to Calpine Canada Energy
Finance, in the case of debt securities issued by Calpine Canada Energy Finance,
and references to the "guarantor" are to Calpine with respect to debt securities
issued by Calpine Canada Energy Finance. Additionally, in the case of debt
securities issued by Calpine Canada Energy Finance, the term "indenture"
includes the guarantee agreement pursuant to which the guarantor guarantees the
debt securities.

     The debt securities will be direct, unsecured obligations of the issuer.
The senior debt securities will rank equally with all other senior debt of the
issuer. The indentures will not limit the amount of debt securities which the
issuer may issue. The subordination provisions of any subordinated debt
securities will be described in an applicable prospectus supplement.

     Almost all of Calpine's operations are conducted through Calpine's
subsidiaries and other affiliates. As a result, Calpine depends almost entirely
upon their earnings and cash flow to service Calpine's indebtedness, including
Calpine's ability to pay the interest on and principal of Calpine's debt
securities. The non-recourse project financing agreements of certain of
Calpine's subsidiaries and other affiliates generally restrict their ability to
pay dividends, make distributions or otherwise transfer funds to Calpine prior
to the payment of other obligations, including operating expenses, debt service
and reserves. Calpine Canada Energy Finance is a special purpose financing
subsidiary formed solely as a financing vehicle for Calpine and its
subsidiaries. Therefore, the ability of Calpine Canada Energy Finance to pay its
obligations under the debt securities is dependent upon the receipt by it of
payments from Calpine and its subsidiaries. If Calpine were not to make such
payments for any reason, the holders of the debt securities would have to rely
on the enforcement of Calpine's guarantee described below.

     Calpine's subsidiaries and other affiliates are separate and distinct legal
entities and will have no obligation to pay any amounts due on the debt
securities issued by Calpine hereunder, and will not guarantee the payment of
interest on or principal of the debt securities issued by Calpine hereunder. The
right of Calpine's debt security holders to receive any assets of any of
Calpine's subsidiaries or other affiliates upon Calpine's liquidation or
reorganization will be subordinated to the claims of any subsidiaries' or other
affiliates' creditors (including trade creditors and holders of debt issued by
Calpine's subsidiaries or affiliates including Calpine Canada Energy Finance).
As of December 31, 2000, Calpine's subsidiaries had $1.5 billion of project
financing. Calpine intends to utilize non-recourse project financing when
appropriate in the future, and this financing will be effectively senior to
Calpine's debt securities.

     The following description is only a summary of the material provisions of
the proposed indentures for the debt securities. We urge you to read the forms
of indentures because they, and not this description, describe every detail of
the terms of the debt securities. A copy of each form of indenture is included
as an exhibit to this registration statement and is available upon request made
to us. The summary below of the general terms of the debt securities will be
supplemented by the more specific terms in a prospectus supplement. Unless
otherwise stated herein or in an applicable prospectus supplement, the following
indenture description will apply to both senior and subordinated debt
securities.

                                        19
<PAGE>   21

TERMS APPLICABLE TO DEBT SECURITIES

     The prospectus supplement for a particular series of debt securities will
specify the following terms of the series of debt securities:

     - the designation, the aggregate principal amount and the authorized
       denominations, if other than $1,000 and integral multiples of $1,000;

     - the percentage of the principal amount at which the debt securities will
       be issued;

     - the date or date on which the debt securities will mature;

     - the currency, currencies or currency units in which payments on the debt
       securities will be payable;

     - the rate or rates at which the debt securities will bear interest, if
       any, or the method of determination of such rate or rates;

     - the date or dates from which the interest, if any, shall accrue, the
       dates on which the interest, if any, will be payable and the method of
       determining holders to whom any of the interest shall be payable;

     - the prices, if any, at which, and the dates at or after which, the issuer
       may or must repay, repurchase or redeem the debt securities;

     - any right to covert the debt securities into, or exchange the debt
       securities for, shares of Calpine common stock or other securities or
       property;

     - any sinking fund obligation with respect to the debt securities;

     - any special United States federal income tax consequences;

     - the exchanges, if any, on which the debt securities may be listed; and

     - any other material terms of the debt securities consistent with the
       provisions of the indenture.

     Unless otherwise specified in the prospectus supplement, the issuer will
compute interest payments on the basis of a 360-day year consisting of twelve
30-day months.

     Some of the debt securities may be issued as discounted debt securities to
be sold at a substantial discount below their stated principal amount. The
prospectus supplement relating to any discounted series of debt securities will
describe any Federal income tax consequences and other special consequences
applicable to discounted debt securities.

     The indentures governing the senior debt does not contain any provisions
that:

     - limit the issuer's ability to incur indebtedness; or

     - provide protection in the event the issuer choose to engage in a highly
       leveraged transaction, reorganization, restructuring, merger or similar
       transaction.

REOPENING OF ISSUE

     The issuer may, from time to time, reopen an issue of debt securities and
issue additional debt securities with the same terms (including issue date,
maturity and interest rate) as debt securities issued on an earlier date. After
such additional debt securities are issued, they will be fungible with the debt
securities issued on the earlier date.

RANKING

     The senior debt securities issued by Calpine will be unsecured and will
rank equal in right of payment with all of Calpine's existing and future
unsecured and unsubordinated indebtedness, including, without limitation,
Calpine's obligations under the Amended and Restated Credit Agreement, dated as
of May 23, 2000, as amended, among Calpine, Bank of Nova Scotia, as Lead
Arranger and Administrative Agent, and Bayerische Landesbank, as Co-Arranger and
Syndication Agent, and the various commercial lending

                                        20
<PAGE>   22

institutions named therein as lenders (as it may be further amended, refinanced,
replaced, renewed or extended from time to time) and Calpine's other outstanding
senior debt securities, including Calpine's 7 5/8% Senior Notes due 2006,
Calpine's 7 3/4% Senior Notes due 2009, Calpine's 7 7/8% Senior Notes due 2008,
Calpine's 8 3/4% Senior Notes due 2007, Calpine's 9 1/4% Senior Notes due 2004,
Calpine's 10 1/2% Senior Notes due 2006, Calpine's 8 1/4% Senior Notes due 2005,
Calpine's 8 5/8% Senior Notes due 2010 and Calpine's 8 1/2% Senior Notes due
2011. At December 31, 2000, Calpine had approximately $2.6 billion of
indebtedness outstanding that would rank equally with the senior debt
securities.

     Unless otherwise provided in the prospectus supplement relating to such
securities, debt securities issued by Calpine Canada Energy Finance will be:

     - senior unsecured obligations of Calpine Canada Energy Finance and will
       rank equally and ratably with all other unsecured and unsubordinated
       indebtedness of Calpine Canada Energy Finance, and

     - guaranteed on a senior unsecured basis by Calpine, which guarantee will
       rank equally and ratably with all other unsecured and unsubordinated
       indebtedness of Calpine.

     The subordinated debt securities issued by Calpine will be subordinate and
junior in right of payment to all of Calpine's senior indebtedness, including
any guarantee by Calpine of Calpine Canada Energy Finance's senior debt
securities. The subordinated debt securities of Calpine Canada Energy Finance
will be subordinate and junior in right of payment to all of Calpine Canada
Energy Finance's senior indebtedness.

GUARANTEES

     Calpine will fully and unconditionally guarantee to each holder of a debt
security issued by Calpine Canada Energy Finance and authenticated and delivered
by the trustee the due and punctual payment of the principal of, and any premium
and interest on, the debt security, when and as it becomes due and payable,
whether at maturity, upon acceleration, by call for redemption, repayment or
otherwise in accordance with the terms of the debt securities and of the related
indenture. The claims of holders under the guarantee by Calpine will be
effectively subordinated to the claims of creditors of Calpine's subsidiaries
other than Calpine Canada Energy Finance.

     Under its guarantee agreement, Calpine will:

     - agree that, if an event of default occurs under the debt securities, its
       obligations under the guarantees will be absolute and unconditional and
       will be enforceable irrespective of any invalidity, irregularity or
       unenforceability of any series of the debt securities or the related
       indenture or any supplement thereto, and

     - waive its right to require the trustee or the holders to pursue or
       exhaust their legal or equitable remedies against Calpine Canada Energy
       Finance before exercising their rights under the guarantees.

COVENANTS

     The indentures shall provide that, except as otherwise set forth under "--
Defeasance," below, for so long as any debt securities remain outstanding or any
amount remains unpaid on any of the debt securities, the issuer and the
guarantor, if any, will comply with the applicable terms of the covenants
contained in the indentures including the following:

PAYMENT OF SECURITIES.

     The issuer will duly and punctually pay the principal of and interest on
the debt securities in accordance with the terms of the debt securities and the
indenture.

MAINTENANCE OF OFFICE OR AGENCY.

     The issuer will maintain in the Borough of Manhattan, the City of New York,
an office or agency where the debt securities may be paid and notices and
demands to or upon the issuer in respect of the debt securities

                                        21
<PAGE>   23

and the indentures may be served and an office or agency where debt securities
may be surrendered for registration of transfer or exchange. The issuer will
give prompt written notice to the trustee of the location, and any change in the
location, of any such office or agency. If at any time the issuer shall fail to
maintain any required office or agency or shall fail to furnish the trustee with
the address of any required office or agency, all presentations, surrenders,
notices and demands may be served at the office of the trustee.

FURTHER ASSURANCES.

     The issuer, the guarantor, if any, and the trustee will execute and deliver
all documents, instruments and agreements, and do all other acts and things as
may be reasonably required, to enable the trustee to exercise and enforce its
rights under the indentures and under the documents, instruments and agreements
required under the indentures and to carry out the intent of the indentures.

LIMITATION ON SALE/LEASEBACK TRANSACTIONS.

     Under the terms of the indentures, the issuer and the guarantor, if any,
shall not, and shall not permit any of their respective Restricted Subsidiaries
to, enter into any Sale/Leaseback Transaction unless:

          (a) the issuer or the guarantor, as the case may be, or the Restricted
     Subsidiary would be entitled to create a Lien on the property or asset
     subject to the Sale/Leaseback Transaction securing Indebtedness in an
     amount equal to the Attributable Debt with respect to that transaction
     without equally and ratably securing the debt securities pursuant to the
     covenant entitled "Limitation on Liens"; or

          (b) the net proceeds of the sale are at least equal to the fair value
     (as determined by board of directors of the issuer or the guarantor, as the
     case may be) of the property or asset subject to the Sale/ Leaseback
     Transaction and the issuer or the guarantor, as the case may be, or the
     Restricted Subsidiary applies or causes to be applied, within 180 days of
     the effective date of the Sale/Leaseback Transaction, an amount in cash
     equal to the net proceeds of the sale to the retirement of Indebtedness of
     the issuer or the guarantor, as the case may be, or of the Restricted
     Subsidiary.

In addition to the transactions permitted pursuant to the above clauses (a) and
(b), the issuer and the guarantor, if any, or any of their respective Restricted
Subsidiaries may enter into a Sale/Leaseback Transaction as long as the sum of:

     - the Attributable Debt with respect to that Sale/Leaseback Transaction and
       all other Sale/Leaseback Transactions entered into pursuant to this
       provision; plus

     - the amount of outstanding Indebtedness secured by Liens incurred pursuant
       to the final provision to the covenant described under "-- Limitation on
       Liens" below;

does not exceed 15% of Consolidated Net Tangible Assets as determined based on
Calpine's consolidated balance sheet as of the end of the most recent fiscal
quarter for which financial statements are available. In addition, any
Restricted Subsidiary of the issuer or the guarantor, if any, may enter into a
Sale/Leaseback Transaction with respect to property or assets owned by that
Restricted Subsidiary, so long as the proceeds of that Sale/Leaseback
Transaction are used to acquire, develop, construct, or repay (within 365 days
of the commencement of full commercial operation of any such property or assets)
Indebtedness incurred to acquire, develop or construct property or assets of any
Restricted Subsidiary.

     As used in the indentures, the following terms are defined as follows:

     "Attributable Debt" means, as at the time of determination, the present
value (discounted at the rate of interest set forth or implicit in terms of the
lease (or, if not practicable to determine that rate, the weighted average rate
of interest borne by the debt securities outstanding hereunder (calculated, in
the event of the issuance of any original issue discount debt securities, based
on the computed interest rate with respect thereto)), compounded annually) of
the total obligations of the lessee for rental payments during the remaining
term of the lease included in such Sale/Leaseback Transaction (including any
period for which such lease has been extended).

                                        22
<PAGE>   24

     "Capitalized Lease Obligations" of a person means the rental obligations
under any lease of any property (whether real, personal or mixed) of which the
discounted present value of the rental obligations of that person as lessee, in
conformity with generally accepted accounting principals, is required to be
capitalized on the balance sheet of that person; the stated maturity of any such
lease shall be the date of the last payment of rent or any other amount due
under such lease prior to the first date upon which such lease may be terminated
by the lessee without payment of a penalty.

     "Consolidated Current Liabilities," as of the date of determination, means
the aggregate amount of consolidated liabilities of Calpine and Calpine's
consolidated Restricted Subsidiaries which may properly be classified as current
liabilities (including taxes accrued as estimated), after eliminating (i) all
inter-company items between Calpine and its subsidiaries and (ii) all current
maturities of long-term Indebtedness, all as determined in accordance with
generally accepted accounting principles.

     "Consolidated Net Tangible Assets" means, as of any date of determination,
the total amount of Calpine's consolidated assets (less accumulated depreciation
or amortization, allowances for doubtful receivables, other applicable reserves
and other properly deductible items) under generally accepted accounting
principles which would appear on Calpine's consolidated balance sheet,
determined in accordance with generally accepted accounting principles, and
after giving effect to purchase accounting and after deducting therefrom, to the
extent otherwise included, the amounts of:

          (a) Consolidated Current Liabilities;

          (b) minority interests in Calpine's consolidated subsidiaries held by
     persons other than Calpine or any of its Restricted Subsidiaries;

          (c) excess of cost over fair value of assets of businesses acquired,
     as determined in good faith by Calpine's board of directors;

          (d) any revaluation or other write-up in value of assets subsequent to
     December 31, 1993 as a result of a change in the method of valuation in
     accordance with generally accepted accounting principles;

          (e) unamortized debt discount and expenses and other unamortized
     deferred charges, goodwill, patents, trademarks, service marks, trade
     names, copyrights, licenses, organization or developmental expenses and
     other intangible items;

          (f) treasury stock; and

          (g) any cash set apart and held in a sinking or other analogous fund
     established for the purpose of redemption or other retirement of capital
     stock to the extent such obligation is not reflected in Consolidated
     Current Liabilities.

     "Indebtedness" of any person means, without duplication:

          (a) the principal of and premium (if any premium is then due and
     owing) in respect of indebtedness of that person for money borrowed;

          (b) all Capitalized Lease Obligations of that person;

          (c) all obligations of that person for the reimbursement of any
     obligor on any letter of credit, banker's acceptance or similar credit
     transaction, other than obligations with respect to letters of credit
     securing obligations (other than obligations described in clauses (a) and
     (b) above) entered into in the ordinary course of business of that person
     to the extent such letters of credit are not drawn upon or, if and to the
     extent drawn upon, that drawing is reimbursed no later than the tenth
     business day following receipt by that person of a demand for reimbursement
     following payment on the letter of credit;

          (d) all obligations of the type referred to in clauses (a) through (c)
     above of other persons and all dividends of other persons for the payment
     of which, in either case, that person is responsible or liable, directly or
     indirectly, as obligor, guarantor or otherwise; and

                                        23
<PAGE>   25

          (e) all obligations of the type referred to in clauses (a) through (d)
     above of other persons secured by any Lien on any property or asset of that
     person (whether or not such obligation is assumed by that person), the
     amount of the obligation on any date of determination being deemed to be
     the lesser of the value of the property or assets or the amount of the
     obligation so secured.

     The amount of Indebtedness of any person at any date shall be, with respect
to unconditional obligations, the outstanding balance at such date of all such
obligations as described above and, with respect to any contingent obligations
at such date, the maximum liability determined by that person's board of
directors, in good faith, as in light of the facts and circumstances existing at
the time, reasonably likely to be incurred upon the occurrence of the
contingency giving rise to such obligation.

     "Lien" means any mortgage, lien, pledge, charge, or other security interest
or encumbrance of any kind (including any conditional sale or other title
retention agreement and any lease in the nature thereof).

     "Preferred Stock," as applied to the capital stock of any corporation,
means capital stock of any class or classes (however designated) which is
preferred as to the payment of dividends, or as to the distribution of assets
upon any voluntary or involuntary liquidation or dissolution of such
corporation, over shares of capital stock of any other class of such
corporation.

     "Restricted Subsidiary" means any subsidiary of a person that is not
designated an Unrestricted Subsidiary by that person's board of directors.

     "Sale/Leaseback Transaction" means an arrangement relating to property now
owned or later acquired whereby a person or one of such person's subsidiaries
transfers that property to another person and then leases it back from that
person, other than leases for a term of not more than 36 months or leases
between such person and a wholly owned subsidiary of such person or between such
person's wholly owned subsidiaries.

     "Senior Indebtedness" means all indebtedness incurred, assumed or
guaranteed by a person, whether or not represented by bonds, debentures notes or
other securities, for money borrowed, and any deferrals, renewals or extensions
or refunding of any such indebtedness, unless in the instrument creating or
evidencing any such indebtedness or pursuant to which the same is outstanding it
is specifically stated, at or prior to the time such person becomes liable in
respect thereof, that any such indebtedness or such deferral, renewal, extension
or refunding thereof is not Senior Indebtedness.

     "Subordinated Security" means any security issued under an Indenture which
is designated as a Subordinated Debt Security.

     "Unrestricted Subsidiary" means (i) any subsidiary that at the time of
determination shall be designated an Unrestricted Subsidiary by a person's board
of directors in the manner provided below and (ii) any subsidiary of an
Unrestricted Subsidiary. A person's board of directors may designate any
subsidiary (including any newly acquired or newly formed subsidiary) to be an
Unrestricted Subsidiary unless such subsidiary owns any capital stock of, or
owns or holds any Lien on any property of, that person or any other subsidiary
of that person that is not a subsidiary of the subsidiary to be so designated,
so long as the subsidiary to be designated an Unrestricted Subsidiary and all
other subsidiaries previously so designated at the time of any determination
hereunder shall, in the aggregate, have total assets not greater than 5% of
Consolidated Net Tangible Assets as determined based on Calpine's consolidated
balance sheet as of the end of the most recent financial quarter for which
financial statements are available. A person's board of directors may designate
any Unrestricted Subsidiary to be a Restricted Subsidiary; provided, however,
that immediately after giving effect to that designation no Default or Event of
Default under the indentures shall have occurred and be continuing. Any such
designation by a person's board of directors shall be evidenced to the trustee
by promptly filing with the trustee a copy of the board resolution giving effect
to the designation and a certificate signed by two of that person's officers
certifying that the designation complied with these provisions. However, the
failure to file the resolution and/or certificate with the trustee shall not
impair or affect the validity of the designation.

                                        24
<PAGE>   26

LIMITATION ON LIENS.

     Under the terms of the indentures, the issuer and the guarantor, if any,
shall not, and shall not permit any of their respective Restricted Subsidiaries
to, incur any Lien upon any properties (including capital stock) without
effectively providing that the outstanding debt securities shall be secured
equally and ratably with (or prior to) that Indebtedness, so long as that
Indebtedness shall be so secured. The above restriction on Liens will not,
however, apply to:

          (a)(1) Liens securing Indebtedness incurred to finance the
     exploration, drilling, development, construction or purchase of or by, or
     repairs, improvements or additions to, property or assets, which Liens may
     include Liens on the capital stock of a Restricted Subsidiary or (2) Liens
     incurred by any Restricted Subsidiary that does not own, directly or
     indirectly, at the time of such original incurrence of such Lien under this
     clause (2) any operating properties or assets securing Indebtedness
     incurred to finance the exploration, drilling, development, construction or
     purchase of or by or repairs, improvements or additions to, property or
     assets of any Restricted Subsidiary that does not, directly or indirectly,
     own any operating properties or assets at the time of such original
     incurrence of such Lien, which Liens may include Liens on the capital stock
     of one or more Restricted Subsidiaries that do not, directly or indirectly,
     own any operating properties or assets at the time of such original
     incurrence of such Lien, provided, however, that the Indebtedness secured
     by any such Lien may not be issued more than 365 days after the later of
     the exploration, drilling, development, completion of construction,
     purchase, repair, improvement, addition or commencement of full commercial
     operation of the property or assets being so financed;

          (b) Liens existing on the date of issuance of a series of debt
     securities, other than Liens relating to Indebtedness or other obligations
     being repaid or Liens that are otherwise extinguished with the proceeds of
     any offering of debt securities pursuant to the indenture;

          (c) Liens on property, assets or shares of stock of a person at the
     time that person becomes a subsidiary of the issuer or the guarantor, as
     applicable; provided, however, that any such Lien may not extend to any
     other property or assets owned by such issuer or guarantor or any of its
     Restricted Subsidiaries;

          (d) Liens on property or assets existing at the time that the issuer
     or the guarantor, as the case may be, or one of its subsidiaries, acquires
     the property or asset, including any acquisition by means of a merger or
     consolidation with or into the issuer or the guarantor, as applicable, or
     one of its subsidiaries; provided, however, that such Liens are not
     incurred in connection with, or in contemplation of, that merger or
     consolidation and provided, further, that the Lien may not extend to any
     other property or asset owned by the issuer or the guarantor, as
     applicable, or any of its Restricted Subsidiaries;

          (e) Liens securing Indebtedness or other obligations of one of the
     subsidiaries of the issuer or the guarantor, as the case may be, that is
     owing to such issuer or guarantor or any of its Restricted Subsidiaries, or
     Liens securing Indebtedness of the issuer or the guarantor, as the case may
     be, or other obligations that are owing to one of the subsidiaries of such
     issuer or guarantor;

          (f) Liens incurred on assets that are the subject of a Capitalized
     Lease Obligation to which the issuer or the guarantor, as the case may be,
     or any of its subsidiaries is a party, which shall include Liens on the
     stock or other ownership interest in one or more Restricted Subsidiaries of
     such issuer or guarantor, leasing such assets;

          (g) Liens to secure any refinancing, refunding, extension, renewal or
     replacement (or successive refinancings, refundings, extensions, renewals
     or replacements) as a whole, or in part, of any Indebtedness secured by any
     Lien referred to in clauses (a), (b), (c), (d) and (f) above, provided,
     however, that (1) such new Lien shall be limited to all or part of the same
     property or assets that secured the original Lien (plus repairs,
     improvements or additions to that property or assets and Liens on the stock
     or other ownership interest in one or more Restricted Subsidiaries
     beneficially owning that property or assets) and (2) the amount of
     Indebtedness secured by such Lien is not increased, other than by an amount

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<PAGE>   27

     necessary to pay fees and expenses, including premiums, related to the
     refinancing, refunding, extension, renewal or replacement of the
     Indebtedness; and

          (h) Liens by which the debt securities are secured equally and ratably
     with other Indebtedness pursuant to this covenant.

     However, the issuer and the guarantor, if any, and any one or more of their
respective Restricted Subsidiaries may incur other Liens to secure Indebtedness
as long as the sum of:

     - the lesser of (1) the amount of outstanding Indebtedness secured by Liens
       incurred pursuant to this provision and (2) the fair market value of the
       property securing that item of Indebtedness; plus

     - the Attributable Debt with respect to all Sale/Leaseback Transactions
       entered into pursuant to clause (a) described under the covenant
       "Limitation on Sale/Leaseback Transactions";

does not exceed 15% of Consolidated Net Tangible Assets as determined based on
Calpine's consolidated balance sheet as of the end of the most recent fiscal
quarter for which financial statements are available.

MERGER, CONSOLIDATION, SALE OR LEASE.

     Nothing in the indentures shall prevent the issuer and the guarantor, if
any, from consolidating with or merging into another corporation or conveying,
transferring or leasing their respective properties and assets substantially as
an entirety to any person, provided that (a) the successor entity assumes the
obligations of the issuer or the guarantor, as the case may be, on each series
of debt securities outstanding and (b) immediately after giving effect to the
transaction, no Event of Default, and no event which, after notice or lapse of
time or both, would become an Event of Default, shall have occurred and be
continuing.

SEC REPORTS.

     Calpine is subject to the informational reporting requirements of Sections
13 and 15(d) under the Securities Exchange Act and, in accordance with those
requirements, files certain reports and other information with the SEC. See
"Where You Can Find More Information." In addition, if Sections 13 and 15(d)
cease to apply to Calpine, Calpine will covenant in the indentures to file those
reports and information with the trustee, and to mail such reports and
information to holders of the debt securities at their registered addresses, for
so long as any debt securities remain outstanding.

COMPLIANCE CERTIFICATES.

     The indentures will require that the issuer and the guarantor, if any, file
annually with the trustee a certificate describing any "Default," which is
defined in the indentures as any event which is, or after notice or passage of
time or both would be, an Event of Default, by the issuer or the guarantor, as
the case may be, in the performance of any conditions or covenants under the
indentures and the status of any such Default. The issuer and the guarantor, if
any, also must give the trustee written notice within 30 days of the occurrence
of certain Defaults under the indentures that could mature into Events of
Default, as described under the caption "-- Events of Default" below.

EVENTS OF DEFAULT

     "Events of Default" are defined in the indentures with respect to any
series of debt securities as any of the following:

          (a) default for 30 days in payment of any interest installment due and
     payable on any debt securities of such series;

          (b) default in payment of principal or premium, if any, when due on
     the debt securities of such series;

          (c) default in the making of any sinking fund payment or analogous
     obligation on the debt securities of such series;

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<PAGE>   28

          (d) material default in performance by the issuer or the guarantor, if
     any, of any other covenants or agreements in respect of the debt securities
     of such series contained in the applicable indenture or the debt securities
     for 60 days after written notice to the issuer and the guarantor, if any,
     or to the issuer, the guarantor, if any, and the trustee by the holders of
     at least 25% in aggregate principal amount of the debt securities of such
     series then outstanding;

          (e) there shall have occurred a default in the payment of the
     principal or premium, if any, of any bond, debenture, note or other
     evidence of indebtedness of the issuer or the guarantor, if any, in each
     case for money borrowed, or in the payment of principal or premium, if any,
     under any mortgage, indenture, agreement or instrument under which there
     may be issued or by which there may be secured or evidenced any
     indebtedness of the issuer or the guarantor, if any, for money borrowed
     (including any other series of debt securities issued under the indenture),
     which default for payment of principal or premium, if any, is in an
     aggregate principal amount exceeding $50,000,000 (or its equivalent in any
     other currency or currencies) when such indebtedness becomes due and
     payable (whether at maturity, upon redemption or acceleration or
     otherwise), if such default shall continue unremedied or unwaived for more
     than 30 business days after the expiration of any grace period or extension
     of the time for payment applicable thereto;

          (f) certain events of bankruptcy, insolvency and reorganization with
     respect to the issuer or guarantor, if any; and

          (g) the guarantee, if any, ceases to be in full force and effect
     (other than in accordance with terms of the guarantee agreement) or the
     guarantor denies or disaffirms its obligations under the guarantee.

     An Event of Default under one series of debt securities does not
necessarily constitute an Event of Default under any other series of debt
securities.

     The indentures provide that if an Event of Default occurs and is continuing
with respect to any series of debt securities, either the trustee or the
registered holders of at least 25% in aggregate principal amount of that series
of debt securities, may declare the principal amount of those debt securities
and any accrued and unpaid interest on those debt securities to be due and
payable immediately. At any time after a declaration of acceleration, but before
a judgment or decree for payment of money has been obtained, if all Events of
Default with respect to those debt securities have been cured (other than the
nonpayment of principal of such debt securities which has become due solely by
reason of the declaration of acceleration) then the declaration of acceleration
shall be automatically annulled and rescinded.

     The indentures will require that the issuer and the guarantor, if any, file
annually with the trustee a certificate describing any Default by the issuer or
the guarantor, as the case may be, in the performance of any conditions or
covenants that has occurred under the indentures and its status. See
"Covenants -- Compliance Reports." The issuer and the guarantor, if any, must
give the trustee written notice within 30 days of any Default under the
indentures that could mature into an Event of Default described in clause (d),
(e) or (f).

     The trustee will be entitled under the indentures, subject to the duty of
the trustee during a Default to act with the required standard of care, to be
indemnified before proceeding to exercise any right or power under the
indentures at the direction of the registered holders of the debt securities or
which requires the trustee to expend or risk its own funds or otherwise incur
any financial liability. The indentures will also provide that the registered
holders of a majority in principal amount of the outstanding debt securities of
any series issued under any indenture may direct the time, method and place of
conducting any proceeding for any remedy available to the trustee or exercising
any trust or power conferred on the trustee with respect to that series of debt
securities. The trustee, however, may refuse to follow any such direction that
conflicts with law or such indenture, is unduly prejudicial to the rights of
other registered holders of that series of debt securities, or would involve the
trustee in personal liability.

     The indentures will provide that while the trustee generally must mail
notice of a Default or Event of Default to the registered holders of the debt
securities of any series issued under any indenture within 90 days of
occurrence, the trustee may withhold notice of any Default or Event of Default
(except in payment on the debt securities) if the trustee in good faith
determines that the withholding of such notice is in the interest of the
registered holders of that series of debt securities.

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<PAGE>   29

MODIFICATION OF THE INDENTURES

     The issuer, the guarantor, if any, and the trustee may amend or supplement
the indentures, including any guarantee agreement, if the holders of a majority
in principal amount of the outstanding debt securities of each series of debt
securities affected by the amendment or supplement consent to it, except that no
amendment or supplement may, without the consent of each affected registered
holder of that series:

     - reduce the amount of principal the issuer has to repay or change the date
       of maturity,

     - reduce the rate or change the time of payment of interest,

     - change the currency of payment,

     - modify any redemption or repurchase right to the detriment of the holder,

     - reduce the percentage of the aggregate principal amount of debt
       securities needed to consent to an amendment or supplement,

     - change the provisions of the indentures relating to waiver of past
       defaults, rights of registered holders of the debt securities to receive
       payments or the provisions relating to amendments of the indentures that
       require the consent of registered holders of each affected series or

     - release the guarantee, if any, except in compliance with the terms of the
       guarantee agreement and related indenture.

ACTIONS BY HOLDERS

     A holder of any series of debt securities may not pursue any remedy with
respect to the indentures or the debt securities of such series (except a
registered holder of a series of debt securities may bring an action for payment
of overdue principal, premium, if any, or interest on that series), unless:

     - the registered holder has given notice to the trustee of such series of a
       continuing Event of Default,

     - registered holders of at least 25% in principal amount of that series of
       debt securities have made a written request to the trustee of such series
       to pursue such remedy,

     - such registered holder or holders have offered the trustee of such series
       security or indemnity reasonably satisfactory to the trustee against any
       loss, liability or expense,

     - the trustee of such series has not complied with such request within 60
       days of such request and offer, and

     - the registered holders of a majority in principal amount of that series
       of debt securities have not given the trustee of such series an
       inconsistent direction during that 60-day period.

DEFEASANCE, DISCHARGE AND TERMINATION

DEFEASANCE AND DISCHARGE.

     The indentures will provide that the issuer may discharge the issuer and
the guarantor, if any, from any and all obligations in respect of a series of
debt securities, and the provisions of the related indenture will no longer be
in effect with respect to that series of debt securities (except for, among
other matters, certain obligations to register the transfer or exchange of those
debt securities, to replace stolen, lost or mutilated debt securities, to
maintain paying agencies and to hold monies for payment in trust, and the rights
of holders of that series to receive payments of principal, premium, if any, and
interest), on the 123rd day after the date of the deposit with the trustee, in
trust, of money or U.S. Government Obligations that, through the payment of
interest, principal and premium, if any, in respect thereof in accordance with
their terms, will provide money, or a combination thereof, in an amount
sufficient to pay the principal, premium, if any, and interest on that series of
debt securities, when due in accordance with the terms of that indenture and
those debt securities. Such a trust may only be established if, among other
things,

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<PAGE>   30

       a. the issuer has delivered to the trustee either

     - an opinion of counsel (who may not be an employee of ours) to the effect
       that registered holders of that series will not recognize income, gain or
       loss for federal income tax purposes as a result of such deposit,
       defeasance and discharge and will be subject to federal income tax on the
       same amount and in the same manner and at the same times as would have
       been the case if such deposit, defeasance and discharge had not occurred,
       which opinion of counsel must refer to and be based upon a ruling of the
       Internal Revenue Service or a change in applicable federal income tax law
       occurring after the date of that indenture or

     - a ruling of the Internal Revenue Service to such effect, and

      b. no Default under the indenture with respect to that series shall have
      occurred and be continuing on the date of such deposit or during the
      period ending on the 123rd day after such date of deposit and such deposit
      shall not result in or constitute a Default or result in a breach or
      violation of, or constitute a default under, any other agreement or
      instrument to which the issuer or the guarantor, if any, is a party or by
      which the issuer or the guarantor, if any, is bound.

     "U.S. Government Obligations" are defined under the indentures as
securities that are (x) direct obligations of the United States for the payment
of which its full faith and credit is pledged or (y) obligations of a person
controlled or supervised by and acting as an agency or instrumentality of the
United States the payment of which is unconditionally guaranteed as a full faith
and credit obligation by the United States and which, in either case, are not
callable or redeemable before their maturity.

DEFEASANCE OF COVENANTS AND CERTAIN EVENTS OF DEFAULT.

     The indentures will further provide that, with respect to a series of debt
securities issued under an indenture, the provisions of that indenture described
under "-- Covenants -- Limitations on Liens" will no longer be in effect,
clauses (d) (with respect to such covenant) and (d) under "-- Events of Default"
shall be deemed not to be Events of Default under that indenture, and the
provisions described herein under "-- Ranking" shall not apply, upon the deposit
with the trustee, in trust, of money or U.S. Government Obligations that through
the payment of interest and principal in respect thereof in accordance with
their terms will provide money in an amount sufficient to pay the principal,
premium, if any, and interest on that series of debt securities when due in
accordance with the terms of that indenture. Such a trust may only be
established if, among other things, the provisions described in clause (b) of
the immediately preceding paragraph have been satisfied and the issuer has
delivered to the trustee an opinion of counsel (who may not be an employee of
ours) to the effect that the registered holders of that series will not
recognize income, gain or loss for federal income tax purposes as a result of
such deposit and defeasance, and will be subject to federal income tax on the
same amount and in the same manner and at the same times as would have been the
case if such deposit and defeasance had not occurred.

     In the event the issuer exercises its option not to comply, or to discharge
the guarantor, if any, from compliance, with the covenants and certain other
provisions of an indenture with respect to a series of debt securities as
described in the immediately preceding paragraph, and that series of debt
securities are declared due and payable because of the occurrence of an Event of
Default that remains applicable, while the amount of money or U.S. Government
Obligations on deposit with the trustee will be sufficient to pay principal of
and interest on that series on the respective dates on which such amounts are
due, they may not be sufficient to pay amounts due on that series at the time of
the acceleration resulting from such Event of Default. However, the issuer and
the guarantor, if any, shall remain liable for such payments.

TERMINATION OF OBLIGATIONS IN CERTAIN CIRCUMSTANCES.

     The indentures will further provide that the issuer may discharge the
issuer and the guarantor, if any, from any and all obligations in respect of a
series of debt securities and the provisions of the related indenture will no
longer be in effect with respect to that series of debt securities (except to
the extent provided under "--Defeasance and Discharge") if that series of debt
securities mature within one year and the issuer deposits

                                        29
<PAGE>   31

with the trustee, in trust, money or U.S. Government Obligations that, through
the payment of interest and principal in respect thereof in accordance with
their terms, will provide money in an amount sufficient to pay the principal of,
premium, if any, and accrued interest on that series of debt securities when due
in accordance with the terms of that indenture and the debt securities. Such a
trust may only be established if, among other things,

     - no Default under the indenture with respect to that series shall have
       occurred and be continuing on the date of such deposit,

     - such deposit will not result in or constitute a Default or result in a
       breach or violation of, or constitute a Default under, any other
       agreement or instrument to which the issuer or the guarantor, if any, is
       a party or by which the issuer or the guarantor, if any, is bound and

     - the issuer has delivered to the trustee an opinion of counsel stating
       that such conditions have been complied with.

     Pursuant to this provision, the issuer is not required to deliver an
opinion of counsel to the effect that registered holders of that series will not
recognize income, gain or loss for U.S. federal income tax purposes as a result
of such deposit and termination, and there is no assurance that registered
holders of that series would not recognize income, gain or loss for U.S. federal
income tax purposes as a result thereof or that they would be subject to U.S.
federal income tax on the same amount and in the same manner and at the same
times as would have been the case if such deposit and termination had not
occurred.

UNCLAIMED MONEY

     Subject to any applicable abandoned property law, the indentures will
provide that the trustee will pay to the issuer upon request any money held by
the trustee for the payment of principal, premium, if any, or interest that
remains unclaimed for two years. After payment to the issuer, registered holders
of debt securities entitled to such money must look to the issuer for payment as
general creditors.

CONCERNING THE TRUSTEE AND PAYING AGENT

     Wilmington Trust Company will initially act as Trustee and paying agent for
the debt securities. Wilmington Trust Company currently acts as trustee under:

     - an indenture with Calpine and Calpine's subsidiary, Calpine Capital Trust
       III, dated as of August 9, 2000, and

     - an indenture with Calpine dated as of August 10, 2000.

     A number of Calpine's series of debt securities are presently outstanding
under each of the above indentures. We may have in the future other
relationships with Wilmington Trust Company.

     We will describe in the prospectus supplement any material business and
other relationships (including additional trusteeships), other than the
trusteeship under the indentures, between us and any of our affiliates, on the
one hand, and each trustee and paying agent under the indentures, on the other
hand.

GOVERNING LAW

     The laws of the State of New York will govern the indentures and each
series of debt securities.

BOOK-ENTRY SYSTEM

     Unless otherwise specified in the prospectus supplement, each series of
debt securities will be represented by one or more global notes registered in
the name of a nominee of The Depository Trust Company ("DTC"), as depositary.
Upon the issuance of the global notes, DTC or its custodian will credit, on its
internal system, the respective principal amount of the individual beneficial
interests represented by the global notes to the accounts of persons who have
accounts with DTC. Each account initially will be designated by or on behalf of
the underwriters, dealer or agents. Ownership of beneficial interests in a
global note will be limited to persons

                                        30
<PAGE>   32

who have accounts with DTC ("participants") or persons who hold interests
through participants. Ownership of beneficial interests in the global notes will
be shown on, and transfers of their ownership may be effected only through,
records maintained by DTC or its nominee (with respect to interests of
participants) and the records of participants (with respect to interests of
persons other than participants). DTC currently limits the maximum denomination
of any single global note to $400,000,000.

     So long as DTC or its nominee is the registered owner or holder of the
global notes, DTC or such nominee, as the case may be, will be considered the
sole owner or holder of the debt securities represented by such global notes for
all purposes under the applicable indenture and the debt securities. No
beneficial owner of an interest in the global notes will be able to transfer
that interest except in accordance with DTC's applicable procedures, in addition
to those provided for under the indenture.

     Payments of the principal of, and interest on, the global notes will be
made to DTC or its nominee, as the case may be, as the registered owner of the
global notes. Neither we, the trustee or any paying agent will have any
responsibility or liability for any aspect of the records relating to or
payments made on account of beneficial ownership interests in the global notes
or for maintaining, supervising or reviewing any records relating to such
beneficial ownership interests.

     We expect that DTC or its nominee, upon receipt of any payment of principal
or interest in respect of the global notes will credit participants' accounts
with payments in amounts proportionate to their respective beneficial interests
in the principal amount of the global notes as shown on the records of DTC or
its nominee. We also expect that payments by participants to owners of
beneficial interests in the global notes held through such participants will be
governed by standing instructions and customary practices, as is now the case
with securities held for the accounts of customers registered in the names of
nominees for such customers. Such payments will be the responsibility of such
participants.

     Transfers between participants in DTC will be effected in the ordinary way
in accordance with DTC rules and will be settled in same-day funds. If a holder
requires physical delivery of a certificated note for any reason, including to
sell debt securities to persons in states which require delivery of certificated
notes or to pledge their debt securities, such holder must transfer its interest
in the global notes in accordance with the normal procedures of DTC and the
procedures set forth in the indenture.

     DTC has advised us that it will take any action permitted to be taken by a
holder of a series of debt securities (including the presentation of debt
securities for exchange as described below) only at the direction of one or more
participants to whose account the DTC interests in the global notes relating to
such series is credited and only in respect of such portion of the aggregate
principal amount of debt securities as to which such participant or participants
has or have given such direction. However, if there is an Event of Default under
a series of debt securities, DTC will exchange the global notes relating to such
series for certificated notes which it will distribute to its participants.

     DTC has advised us as follows: DTC is a limited purpose trust company
organized under the laws of the State of New York, a "banking organization"
within the meaning of New York Banking Law, a member of the Federal Reserve
System, a "clearing corporation" within the meaning of the Uniform Commercial
Code and a "Clearing Agency" registered pursuant to the provisions of Section
17A of the Securities Exchange Act of 1934. DTC was created to hold securities
for its participants and facilitate the clearance and settlement of securities
transactions between participants through electronic book-entry changes in
accounts of its participants, thereby eliminating the need for physical movement
of certificates. Participants include securities brokers and dealers, banks,
trust companies and clearing corporations and certain other organizations.
Indirect access to the DTC system is available to "indirect participants" such
as banks, brokers, dealers and trust companies that clear through or maintain a
custodial relationship with a participant, either directly or indirectly.

     Although DTC has agreed to the foregoing procedures in order to facilitate
transfers of interest in the global notes among participants of DTC, it is under
no obligation to perform or continue to perform such procedures, and such
procedures may be discontinued at any time. Neither we nor the trustee will have
any responsibility for the performance by DTC or its respective participants or
indirect participants of their respective obligations under the rules and
procedures governing their operations.

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<PAGE>   33

CERTIFICATED NOTES

     If DTC is at any time unwilling or unable to continue as a depositary for
the global notes and a successor depositary is not appointed by us within 90
days, or if the issuer otherwise chooses to issue definitive debt securities,
the issuer will issue certificated notes in exchange for the global notes. In
either instance, an owner of a beneficial interest in a global note will be
entitled to have debt securities equal in principal amount to such beneficial
interest registered in its name and will be entitled to physical delivery of
debt securities in definitive form. Debt securities in definitive form will be
issued in denominations of $1,000 and integral multiples of $1,000 and will be
issued in registered form only, without coupons. The issuer will maintain in the
Borough of Manhattan, The City of New York, one or more offices or agencies
where debt securities may be presented for payment and may be transferred or
exchanged. You will not be charged a fee for any transfer or exchange of your
debt securities, but the issuer may require payment of a sum sufficient to cover
any tax or other governmental charge payable in connection therewith.

SAME-DAY SETTLEMENT IN RESPECT OF GLOBAL NOTES

     Global notes held by DTC will trade in DTC's Same-Day Funds Settlement
System until maturity and secondary market trading activity in the debt
securities will settle in immediately available funds. No assurance can be given
as to the effect, if any, of settlement in immediately available funds on the
trading activity in the debt securities.

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             CERTAIN UNITED STATES FEDERAL INCOME TAX CONSEQUENCES

     The following is a summary of the material United States federal income tax
consequences of the purchase, ownership and disposition of the securities.
Unless otherwise stated, this summary deals only with the securities held as
capital assets by U.S. holders. As used herein, "U.S. holders" are any
beneficial owners of the securities, that are, for United States federal income
tax purposes, (1) citizens or residents of the United States, (2) corporations
created or organized in or under the laws of the United States, any state
thereof or the District of Columbia (other than partnerships that are not
treated as a United States person under any applicable Treasury regulations),
(3) estates, the income of which is subject to United States federal income
taxation regardless of its source, or (4) trusts if (A) a court within the
United States is able to exercise primary supervision over the administration of
the trust and (B) one or more United States persons have the authority to
control all substantial decisions of the trust. As used herein, "non-U.S.
holders" are holders of the securities that are, for United States federal
income tax purposes (1) nonresident alien individuals; (2) foreign corporations;
or (3) foreign estates or trusts that are not subject to U.S. federal income
taxation on their worldwide income. If a partnership (including for this purpose
any entity treated as a partnership for U.S. tax purposes) is a beneficial owner
of the securities, the treatment of a partner in the partnership will generally
depend upon the status of the partner and upon the activities of the
partnership. A holder of securities that is a partnership and partners in such
partnership, should consult their tax advisers about the U.S. federal income tax
consequences of holding and disposing of the securities. This summary does not
deal with special classes of holders such as banks, thrifts, real estate
investment trusts, regulated investment companies, insurance companies, dealers
in securities or currencies, or tax-exempt investors and does not discuss
securities held as part of a hedge, straddle, "synthetic security" or other
integrated transaction. This summary also does not address the tax consequences
to persons that have a functional currency other than the U.S. dollar or the tax
consequences to shareholders, partners or beneficiaries of a holder of the
securities. Further, it does not include any description of any alternative
minimum tax consequences or the tax laws of any state or local government or of
any foreign government that may be applicable to the securities. This summary is
based on the Internal Revenue Code of 1986, as amended, the Treasury regulations
promulgated thereunder and administrative and judicial interpretations thereof,
all as of the date hereof, and all of which are subject to change, possibly on a
retroactive basis.

     You should consult with your own tax advisor regarding the federal, state,
local and foreign income, franchise, personal property, and any other tax
consequences of the purchase, ownership and disposition of the securities.

TAXATION OF COMMON STOCK

     The subsection describes the material United States federal income tax
consequences of owning, selling and disposing of the common stock that Calpine
may offer.

U.S. HOLDERS OF COMMON STOCK

Dividends

     The amount of any distribution Calpine makes in respect of Calpine's common
stock will be equal to the amount of cash and the fair market value, on the date
of distribution, of any property distributed. Generally, distributions will be
treated as a dividend, subject to tax as ordinary income, to the extent of
Calpine's current or accumulated earnings and profits, then as a tax-free return
of capital to the extent of a holder's tax basis in the common stock and
thereafter as gain from the sale or exchange of such stock as described below.

     In general, a dividend distribution to a corporate holder will qualify for
the 70% dividends-received deduction if the holder owns less than 20% of the
voting power and value of our stock (other than any non-voting, non-convertible,
non-participating preferred stock). The dividends received deduction is subject
to certain holding period, taxable income, and other limitations.

Sale or Exchange of Common Stock

     Upon the sale or exchange of common stock, a holder generally will
recognize capital gain or loss equal to the difference between (1) the amount of
cash and the fair market value of any property received upon the

                                        33
<PAGE>   35

sale or exchange and (2) such holder's adjusted tax basis in the common stock.
In the case of a holder other than a corporation, the maximum marginal United
States federal income tax rate applicable to such gain is 20% if such holder's
holding period for such common stock exceeds one year. A holder's basis in the
common stock is generally equal to its initial purchase price.

Information Reporting and Backup Withholding Tax

     In general, information reporting requirements will apply to payments of
dividends on common stock and payments of the proceeds of the sale of common
stock, and a 31% backup withholding tax may apply to such payments if the holder
fails to comply with certain identification requirements. Any amounts withheld
under the backup withholding rules from a payment to a holder will be allowed as
a credit against such holder's United States federal income tax and may entitle
the holder to a refund, provided that the required information is furnished to
the Internal Revenue Service.

Non-U.S. Holders of Common Stock

     The rules governing United States federal income taxation of a beneficial
owner of common stock that is a non-U.S. holder are complex and no attempt will
be made herein to provide more than a summary of such rules. Non-U.S. holders
should consult with their own tax advisors to determine the effect of federal,
state, local and foreign income tax laws, as well as treaties, with regard to an
investment in the common stock, including any reporting requirements.

Dividends

     Distributions by Calpine with respect to the common stock that are treated
as dividends paid (or deemed paid), as described above under "Dividends," to a
non-U.S. holder (excluding dividends that are effectively connected with the
conduct of a United States trade or business by such holder and are taxable as
described below) will be subject to United States federal withholding tax at a
30% rate (or a lower rate provided under any applicable income tax treaty).
Except to the extent that an applicable tax treaty otherwise provides, a non-
U.S. holder will be taxed in the same manner as a U.S. holder on dividends paid
(or deemed paid) that are effectively connected with the conduct of a United
States trade or business by the non-U.S. holder. If such non-U.S. holder is a
foreign corporation, it may also be subject to a United States branch profits
tax on such effectively connected income at a 30% rate (or such lower rate as
may be specified by an applicable tax treaty). Even though such effectively
connected dividends are subject to income tax and may be subject to the branch
profits tax, they will not be subject to U.S. withholding tax if the holder
delivers a properly executed Internal Revenue Service Form W-8EC1 (or successor
form) to the payor.

     A non-U.S. holder who wishes to claim the benefit of an applicable treaty
rate is required to satisfy applicable certification and other requirements. If
you are eligible for a reduced rate of United States withholding tax pursuant to
an income tax treaty, you may obtain a refund of any excess amounts withheld by
filing an appropriate claim for refund with the Internal Revenue Service.

Sale or Exchange of Common Stock

     Subject to the discussion below regarding "Foreign Investment in Real
Property Tax Act," a non-U.S. holder generally will not be subject to United
States federal income tax or withholding tax on the sale or exchange of common
stock unless (1) the gain is effectively connected with a United States trade or
business of the non-U.S. holder, (2) in the case of a non-U.S. holder who is an
individual, such holder is present in the United States for a period or periods
aggregating 183 days or more during the taxable year of the disposition, and
either (A) such holder has a "tax home" in the United States or (B) the
disposition is attributable to an office or other fixed place of business
maintained by such holder in the United States, (3) the non-U.S. holder is
subject to tax pursuant to the provisions of the Internal Revenue Code
applicable to certain United States expatriates or (4) in the event that Calpine
is characterized as a United States real property holding corporation (see
discussion below under "Foreign Investment in Real Property Tax Act"), the
non-U.S. holders beneficial and/or constructive ownership of common stock
exceeds 5% of the total fair market value of the common stock.

                                        34
<PAGE>   36

INFORMATION REPORTING AND BACKUP WITHHOLDING TAX

     United States information reporting requirements and backup withholding tax
will not apply to any payment of the proceeds of the sale of common stock
effected outside the United States by a foreign office of a "broker" as defined
in applicable Treasury regulations, unless such broker (1) is a United States
person as defined in the Internal Revenue Code, (2) is a foreign person that
derives 50% or more of its gross income for certain periods from the conduct of
a trade or business in the United States, (3) is a controlled foreign
corporation for United States federal income tax purposes or (4) is a foreign
partnership with certain U.S. connections. Payment of the proceeds of any such
sale effected outside the United States by a foreign office of any broker that
is described in the preceding sentence may be subject to backup withholding tax
and information reporting requirements, unless such broker has documentary
evidence in its records that the beneficial owner is a non-U.S. holder and
certain other conditions are met, or the beneficial owner otherwise establishes
an exemption. If paid to an address outside the United States, dividends on
common stock held by a non-U.S. holder may be subject to the information
reporting and backup withholding requirements described in this section unless
certain certification requirements are satisfied.

FOREIGN INVESTMENT IN REAL PROPERTY TAX ACT

     Under the Foreign Investment in Real Property Tax Act, any person who
acquires a "United States real property interest" (as described below) from a
foreign person must deduct and withhold a tax equal to 10% of the amount
realized by the foreign transferor. In addition, a foreign person who disposes
of a United States real property interest generally is required to recognize
gain or loss that is subject to United States federal income tax. A "United
States real property interest" generally includes any interest (other than an
interest solely as a creditor) in a United States corporation unless it is
established under specific procedures that the corporation is not (and was not
for the prior five-year period) a "United States real property holding
corporation." We can give no assurance as to whether we are, at any time within
the past five years have been, or will in the future become, a United States
real property holding corporation. If it is determined that we are, have been in
the past five years or in the future become, a United States real property
holding corporation, so long as our stock is regularly traded on an established
securities market, an exemption should apply to the common stock except with
respect to a non-U.S. holder whose beneficial and/or constructive ownership of
common stock exceeds 5% of the total fair market value of the common stock.

     Any investor that may approach or exceed the 5% ownership threshold
discussed above, either alone or in conjunction with related persons, should
consult its own tax advisor concerning the United States tax consequences that
may result. A non-U.S. holder who sells or otherwise disposes of common stock
may be required to inform its transferee whether such common stock constitutes a
United States real property interest.

     THE UNITED STATES FEDERAL INCOME TAX DISCUSSION SET FORTH ABOVE IS INCLUDED
FOR GENERAL INFORMATION ONLY AND MAY NOT BE APPLICABLE DEPENDING UPON A HOLDER'S
PARTICULAR SITUATION. HOLDERS SHOULD CONSULT THEIR TAX ADVISORS WITH RESPECT TO
THE TAX CONSEQUENCES TO THEM OF THE PURCHASE, OWNERSHIP AND DISPOSITION OF
COMMON STOCK, INCLUDING THE TAX CONSEQUENCES UNDER STATE, LOCAL, FOREIGN AND
OTHER TAX LAWS AND THE POSSIBLE EFFECTS OF CHANGES IN UNITED STATES FEDERAL OR
OTHER TAX LAWS.

TAXATION OF PREFERRED STOCK

     This subsection describes the material United States federal income tax
consequences of owning, selling and disposing of the preferred stock that
Calpine may offer.

U.S. HOLDERS OF PREFERRED STOCK

DIVIDENDS

     The amount of any distribution Calpine makes in respect of Calpine's
preferred stock will be equal to the amount of cash and the fair market value,
on the date of distribution, of any property (including common stock)
distributed. Generally, distributions will be treated as a dividend, subject to
tax as ordinary income, to the extent of Calpine's current or accumulated
earnings and profits, then as a tax-free return of capital to the extent of a
holder's tax basis in the preferred stock and thereafter as gain from the sale
or exchange of such stock as described below.

                                        35
<PAGE>   37

DIVIDENDS TO CORPORATE HOLDERS

     In general, a dividend distribution to a corporate holder will qualify for
the 70% dividends received deduction if the holder owns less than 20% of the
voting power and value of our preferred stock (other than any non-voting,
non-convertible, non-participating preferred stock). In addition, the benefit of
a dividends received deduction may be reduced by the corporate alternative
minimum tax.

     In determining entitlement to the dividends received deduction, corporate
holders of preferred stock should also consider the provisions of Sections
246(c), 246A and 1059 of the Internal Revenue Code and Treasury regulations
promulgated thereunder, and Internal Revenue Service rulings and administrative
pronouncements relating to such provisions. Under current law, Section 246(c) of
the Internal Revenue Code disallows the dividends received deduction in its
entirety if the holder does not satisfy the applicable holding period
requirement for the dividend-paying stock for a period immediately before or
immediately after such holder becomes entitled to receive each dividend on the
stock. Section 246(c)(4) of the Internal Revenue Code provides that a holder may
not count toward this minimum holding period any period in which the holder (1)
has, among other things, an option to sell preferred stock which it owns, (2) is
under a contractual obligation to sell preferred stock which it owns, (3) has
made (and not closed) a short sale of substantially identical stock or
securities, or (4) has diminished its risk of loss by holding one or more
positions with respect to substantially similar or related property. Under
certain circumstances, Section 1059 of the Internal Revenue Code (A) reduces the
tax basis of stock by a portion of any "extraordinary dividends" that are
eligible for the dividends received deduction and (B) to the extent that the
basis reduction would otherwise reduce the tax basis of the preferred stock
below zero, requires immediate recognition of gain, which is treated as gain
from the sale or exchange of the stock. In the case of preferred stock, an
"extraordinary dividend" would include any amount treated as a dividend with
respect to a redemption that is not pro rata to all stockholders (or meets
certain other requirements), without regard to either the relative amount of the
dividend or the holder's holding period for the preferred stock. Section 246A of
the Internal Revenue Code contains the "debt-financed" portfolio stock rules,
under which the dividends received deduction could be reduced to the extent that
a holder incurs indebtedness directly attributable to its investment in the
preferred stock.

RECEIPT OF COMMON STOCK UPON CONVERSION OF THE PREFERRED STOCK

     If the preferred stock is convertible into common stock of Calpine, gain or
loss will not be recognized by a holder upon the conversion of such preferred
stock into common stock if no cash is received. A holder who receives cash in
lieu of a fractional share of common stock will in general be treated as having
received such fractional share and having exchanged it for cash in a redemption,
which would be treated in the manner described under "Sale, Exchange or
Redemption of Preferred stock" below. As discussed therein, a holder who cannot
qualify for sale or exchange treatment under the rules applicable to redemptions
will generally be taxable on the cash received in lieu of a fractional share as
a distribution described in "Dividends" above.

     Generally, a holder's tax basis in the common stock received upon
conversion will generally be equal to the holder's tax basis in the preferred
stock less the tax basis allocated to any fractional share for which cash is
received, and a holder's holding period in the common stock received upon
conversion generally will include the period during which the preferred stock
was held by such holder.

ADJUSTMENTS OF CONVERSION PRICE IN RESPECT OF PREFERRED STOCK

     If the preferred stock is convertible into common stock of Calpine,
adjustments to the conversion price ratio of common stock to take into account a
stock dividend or stock split generally will not be taxable. However, an
adjustment to the conversion price ratio to reflect the issuance of certain
rights, warrants, evidences of indebtedness, securities or other assets to
holders of common stock (an "Adjustment") may result in constructive
distributions to the holders of the preferred stock. The amount of any such
constructive distribution would be the fair market value on the date of the
Adjustment of the number of shares of common stock which, if actually
distributed to holders of preferred stock, would produce the same increase in
the proportionate interests of such holders in the assets or earnings and
profits of Calpine as that produced by the Adjustment. The distribution would be
treated in the manner described above under "Dividends."

                                        36
<PAGE>   38

EXCESSIVE REDEMPTION PRICE OF PREFERRED STOCK

     Under Section 305 of the Internal Revenue Code and Treasury regulations, if
preferred stock with a mandatory redemption date or preferred stock subject to
certain redemption rights on the part of either Calpine or the holder of such
stock has a redemption price that exceeds its issue price (i.e., its fair market
value at its date of original issuance) by more than a de minimis amount, such
excess may be treated as a constructive distribution that will be treated in the
same manner as distribution described above under "Dividends." A holder of such
preferred stock would be required to treat such excess as a constructive
distribution received by the holder over the life of such stock under a constant
interest (economic yield) method that takes into account the compounding of
yield.

ACCRUAL DIVIDENDS ON THE PREFERRED STOCK

     The tax treatment of accrued dividends that are payable upon a redemption
of the preferred stock will be addressed in the applicable prospectus
supplement.

SALE, EXCHANGE OR REDEMPTION OF PREFERRED STOCK

     Upon the sale or exchange of preferred stock, a holder generally will
recognize capital gain or loss equal to the difference between (1) the amount of
cash and the fair market value of any property received upon the sale or
exchange and (2) such holder's adjusted tax basis in the stock. In the case of a
holder other than a corporation, the maximum marginal United States federal
income tax rate applicable to such gain is 20% if such holder's holding period
for such stock exceeds one year. A holder's basis in the stock is generally
equal to its initial purchase price.

     Gain or loss recognized by a holder on a redemption of the preferred stock
should be treated as a sale or exchange and therefore qualify for the treatment
described above if, taking into account stock that is actually or constructively
owned under the constructive ownership rules of Section 318 of the Internal
Revenue Code by such holder, either (1) the holder's interest in the stock of
Calpine is completely terminated as a result of such redemption, (2) such
holder's percentage ownership of Calpine's voting stock immediately after the
redemption is less than 80% of such holder's percentage ownership immediately
before the redemption or (3) the redemption is "not essentially equivalent to a
dividend." Under Section 318 of the Internal Revenue Code, a person generally
will be treated as the owner of stock of Calpine owned by certain related
parties or certain entities in which the person owns an interest and stock that
a holder could acquire through exercise of an option. For this purpose, an
option would include the conversion right under the preferred stock. Whether a
redemption is not essentially equivalent to a dividend depends on each holder's
facts and circumstances, but in any event requires a "meaningful reduction" in
such holder's equity interest in Calpine. A holder of the preferred stock who
sells some or all of the stock of Calpine owned by it may be able to take such
sales into account to satisfy one of the foregoing conditions. Conversely, a
holder who purchases additional shares of stock of Calpine may be required to
take such shares into account in determining whether any of the foregoing
conditions are satisfied.

     If none of the above conditions is satisfied to qualify for sale or
exchange treatment, the entire amount of the cash (or property) received on a
redemption will be treated as a distribution (without offset by the holder's tax
basis in the redeemed shares), which will be treated in the same manner as
distributions described above under "Dividends." In such case, the holder's
basis in the redeemed preferred stock would be transferred to the holder's
remaining shares of Calpine stock (if any). If the holder does not retain any
shares of Calpine's stock but dividend treatment arises because of the
constructive ownership rules, such basis will be entirely lost to the holder.

Other Preferred Stock

     Special tax rules may apply to certain types of preferred stock including,
but not limited to, preferred stock issued at a discount. The applicable
prospectus supplement will discuss any such special United States federal income
tax rules with respect to such preferred stock.

                                        37
<PAGE>   39

Information Reporting and Backup Withholding Tax

     In general, information reporting requirements will apply to payments of
dividends on the preferred stock and payments of the proceeds of the sale of the
preferred stock, and a 31% backup withholding tax may apply to such payments if
the holder fails to comply with certain identification requirements. Any amounts
withheld under the backup withholding rules from a payment to a holder will be
allowed as a credit against such holder's United States federal income tax and
may entitle the holder to a refund, provided that the required information is
furnished to the Internal Revenue Service.

Non-U.S. Holders of Preferred Stock

     The rules governing United States federal income taxation of a beneficial
owner of preferred stock that is a non-U.S. holder are complex and no attempt
will be made herein to provide more than a summary of such rules. Non-U.S.
holders should consult with their own tax advisors to determine the effect of
federal, state, local and foreign income tax laws, as well as treaties, with
regard to an investment in the preferred stock, including any reporting
requirements.

Dividends

     Distributions by Calpine with respect to the preferred stock that are
treated as dividends paid (or deemed paid), as described above under
"Dividends," to a non-U.S. holder (excluding dividends that are effectively
connected with the conduct of a United States trade or business by such holder
and are taxable as described below) will be subject to United States federal
withholding tax at a 30% rate (or a lower rate provided under any applicable
income tax treaty). Except to the extent that an applicable tax treaty otherwise
provides, a non-U.S. holder will be taxed in the same manner as a holder who is
a United States person on dividends paid (or deemed paid) that are effectively
connected with the conduct of a United States trade or business by the non-U.S.
holder. If such non-U.S. holder is a foreign corporation, it may also be subject
to a United States branch profits tax on such effectively connected income at a
30% rate (or such lower rate as may be specified by an applicable tax treaty).
Even though such effectively connected dividends are subject to income tax, and
may be subject to the branch profits tax, they will not be subject to U.S.
withholding tax if the holder delivers a properly executed Internal Revenue
Service Form W-8ECI (or successor form) to the payor.

     A non-U.S. holder who wishes to claim the benefit of an applicable treaty
rate is required to satisfy applicable certification and other requirements. If
you are eligible for a reduced rate of United States withholding tax pursuant to
an income tax treaty, you may obtain a refund of any excess amounts withheld by
filing an appropriate claim for refund with the Internal Revenue Service.

Receipt of Common Stock Upon Conversion of the Preferred Stock

     In general, no United States federal income tax or withholding tax will be
imposed upon the conversion of preferred stock into common stock by a non-U.S.
holder (except with respect to the non-U.S. holder's receipt of cash in lieu of
fractional shares where one of the conditions described below under "Sale or
Exchange of Preferred stock" is satisfied).

SALE OR EXCHANGE OF PREFERRED STOCK

     Subject to the discussion below regarding "Foreign Investment in Real
Property Tax Act," a non-U.S. holder generally will not be subject to United
States federal income tax or withholding tax on the sale or exchange of
preferred stock unless (1) the gain is effectively connected with a United
States trade or business of the non-U.S. holder, (2) in the case of a non-U.S.
holder who is an individual, such holder is present in the United States for a
period or periods aggregating 183 days or more during the taxable year of the
disposition, and either (A) such holder has a "tax home" in the United States or
(B) the disposition is attributable to an office or other fixed place of
business maintained by such holder in the United States, (3) the non-U.S. holder
is subject to tax pursuant to the provisions of the Internal Revenue Code
applicable to certain United States expatriates or (4) in the event that Calpine
is characterized as a United States real property holding corporation (see
discussion below under "Foreign Investment in Real Property Tax Act"), the
non-U.S. holders beneficial and/or constructive ownership of preferred stock
exceeds 5% of the total fair market value of the preferred stock.

                                        38
<PAGE>   40

     If an individual non-U.S. holder falls under clause (1) above, such
individual generally will be taxed on the net gain derived from a sale under
regular graduated United States federal income tax rates. If an individual
non-U.S. holder falls under clause (2) above, such individual generally will be
subject to a flat 30% tax on the gain derived from a sale, which may be offset
by certain United States capital losses (notwithstanding the fact that such
individual is not considered a resident of the United States). Thus, individual
non-U.S. holders who have spent (or expect to spend) 183 days or more in the
United States in the taxable year in which they contemplate a sale of preferred
stock are urged to consult their tax advisors as to the tax consequences of such
sale.

     If a non-U.S. holder that is a foreign corporation falls under clause (1)
of the first sentence above, it generally be taxed on its net gain under regular
graduated United States federal income tax rates and, in addition, will be
subject to the branch profits tax equal to 30% of its "effectively connected
earnings and profits," as defined in the Internal Revenue Code, for the taxable
year, as adjusted for certain items, unless it qualifies for a lower rate under
an applicable income tax treaty.

INFORMATION REPORTING AND BACKUP WITHHOLDING TAX

     United States information reporting requirements and backup withholding tax
will not apply to any payment of the proceeds of the sale of preferred stock
effected outside the United States by a foreign office of a "broker" as defined
in applicable Treasury regulations, unless such broker (1) is a United States
person as defined in the Internal Revenue Code, (2) is a foreign person that
derives 50% or more of its gross income for certain periods from the conduct of
a trade or business in the United States, (3) is a controlled foreign
corporation for United States federal income tax purposes or (4) is a foreign
partnership with certain U.S. connections. Payment of the proceeds of any such
sale effected outside the United States by a foreign office of any broker that
is described in the preceding sentence may be subject to backup withholding tax
and information reporting requirements, unless such broker has documentary
evidence in its records that the beneficial owner is a non-U.S. holder and
certain other conditions are met, or the beneficial owner otherwise establishes
an exemption. If paid to an address outside the United States, dividends on
preferred stock held by a non-U.S. may be subject to the information reporting
and backup withholding requirements described in this section unless certain
certification requirements are satisfied.

Foreign Investment in Real Property Tax Act

     Under the Foreign Investment in Real Property Tax Act, any person who
acquires a "United States real property interest" (as described below) from a
foreign person must deduct and withhold a tax equal to 10% of the amount
realized by the foreign transferor. In addition, a foreign person who disposes
of a United States real property interest generally is required to recognize
gain or loss that is subject to United States federal income tax. A "United
States real property interest" generally includes any interest (other than an
interest solely as a creditor) in a United States corporation unless it is
established under specific procedures that the corporation is not (and was not
for the prior five-year period) a "United States real property holding
corporation." We can give no assurance as to whether we are, at any time within
the past 5 years have been, or will in the future become, a United States real
property holding corporation. If it is determined that we are, have been in the
past five years or in the future become, a United States real property holding
corporation, so long as our stock is regularly traded on an established
securities market, an exemption should apply to the preferred stock except with
respect to a non-U.S. holder whose beneficial and/or constructive ownership of
preferred stock exceeds 5% of the total fair market value of the preferred
stock.

     Any investor that may approach or exceed the 5% ownership threshold
discussed above, either alone or in conjunction with related persons, should
consult its own tax advisor concerning the United States tax consequences that
may result. A non-U.S. holder who sells or otherwise disposes of preferred stock
may be required to inform its transferee whether such preferred stock
constitutes a United States real property interest.

     THE UNITED STATES FEDERAL INCOME TAX DISCUSSION SET FORTH ABOVE IS INCLUDED
FOR GENERAL INFORMATION ONLY AND MAY NOT BE APPLICABLE DEPENDING UPON A HOLDER'S
PARTICULAR SITUATION. HOLDERS SHOULD CONSULT THEIR TAX ADVISORS WITH RESPECT TO
THE TAX CONSEQUENCES TO THEM OF THE PURCHASE, OWNERSHIP AND DISPOSITION OF THE
PREFERRED STOCK, INCLUDING THE TAX CONSEQUENCES UNDER STATE, LOCAL, FOREIGN AND
OTHER TAX LAWS AND THE POSSIBLE EFFECTS OF CHANGES IN UNITED STATES FEDERAL OR
OTHER TAX LAWS.

                                        39
<PAGE>   41

TAXATION OF DEBT SECURITIES

     This subsection describes the material United States federal income tax
consequences of owning, selling and disposing of the debt securities offered by
Calpine or Calpine Canada Energy Finance, as the case may be. It deals only with
debt securities that are due to mature 30 years or less from the date on which
they are issued. The United States federal income tax consequences of owning
debt securities that are due to mature more than 30 years from the date of issue
will be discussed in an applicable prospectus supplement. In addition, this
subsection assumes that the debt securities will not be offered at a discount.

U.S. HOLDERS OF DEBT SECURITIES

Interest Income

     Payments of interest on a debt security generally will be taxable to a U.S.
holder as ordinary interest income at the time such payments are accrued or are
received (in accordance with the holder's regular method of tax accounting).

Debt Securities Purchased at a Market Discount

     A holder who purchases a debt security will be considered to have purchased
the underlying debenture at a "market discount" if the holder's adjusted basis
in the debt security is less than its issue price, unless such market discount
is a de minimis amount (generally up to 1/4 of 1 percent of the adjusted issue
price of the debt security as of the purchase date multiplied by its weighted
average maturity as of such date). In general, any partial payment of principal
on, or gain recognized on the maturity or disposition of, the debt security will
be treated as ordinary income to the extent that such gain does not exceed the
accrued market discount on the underlying debenture. Alternatively, a holder of
a debt security may elect to include market discount in income currently over
the life of the debt security. Such an election applies to all debt instruments
with market discount acquired by the electing holder on or after the first day
of the first taxable year to which the election applies and may not be revoked
without the consent of the Internal Revenue Service.

     Market discount accrues on a straight-line basis unless the holder elects
to accrue such discount on a constant yield to maturity basis. Such an election
is applicable only to the debt security with respect to which it is made and is
irrevocable. A holder of a debt security that does not elect to include market
discount in income currently generally will be required to defer deductions for
interest on borrowings allocable to such debt security in an amount not
exceeding the accrued market discount on such debt security until the maturity
or disposition of such debt security.

Debt Securities Purchased at a Premium

     Under the Internal Revenue Code, a holder that purchases a debt security
will be considered to have purchased the debt security at a premium if the
holder's adjusted basis in the debt security immediately after the purchase is
greater than the issue price of such debt security. Such a holder may elect to
treat such premium as "amortizable bond premium," in which case the amount of
qualified stated interest required to be included in the holder's income each
year with respect to the interest on the debt security will be reduced by the
amount of the amortizable bond premium allocable (based on the debt security's
yield to maturity) to such year. Any election to amortize bond premium is
applicable to all bonds (other than bonds the interest on which is excludible
from gross income) held by the holder at the beginning of the first taxable year
to which the election applies or thereafter acquired by the holder, and may not
be revoked without the consent of the Internal Revenue Service.

Sale or Exchange of Debt Securities

     A holder will generally recognize taxable gain or loss equal to the
difference between the amount realized on the sale, exchange or other
disposition of the debt security and the holder's adjusted tax basis in such
debt security (subject to the discussion above regarding market discount, which
may be treated as ordinary income). A holder's adjusted tax basis in the debt
security generally will be the initial purchase price paid therefor. In the case
of a holder other than a corporation, the maximum marginal United States federal
income tax rate applicable to gain recognized on the sale of a debt security is
20% if such holder's holder period for such debt security exceeds one year.

                                        40
<PAGE>   42

     To the extent the selling price is less than the holder's adjusted tax
basis, the holder will recognize a capital loss. Subject to certain limited
exceptions, capital losses cannot be applied to offset ordinary income for
United States federal income tax purposes.

Other Debt Securities

     Special tax rules may apply to certain types of debt securities including,
but not limited to, debt securities issued at a discount, debt securities
subject to contingencies, variable rate debt securities and debt securities
convertible into equity of Calpine. The applicable prospectus supplement will
discuss any such special United States federal income tax rules with respect to
such debt securities.

Information Reporting and Backup Withholding Tax

     In general, information reporting requirements will apply to payments of
principal, premium, if any, and interest on the debt securities and payments of
the proceeds of the sale of the debt securities, and a 31% backup withholding
tax may apply to such payments if the holder fails to comply with certain
identification requirements. Any amounts withheld under the backup withholding
rules from a payment to a holder will be allowed as a credit against such
holder's United States federal income tax and may entitle the holder to a
refund, provided that the required information is furnished to the Internal
Revenue Service.

NON-U.S. HOLDERS OF DEBT SECURITIES

     The rules governing United States federal income taxation of a beneficial
owner of debt securities that is a non-U.S. holder are complex and no attempt
will be made herein to provide more than a summary of such rules. Non-U.S.
holders should consult with their own tax advisors to determine the effect of
federal, state, local and foreign income tax laws, as well as treaties, with
regard to an investment in the debt securities, including any reporting
requirements.

     This discussion assumes that the debt security or coupon is not subject to
the rules of Section 871(h)(4)(A) of The Internal Revenue Code, relating to
interest payments that are determined by reference to income, profits, changes
in value of property or other attributes of the issuer or a related party.

Interest Income

     Generally, interest income of a non-U.S. holder that is not effectively
connected with a United States trade or business will be subject to a
withholding tax at a 30% rate (or, if applicable, a lower tax rate specified by
a treaty). However, interest income earned on a debt security by a non-U.S.
holder will qualify for the "portfolio interest" exemption and therefore will
not be subject to United States federal income tax or withholding tax, provided
that such interest income is not effectively connected with a United States
trade or business of the non-U.S. holder and provided that (1) the non-U.S.
holder does not actually or constructively own 10% of more of the total combined
voting power of all classes of Calpine stock entitled to vote; (2) the non-U.S.
holder is not a controlled foreign corporation that is related to the issuer or
Calpine through stock ownership; (3) the non-U.S. holder is not a bank which
acquired the debt security in consideration for an extension of credit made
pursuant to a loan agreement entered into in the ordinary course of business;
and (4) either (A) the non-U.S. holder certifies to the issuer or the issuer's
agent, under penalties of perjury, that it is not a United States person and
provides its name, address, and certain other information on a properly executed
Internal Revenue Service Form W-8BEN or a suitable substitute form or (B) a
securities clearing organization, bank or other financial institution that holds
customer securities in the ordinary course of its trade or business and holds
the debt securities in such capacity, certifies to the issuer or the issuer's
agent, under penalties of perjury, that such a statement has been received from
the beneficial owner by it or by a financial institution between it and the
beneficial owner and furnishes to the issuer or the issuer's agent with a copy
thereof. If a non-U.S. holder holds the debt security through certain foreign
intermediaries or partnerships, such holder and the foreign intermediary or
partnership may be required to satisfy certification requirements under
applicable United States Treasury regulations.

     Except to the extent that an applicable treaty otherwise provides, a
non-U.S. holder generally will be taxed with respect to interest in the same
manner as a holder that is a United States person if the interest is effectively
connected with a United States trade or business of the non-U.S. holder.
Effectively connected

                                        41
<PAGE>   43

interest income received or accrued by a corporate non-U.S. holder may also,
under certain circumstances, be subject to an additional "branch profits" tax at
a 30% rate (or, if applicable, at a lower tax rate specified by a treaty). Even
though such effectively connected income is subject to income tax, and may be
subject to the branch profits tax, it is not subject to withholding tax if the
non-U.S. holder delivers a properly executed Internal Revenue Service Form
W-8ECI (or successor form) to the payor.

Sale or Exchange of Debt Securities

     A non-U.S. holder generally will not be subject to United States federal
income tax or withholding tax on any gain realized on the sale, exchange or
other disposition of a debt security unless (1) the gain is effectively
connected with a United States trade or business of the non-U.S. holder, (2) in
the case of a non-U.S. holder who is an individual, such holder is present in
the United States for a period or periods aggregating 183 days or more during
the taxable year of the disposition, and either such holder has a "tax home" in
the United States or the disposition is attributable to an office or other fixed
place of business maintained by such holder in the United States, or (3) the
non-U.S. holder is subject to tax pursuant to the provisions of the Internal
Revenue Code applicable to certain United States expatriates.

Information Reporting and Backup Withholding Tax

     United States information reporting requirements and backup withholding tax
will not apply to payments on the debt securities to a non-U.S. holder if the
statement described in "Interest Income" is duly provided by such holder,
provided that the payor does not have actual knowledge that the holder is a
United States person. Information reporting requirements and backup withholding
tax will not apply to any payment of the proceeds of the sale of debt securities
effected outside the United States by a foreign office of a "broker" as defined
in applicable Treasury regulations, unless such broker (1) is a United States
person as defined in the Internal Revenue Code, (2) is a foreign person that
derives 50% or more of its gross income for certain periods from the conduct of
a trade or business in the United States, (3) is a controlled foreign
corporation for United States federal income tax purposes or (4) is a foreign
partnership with certain U.S. connections. Payment of the proceeds of any such
sale effected outside the United States by a foreign office of any broker that
is described in the preceding sentence may be subject to backup withholding tax
and information reporting requirements, unless such broker has documentary
evidence in its records that the beneficial owner is a non-U.S. holder and
certain other conditions are met, or the beneficial owner otherwise establishes
an exemption. Payment of the proceeds of any such sale to or through the United
States office of a broker is subject to information reporting and backup
withholding requirements unless the beneficial owner of the debt securities
provides the statement described in "Interest Income" or otherwise establishes
an exemption.

     THE UNITED STATES FEDERAL INCOME TAX DISCUSSION SET FORTH ABOVE IS INCLUDED
FOR GENERAL INFORMATION ONLY AND MAY NOT BE APPLICABLE DEPENDING UPON A HOLDER'S
PARTICULAR SITUATION. HOLDERS SHOULD CONSULT THEIR TAX ADVISORS WITH RESPECT TO
THE TAX CONSEQUENCES TO THEM OF THE PURCHASE, OWNERSHIP AND DISPOSITION OF THE
DEBT SECURITIES, INCLUDING THE TAX CONSEQUENCES UNDER STATE, LOCAL, FOREIGN AND
OTHER TAX LAWS AND THE POSSIBLE EFFECTS OF CHANGES IN UNITED STATES FEDERAL OR
OTHER TAX LAWS.

                                        42
<PAGE>   44

                          NOTICE TO CANADIAN RESIDENTS

RESALE RESTRICTIONS

     The distribution of the securities in Canada will be made only on a private
placement basis exempt from the requirement that we prepare and file a
prospectus with the securities regulatory authorities in each province where
trades of the securities are made. Any resale of the securities in Canada must
be made under applicable securities laws which will vary depending on the
relevant jurisdiction, and which may require resales to be made under available
statutory exemptions or under a discretionary exemption granted by the
applicable Canadian securities regulatory authority. Purchasers are advised to
seek legal advice prior to any resale of the securities.

REPRESENTATIONS OF PURCHASERS

     By purchasing the securities in Canada and accepting a purchase
confirmation a purchaser is representing to the issuer and the dealer from whom
the purchase confirmation is received that

          (i) the purchaser is entitled under applicable provincial securities
     laws to purchase the securities without the benefit of a prospectus
     qualified under those securities laws,

          (ii) where required by law, that the purchaser is purchasing as
     principal and not as agent, and

          (iii) the purchaser has reviewed the text above under Resale
     Restrictions.

RIGHTS OF ACTION (ONTARIO PURCHASERS)

     The securities being offered are those of a foreign issuer and Ontario
purchasers will not receive the contractual right of action prescribed by
Ontario securities law. As a result, Ontario purchasers must rely on other
remedies that may be available, including common law rights of action for
damages or rescission or rights of action under the civil liability provisions
of the U.S. federal securities laws.

ENFORCEMENT OF LEGAL RIGHTS

     All of the issuer's directors and officers as well as the experts named
herein may be located outside of Canada and, as a result, it may not be possible
for Canadian purchasers to effect service of process within Canada upon the
issuer or such persons. All or a substantial portion of the assets of the issuer
and such persons may be located outside of Canada and, as a result, it may not
be possible to satisfy a judgment against the issuer or such persons in Canada
or to enforce a judgment obtained in Canadian courts against such issuer or
persons outside of Canada.

NOTICE TO BRITISH COLUMBIA RESIDENTS

     A purchaser of the securities to whom the Securities Act (British Columbia)
applies is advised that the purchaser is required to file with the British
Columbia Securities Commission a report within ten days of the sale of any
securities acquired by the purchaser pursuant to this offering. The report must
be in the form attached to British Columbia Securities Commission Blanket Order
BOR #95/17, a copy of which may be obtained from us. Only one report must be
filed for the securities acquired on the same date and under the same prospectus
exemption.

TAXATION AND ELIGIBILITY FOR INVESTMENT

     Canadian purchasers of the securities should consult their own legal and
tax advisors with respect to the tax consequences of an investment in the
securities in their particular circumstances and about the eligibility of the
securities for investment by the purchaser under relevant Canadian legislation.

                                        43
<PAGE>   45

                                 LEGAL MATTERS

     The validity of the debt and equity securities of Calpine offered hereby
will be passed upon for us by Covington & Burling, New York, New York. The
validity of the debt securities of Calpine Canada Energy Finance offered hereby
will be passed upon for us by Bennett Jones, Calgary, Alberta, Canada, and
Covington & Burling, New York, New York. Any underwriters will be represented by
Skadden, Arps, Slate, Meagher & Flom LLP, New York, New York.

                                    EXPERTS

     The financial statements incorporated by reference in this prospectus and
elsewhere in the registration statement have been audited by Arthur Andersen
LLP, independent public accountants, as indicated in their reports with respect
thereto and are included herein in reliance upon the authority of said firm as
experts in giving said reports.

                                        44
<PAGE>   46

                                 [CALPINE LOGO]
<PAGE>   47

                                    PART II

                     INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 14.  OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.

     The following table sets forth the costs and expenses payable by Calpine
Corporation ("Calpine") in connection with sales of the securities being
registered. All amounts are estimates except the SEC registration statement
filing fee.

<TABLE>
<S>                                                           <C>
SEC Registration Statement filing fee.......................  $  625,000
Legal fees and expenses.....................................     500,000
Accounting fees and expenses................................     300,000
Trustee's fees and expenses (including counsel fees)........     200,000
Printing fees...............................................     600,000
Transfer agent fees.........................................      20,000
Miscellaneous...............................................      22,800
          Total.............................................  $2,267,800
</TABLE>

ITEM 15.  INDEMNIFICATION OF DIRECTORS AND OFFICERS.

CALPINE CORPORATION

     Section 145 of the General Corporation Law of the State of Delaware (the
"Delaware Law") empowers a Delaware corporation to indemnify any persons who
are, or are threatened to be made, parties to any threatened, pending or
completed legal action, suit or proceedings, whether civil, criminal,
administrative or investigative (other than action by or in the right of such
corporation), by reason of the fact that such person was an officer or director
of such corporation, or is or was serving at the request of such corporation as
a director, officer, employee or agent of another corporation or enterprise. The
indemnity may include expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred by such person in
connection with such action, suit or proceeding, provided that such officer or
director acted in good faith and in a manner he reasonably believed to be in or
not opposed to the corporation's best interests, and, for criminal proceedings,
had no reasonable cause to believe his conduct was unlawful. A Delaware
corporation may indemnify officers and directors in an action by or in the right
of the corporation under the same conditions, except that no indemnification is
permitted without judicial approval if the officer or director is adjudged to be
liable to the corporation in the performance of his duty. Where an officer or
director is successful on the merits or otherwise in the defense of any action
referred to above, the corporation must indemnify him against the expenses which
such officer or director actually and reasonably incurred.

     In accordance with the Delaware Law, the certificate of incorporation of
Calpine contains a provision to limit the personal liability of the directors of
Calpine for violations of their fiduciary duty. This provision eliminates each
director's liability to Calpine or its stockholders for monetary damages except
(i) for any breach of the director's duty of loyalty to Calpine or its
stockholders, (ii) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (iii) under Section 174 of
the Delaware Law providing for liability of directors for unlawful payment of
dividends or unlawful stock purchases or redemptions, or (iv) for any
transaction from which a director derived an improper personal benefit. The
effect of this provision is to eliminate the personal liability of directors for
monetary damages for actions involving a breach of their fiduciary duty of care,
including any such actions involving gross negligence.

     Article Ten of the bylaws of Calpine provides for indemnification of the
officers and directors of Calpine to the fullest extent permitted by applicable
law.

     Calpine has entered into indemnification agreements with its directors and
officers. These agreements provide substantially broader indemnity rights than
those provided under the Delaware Law and the Calpine's bylaws. The
indemnification agreements are not intended to deny or otherwise limit
third-party or derivative suits against Calpine or its directors or officers,
but if a director or officer were entitled to indemnity or

                                       II-1
<PAGE>   48

contribution under the indemnification agreement, the financial burden of a
third-party suit would be borne by Calpine, and Calpine would not benefit from
derivative recoveries against the director or officer. Such recoveries would
accrue to the benefit of Calpine but would be offset by Calpine's obligations to
the director or officer under the indemnification agreement. In addition, the
directors of Calpine are insured under officers and directors liability
insurance policies.

CALPINE CANADA ENERGY FINANCE ULC

     Every director or officer, former director or officer, or person who acts
or acted at the request of Calpine Canada Energy Finance, as a director or
officer of Calpine Canada Energy Finance, a body corporate, partnership or other
association of which Calpine Canada Energy Finance is or was a shareholder,
partner, member or creditor, and the heirs and legal representatives of such
person, in the absence of any dishonesty on the part of such person, shall be
indemnified by Calpine Canada Energy Finance against all costs, losses and
expenses, including an amount paid to settle an action or claim or satisfy a
judgment, that such person may incur or become liable to pay in respect of any
claim made against such person or civil, criminal or administrative action or
proceeding to which such person is made a party by reason of being or having
been a director or officer of Calpine Canada Energy Finance.

ITEM 16.  EXHIBITS.

<TABLE>
<CAPTION>
EXHIBIT
NUMBER                            DESCRIPTION
-------                           -----------
<C>       <S>
 (a)1.1   Form of Underwriting Agreement with respect to Common Stock,
          Preferred Stock and Debt Securities of Calpine
   *1.2   Form of Underwriting Agreement with respect to Debt
          Securities of Calpine Canada Energy Finance
 (b)3.1   Amended and Restated Certificate of Incorporation of Calpine
 (c)3.2   By-laws of Calpine
   +3.3   Memorandum of Association of Calpine Canada Energy Finance
   +3.4   Articles of Association of Calpine Canada Energy Finance
 (d)4.1   Form of Indenture between Calpine and Wilmington Trust
          Company, including form of Note
 (e)4.2   Rights Agreement, dated as of June 5, 1997, between Calpine
          and First Chicago Trust Company of New York, as Rights Agent
   +4.3   Form of Indenture between Calpine Canada Energy Finance and
          Wilmington Trust Company, including form of Note
   +4.4   Form of Guarantee Agreement of Calpine with respect to
          Senior Debt Securities of Calpine Canada Energy Finance
   *5.1   Opinion of Covington & Burling
   *8.1   Opinion of Covington & Burling as to certain tax matters
   *8.2   Opinion of Bennett Jones as to certain Canadian federal tax
          matters
  *10.1   Amended and Restated Credit Agreement, dated as of February
          15, 2001, among Calpine Construction Finance Company, L.P.,
          Credit Suisse First Boston, The Bank of Nova Scotia, TD
          Securities (USA) Inc. and CIBC World Markets Corp.
  +12.1   Statement Regarding Computation of Ratios
  +23.1   Consent of Arthur Andersen LLP, independent public
          accountants
  *23.2   Consent of Covington & Burling (included in Exhibits 5.1 and
          8.1)
  *23.3   Consent of Bennett Jones (included in Exhibit 8.2)
  +24.1   Power of Attorney of Officers and Directors of Calpine (see
          pages II-5 and II-6)
  +24.2   Power of Attorney of Officers and Directors of Calpine
          Canada Energy Finance (see page II-7)
</TABLE>

                                       II-2
<PAGE>   49

<TABLE>
<CAPTION>
EXHIBIT
NUMBER                            DESCRIPTION
-------                           -----------
<C>       <S>
  *25.1   Form T-1 Statement of Eligibility under the Trust Indenture
          Act of 1939, as amended, of Wilmington Trust Company, as
          Trustee under the Calpine Corporation Indenture
  *25.2   Form T-1 Statement of Eligibility under the Trust Indenture
          Act of 1939, as amended, of Wilmington Trust Company, as
          Trustee under the Calpine Canada Energy Finance Indenture
</TABLE>

---------------
  *  To be filed by amendment.

  +  Filed herewith.

 (a) Incorporated by reference to Calpine's Registration Statement on Form S-3
     (Registration No. 333-48274).

 (b) Incorporated by reference to Calpine's Registration Statement on Form S-3
     (Registration No. 333-40652).

 (c) Incorporated by reference to Calpine's Registration Statement on Form S-1
     (Registration No. 333-07497).

 (d) Incorporated by reference to Amendment No. 1 to Calpine's Registration
     Statement on Form S-3 (Registration No. 333-40652).

 (e) Incorporated by reference to Calpine's Registration Statement on Form 8-A,
     as amended by Calpine's Registration Statement on Form 8-A/A (File No.
     001-12079).

ITEM 17.  UNDERTAKINGS

     The undersigned registrants hereby undertake:

          (1) To file, during any period in which offers or sales are being
     made, a post-effective amendment to this registration statement:

             (i) to include any prospectus required by Section 10(a)(3) of the
        Securities Act of 1933;

             (ii) to reflect in the prospectus any facts or events arising after
        the effective date of the registration statement (or the most recent
        post-effective amendment thereof) which, individually or in the
        aggregate, represent a fundamental change in the information set forth
        in the registration statement. Notwithstanding the foregoing, any
        increase or decrease in volume of securities offered (if the total
        dollar value of securities offered would not exceed that which was
        registered) and any deviation from the low or high end of the estimated
        maximum offering range may be reflected in the form of prospectus filed
        with the Commission pursuant to Rule 424(b) if, in the aggregate, the
        changes in volume and price represent no more than 20 percent change in
        the maximum aggregate offering price set forth in the "Calculation of
        Registration Fee" table in the effective registration statement;

             (iii) to include any material information with respect to the plan
        of distribution not previously disclosed in the registration statement
        or any material change to such information in the registration
        statement.

          (2) That, for the purpose of determining any liability under the
     Securities Act of 1933, each such post-effective amendment shall be deemed
     to be a new registration statement relating to the securities offered
     therein, and the offering of such securities at that time shall be deemed
     to be the initial bona fide offering thereof.

          (3) To remove from registration by means of a post-effective amendment
     any of the securities being registered which remain unsold at the
     termination of the offering.

          (4) If either of the registrants is a foreign private issuer, to file
     a post-effective amendment to the registration statement to include any
     financial statements required by Rule 3-19 of this chapter at the start of
     any delayed offering or throughout a continuous offering. Financial
     statements and information

                                       II-3
<PAGE>   50

     otherwise required by Section 10(a)(3) of the Act need not be furnished,
     provided, that the registrants include in the prospectus, by means of a
     post-effective amendment, financial statements required pursuant to this
     paragraph (a)(4) and other information necessary to ensure that all other
     information in the prospectus is at least as current as the date of those
     financial statements. Notwithstanding the foregoing, with respect to
     registration statements on Form F-3, a post-effective amendment need not be
     filed to include financial statements and information required by Section
     10(a)(3) of the Act or Rule 3-19 of this chapter if such financial
     statements and information are contained in periodic reports filed with or
     furnished to the Commission by the registrant pursuant to Section 13 or
     Section 15(d) of the Securities Exchange Act of 1934 that are incorporated
     by reference in the Form F-3.

     The undersigned registrants hereby undertake that, for purposes of
determining any liability under the Securities Act of 1933, each filing of
Calpine Corporation's annual report pursuant to Section 13(a) or Section 15(d)
of the Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.

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

     The undersigned registrants hereby undertake that:

     For purposes of determining any liability under the Securities Act of 1933,
the information omitted from the form of prospectus filed as part of this
registration statement in reliance upon Rule 430A and contained in a form of
prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h)
under the Securities Act shall be deemed to be part of this registration
statement as of the time it was declared effective.

     For purposes of determining any liability under the Securities Act of 1933,
each post-effective amendment that contains a form of prospectus shall be deemed
to be a new registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.

                                       II-4
<PAGE>   51

                                   SIGNATURES

     Pursuant to the requirements of the Securities Act of 1933, Calpine
Corporation certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-3 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized in the City of San Jose, State of California, on this 20th day
of March, 2001.

                                          CALPINE CORPORATION

                                          By      /s/ PETER CARTWRIGHT
                                            ------------------------------------
                                                      Peter Cartwright
                                                    Chairman, President,
                                            Chief Executive Officer and Director

                              CALPINE CORPORATION
                               POWER OF ATTORNEY

KNOW ALL PERSONS BY THESE PRESENTS:

     That the undersigned officers and directors of Calpine Corporation do
hereby constitute and appoint Peter Cartwright and Ann B. Curtis, and each of
them, the lawful attorney and agent or attorneys and agents with power and
authority to do any and all acts and things and to execute any and all
instruments which said attorneys and agents, or either of them, determine may be
necessary or advisable or required to enable Calpine Corporation to comply with
the Securities and Exchange Act of 1934, as amended, and any rules or
regulations or requirements of the Securities and Exchange Commission in
connection with this Registration Statement on Form S-3. Without limiting the
generality of the foregoing power and authority, the powers granted include the
power and authority to sign the names of the undersigned officers and directors
in the capacities indicated below to this Registration Statement or amendments
or supplements thereto, and each of the undersigned hereby ratifies and confirms
all that said attorneys and agents, or either of them, shall do or cause to be
done by virtue hereof. This Power of Attorney may be signed in several
counterparts.

     IN WITNESS WHEREOF, each of the undersigned has executed this Power of
Attorney as of the date indicated opposite his or her name.

     Pursuant to the requirements of the Securities Exchange Act of 1934, this
Registration Statement on Form S-3 has been signed below by the following
persons on behalf of Calpine Corporation and in the capacities and on the dates
indicated.

<TABLE>
<CAPTION>
                     SIGNATURE                                     TITLE                     DATE
                     ---------                                     -----                     ----
<C>                                                  <C>                                <S>
               /s/ PETER CARTWRIGHT                        Chairman, President,         March 20, 2001
---------------------------------------------------       Chief Executive Officer
                 Peter Cartwright                              and Director
                                                       (Principal Executive Officer)

                 /s/ ANN B. CURTIS                       Executive Vice President       March 20, 2001
---------------------------------------------------            and Director
                   Ann B. Curtis                       (Principal Financial Officer)
</TABLE>

                                       II-5
<PAGE>   52

<TABLE>
<CAPTION>
                     SIGNATURE                                     TITLE                     DATE
                     ---------                                     -----                     ----

<C>                                                  <C>                                <S>
             /s/ CHARLES B. CLARK, JR.                      Vice President and          March 20, 2001
---------------------------------------------------        Corporate Controller
               Charles B. Clark, Jr.                  (Principal Accounting Officer)

               /s/ JEFFREY E. GARTEN                             Director               March 20, 2001
---------------------------------------------------
                 Jeffrey E. Garten

               /s/ MICHAEL P. POLSKY                             Director               March 20, 2001
---------------------------------------------------
                 Michael P. Polsky

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

              /s/ GEORGE J. STATHAKIS                            Director               March 20, 2001
---------------------------------------------------
                George J. Stathakis

                /s/ JOHN O. WILSON                               Director               March 20, 2001
---------------------------------------------------
                  John O. Wilson

                                                                 Director
---------------------------------------------------
                 V. Orville Wright
</TABLE>

                                       II-6
<PAGE>   53

                                   SIGNATURES

     Pursuant to the requirements of the Securities Act of 1933, Calpine Canada
Energy Finance ULC certifies that it has reasonable grounds to believe that it
meets all of the requirements for filing on Form S-3 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized in the City of San Jose, State of California, on this 20th day
of March, 2001.

                                          CALPINE CANADA ENERGY FINANCE ULC

                                          By        /s/ ANN B. CURTIS
                                            ------------------------------------
                                                Executive Vice President and
                                                          Secretary

                       CALPINE CANADA ENERGY FINANCE ULC
                               POWER OF ATTORNEY

KNOW ALL PERSONS BY THESE PRESENTS:

     That the undersigned officers and directors of Calpine Canada Energy
Finance ULC do hereby constitute and appoint Peter Cartwright and Ann B. Curtis,
and each of them, the lawful attorney and agent or attorneys and agents with
power and authority to do any and all acts and things and to execute any and all
instruments which said attorneys and agents, or either of them, determine may be
necessary or advisable or required to enable Calpine Canada Energy Finance ULC
to comply with the Securities and Exchange Act of 1934, as amended, and any
rules or regulations or requirements of the Securities and Exchange Commission
in connection with this Registration Statement on Form S-3. Without limiting the
generality of the foregoing power and authority, the powers granted include the
power and authority to sign the names of the undersigned officers and directors
in the capacities indicated below to this Registration Statement or amendments
or supplements thereto, and each of the undersigned hereby ratifies and confirms
all that said attorneys and agents, or either of them, shall do or cause to be
done by virtue hereof. This Power of Attorney may be signed in several
counterparts.

     IN WITNESS WHEREOF, each of the undersigned has executed this Power of
Attorney as of the date indicated opposite his or her name.

     Pursuant to the requirements of the Securities Exchange Act of 1934, this
Registration Statement on Form S-3 has been signed below by the following
persons on behalf of Calpine Canada Energy Finance ULC and in the capacities and
on the dates indicated.

<TABLE>
<CAPTION>
                     SIGNATURE                                    TITLE                     DATE
                     ---------                                    -----                     ----
<C>                                                  <C>                              <S>
               /s/ PETER CARTWRIGHT                      President and Director       March 20, 2001
---------------------------------------------------   (Principal Executive Officer)
                 Peter Cartwright

                 /s/ ANN B. CURTIS                      Executive Vice President,     March 20, 2001
---------------------------------------------------      Secretary and Director
                   Ann B. Curtis                        (Principal Financial and
                                                           Accounting Officer)

           Authorized representative in
                 The United States

                 /s/ ANN B. CURTIS                                                    March 20, 2001
---------------------------------------------------
             Authorized Representative
</TABLE>

                                       II-7
<PAGE>   54

                               INDEX TO EXHIBITS

<TABLE>
<CAPTION>
EXHIBIT
NUMBER                           DESCRIPTION
-------                          -----------
<C>      <S>
(a)1.1   Form of Underwriting Agreement with respect to Common Stock,
         Preferred Stock and Debt Securities of Calpine
  *1.2   Form of Underwriting Agreement with respect to Debt
         Securities of Calpine Canada Energy Finance
(b)3.1   Amended and Restated Certificate of Incorporation of Calpine
(c)3.2   By-laws of Calpine
  +3.3   Memorandum of Association of Calpine Canada Energy Finance
  +3.4   Articles of Association of Calpine Canada Energy Finance
(d)4.1   Form of Indenture between Calpine and Wilmington Trust
         Company, including form of Note
(e)4.2   Rights Agreement, dated as of June 5, 1997, between Calpine
         and First Chicago Trust Company of New York, as Rights Agent
  +4.3   Form of Indenture between Calpine Canada Energy Finance and
         Wilmington Trust Company, including form of Note
  +4.4   Form of Guarantee Agreement of Calpine with respect to
         Senior Debt Securities of Calpine Canada Energy Finance
  *5.1   Opinion of Covington & Burling
  *8.1   Opinion of Covington & Burling as to certain tax matters
  *8.2   Opinion of Bennett Jones as to certain Canadian federal tax
         matters
 *10.1   Amended and Restated Credit Agreement, dated as of February
         15, 2001, among Calpine Construction Finance Company, L.P.,
         Credit Suisse First Boston, The Bank of Nova Scotia, TD
         Securities (USA) Inc. and CIBC World Markets Corp.
 +12.1   Statement Regarding Computation of Ratios
 +23.1   Consent of Arthur Andersen LLP, independent public
         accountants
 *23.2   Consent of Covington & Burling (included in Exhibits 5.1 and
         8.1)
 *23.3   Consent of Bennett Jones (included in Exhibit 8.2)
 +24.1   Power of Attorney of Officers and Directors of Calpine (see
         pages II-5 and II-6)
 +24.2   Power of Attorney of Officers and Directors of Calpine
         Canada Energy Finance (see page II-7)
 *25.1   Form T-1 Statement of Eligibility under the Trust Indenture
         Act of 1939, as amended, of Wilmington Trust Company, as
         Trustee under the Calpine Corporation Indenture
 *25.2   Form T-1 Statement of Eligibility under the Trust Indenture
         Act of 1939, as amended, of Wilmington Trust Company, as
         Trustee under the Calpine Canada Energy Finance Indenture
</TABLE>

---------------
  * To be filed by amendment.

  + Filed herewith.

(a) Incorporated by reference to Calpine's Registration Statement on Form S-3
    (Registration No. 333-4827.

(b) Incorporated by reference to Calpine's Registration Statement on Form S-3
    (Registration No. 333-40652).

(c) Incorporated by reference to Calpine's Registration Statement on Form S-1
    (Registration No. 333-07497).

(d) Incorporated by reference to Amendment No. 1 to Calpine's Registration
    Statement on Form S-3 (Registration No. 333-40652).

(e) Incorporated by reference to Calpine's Registration Statement on Form 8-A,
    as amended by Calpine's Registration Statement on Form 8-A/A (File No.
    001-12079).

                                       II-8
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-3.3
<SEQUENCE>2
<FILENAME>f70590mex3-3.txt
<DESCRIPTION>MEMORANDUM OF ASSOCIATION
<TEXT>

<PAGE>   1
                                                                     Exhibit 3.3


                            MEMORANDUM OF ASSOCIATION

                                       OF

                        CALPINE CANADA ENERGY FINANCE ULC

1.       The name of the Company is CALPINE CANADA ENERGY FINANCE ULC.

2.       There are no restrictions on the objects and powers of the Company and
         the Company shall expressly have the following powers:

         (1)      to sell or dispose of its undertaking, or a substantial part
                  thereof;

         (2)      to distribute any of its property in specie among its members;
                  and

         (3)      to amalgamate with any company or other body of persons.

3.       The liability of the members is unlimited.

         I, the undersigned, whose name, address and occupation are subscribed,
am desirous of being formed into a company in pursuance of this Memorandum of
Association, and I agree to take the number and kind of shares in the capital
stock of the Company written below my name.

                              "Charles S. Reagh"
                            -------------------------------------------------
                            Name of Subscriber: Charles S. Reagh
                            800-1959 Upper Water Street, Halifax, NS B3J 2X2
                            Occupation: Solicitor

             Number of shares subscribed: One Common share

TOTAL SHARES TAKEN: one common share
Dated this 6th day of March, 2001.

Witness to above signature:     "Leanne M. Thomas"
                                -------------------------------------------
                                Name of Witness: Leanne M. Thomas
                                800-1959 Upper Water Street, Halifax, NS B3J 2X2
                                Occupation: Legal Assistant
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-3.4
<SEQUENCE>3
<FILENAME>f70590mex3-4.txt
<DESCRIPTION>ARTICLES OF ASSOCIATION
<TEXT>

<PAGE>   1
                                                                     Exhibit 3.4


                             ARTICLES OF ASSOCIATION
                                       OF
                        CALPINE CANADA ENERGY FINANCE ULC

                                 INTERPRETATION

1.       In these Articles, unless there be something in the subject or context
         inconsistent therewith;

         (1)      "Act" means the Companies Act (Nova Scotia);

         (2)      "Articles" means these Articles of Association of the Company
                  and all amendments hereto;

         (3)      "Company" means the company named above;

         (4)      "director" means a director of the Company;

         (5)      "Memorandum" means the Memorandum of Association of the
                  Company and all amendments thereto;

         (6)      "month" means calendar month;

         (7)      "Office" means the registered office of the Company;

         (8)      "person" includes a body corporate;

         (9)      "proxyholder" includes an alternate proxyholder;

         (10)     "Register" means the register of members kept pursuant to the
                  Act, and where the context permits includes a branch register
                  of members;

         (11)     "Registrar" means the Registrar as defined in the Act;

         (12)     "Secretary" includes any person appointed to perform the
                  duties of the Secretary temporarily;

         (13)     "shareholder" means member as that term is used in the Act in
                  connection with an unlimited company having share capital and
                  as that term is used in the Memorandum;

         (14)     "special resolution" has the meaning assigned by the Act;

         (15)     "in writing" and "written" includes printing, lithography and
                  other modes of representing or reproducing words in visible
                  form;

         (16)     words importing number or gender include all numbers and
                  genders unless the context otherwise requires.

2.       The regulations in Table A in the First Schedule to the Act shall not
         apply to the Company.
<PAGE>   2
                                      -2-

3.       The directors may enter into and carry into effect or adopt and carry
         into effect any agreement made by the promoters of the Company on
         behalf of the Company and may agree to any modification in the terms of
         any such agreement, either before or after its execution.

4.       The directors may, out of the funds of the Company, pay all expenses
         incurred for the incorporation and organization of the Company.

5.       The Company may commence business on the day following incorporation or
         so soon thereafter as the directors think fit, notwithstanding that
         part only of the shares has been allotted.


                                     SHARES

6.       The capital of the company shall consist of 500,000,000 common shares
         without nominal or par value, with the power to divide the shares in
         the capital for the time being into classes or series and to attach
         thereto respectively any preferred, deferred or qualified rights,
         privileges or conditions, including restrictions on voting rights and
         including redemption, purchase and other acquisition of such shares,
         subject, however, to the provisions of the Act.

7.       The directors shall control the shares and, subject to the provisions
         of these Articles, may allot or otherwise dispose of them to such
         person at such times, on such terms and conditions and, if the shares
         have a par value, either at a premium or at par, as they think fit.

8.       The directors may pay on behalf of the Company a reasonable commission
         to any person in consideration of subscribing or agreeing to subscribe
         (whether absolutely or conditionally) for any shares in the Company, or
         procuring or agreeing to procure subscriptions (whether absolute or
         conditional) for any shares in the Company. Subject to the Act, the
         commission may be paid or satisfied in shares of the Company.

9.       On the issue of shares the Company may arrange among the holders
         thereof differences in the calls to be paid and in the times for their
         payment.

10.      If the whole or part of the allotment price of any shares is, by the
         conditions of their allotment, payable in instalments, every such
         instalment shall, when due, be payable to the Company by the person who
         is at such time the registered holder of the shares.

11.      Shares may be registered in the names of joint holders not exceeding
         three in number.

12.      Joint holders of a share shall be jointly and severally liable for the
         payment of all instalments and calls due in respect of such share. On
         the death of one or more joint holders of shares the survivor or
         survivors of them shall alone be recognized by the Company as the
         registered holder or holders of the shares.
<PAGE>   3
                                       -3-

13.      Save as herein otherwise provided, the Company may treat the registered
         holder of any share as the absolute owner thereof and accordingly shall
         not, except as ordered by a court of competent jurisdiction or required
         by statute, be bound to recognize any equitable or other claim to or
         interest in such share on the part of any other person.

14.      The Company is a private company, and:

         (1)      no transfer of any share or prescribed security of the Company
                  shall be effective unless or until approved by the directors;

         (2)      the number of holders of issued and outstanding prescribed
                  securities or shares of the Company, exclusive of persons who
                  are in the employment of the Company or in the employment of
                  an affiliate of the Company and exclusive of persons who,
                  having been formerly in the employment of the Company or the
                  employment of an affiliate of the Company, were, while in that
                  employment, and have continued after termination of that
                  employment, to own at least one prescribed security or share
                  of the Company, shall not exceed 50 in number, two or more
                  persons or companies who are the joint registered owners of
                  one or more prescribed securities or shares being counted as
                  one holder; and

         (3)      the Company shall not invite the public to subscribe for any
                  of its securities.

         In this Article, "private company" and "securities" have the meanings
         ascribed to those terms in the Securities Act (Nova Scotia), and
         "prescribed security" means any of the securities prescribed by the
         Nova Scotia Securities Commission from time to time for the purpose of
         the definition of "private company" in the Securities Act (Nova
         Scotia).

                                  CERTIFICATES

15.      Certificates of title to shares shall comply with the Act and may
         otherwise be in such form as the directors may from time to time
         determine. Unless the directors otherwise determine, every certificate
         of title to shares shall be signed manually by at least one of the
         Chairman, President, Secretary, Treasurer, a vice-president, an
         assistant secretary, any other officer of the Company or any director
         of the Company or by or on behalf of a share registrar transfer agent
         or branch transfer agent appointed by the Company or by any other
         person whom the directors may designate. When signatures of more than
         one person appear on a certificate all but one may be printed or
         otherwise mechanically reproduced. All such certificates when signed as
         provided in this Article shall be valid and binding upon the Company.
         If a certificate contains a printed or mechanically reproduced
         signature of a person, the Company may issue the certificate,
         notwithstanding that the person has ceased to be a director or an
         officer of the Company and the certificate is as valid as if such
         person were a director or an officer at the date of its issue.

16.      Except as the directors may determine, each shareholder's shares may be
         evidenced by any number of certificates so long as the aggregate of the
         shares stipulated in such certificates
<PAGE>   4
                                       -4-

         equals the aggregate registered in the name of the shareholder.

17.      Where shares are registered in the names of two or more persons, the
         Company shall not be bound to issue more than one certificate or set of
         certificates, and such certificate or set of certificates shall be
         delivered to the person first named on the Register.

18.      Any certificate that has become worn, damaged or defaced may, upon its
         surrender to the directors, be cancelled and replaced by a new
         certificate. Any certificate that has become lost or destroyed may be
         replaced by a new certificate upon proof of such loss or destruction to
         the satisfaction of the directors and the furnishing to the Company of
         such undertakings of indemnity as the directors deem adequate.

19.      The sum of one dollar or such other sum as the directors from time to
         time determine shall be paid to the Company for every certificate other
         than the first certificate issued to any holder in respect of any share
         or shares.

20.      The directors may cause one or more branch Registers of shareholders to
         be kept in any place or places, whether inside or outside of Nova
         Scotia.

                                     CALLS

21.      The directors may make such calls upon the shareholders in respect of
         all amounts unpaid on the shares held by them respectively and not made
         payable at fixed times by the conditions on which such shares were
         allotted, and each shareholder shall pay the amount of every call so
         made to the person and at the times and places appointed by the
         directors. A call may be made payable by instalments.

22.      A call shall be deemed to have been made at the time when the
         resolution of the directors authorizing such call was passed.

23.      At least 14 days' notice of any call shall be given, and such notice
         shall specify the time and place at which and the person to whom such
         call shall be paid.

24.      If the sum payable in respect of any call or instalment is not paid on
         or before the day appointed for the payment thereof, the holder for the
         time being of the share in respect of which the call has been made or
         the instalment is due shall pay interest on such call or instalment at
         the rate of 9% per year or such other rate of interest as the directors
         may determine from the day appointed for the payment thereof up to the
         time of actual payment.

25.      At the trial or hearing of any action for the recovery of any amount
         due for any call, it shall be sufficient to prove that the name of the
         shareholder sued is entered on the Register as the holder or one of the
         holders of the share or shares in respect of which such debt accrued,
         that the resolution making the call is duly recorded in the minute book
         and that such notice of such call was duly given to the shareholder
         sued in pursuance of these Articles. It shall not be necessary to prove
         the appointment of the directors who made such call or any other
         matters whatsoever and the proof of the matters stipulated shall be
         conclusive evidence of
<PAGE>   5
                                      -5-
         the debt.

                              FORFEITURE OF SHARES

26.      If any shareholder fails to pay any call or instalment on or before the
         day appointed for payment, the directors may at any time thereafter
         while the call or instalment remains unpaid serve a notice on such
         shareholder requiring payment thereof together with any interest that
         may have accrued and all expenses that may have been incurred by the
         Company by reason of such non-payment.

27.      The notice shall name a day (not being less than 14 days after the date
         of the notice) and a place or places on and at which such call or
         instalment and such interest and expenses are to be paid. The notice
         shall also state that, in the event of non-payment on or before the day
         and at the place or one of the places so named, the shares in respect
         of which the call was made or instalment is payable will be liable to
         be forfeited.

28.      If the requirements of any such notice are not complied with, any
         shares in respect of which such notice has been given may at any time
         thereafter, before payment of all calls or instalments, interest and
         expenses due in respect thereof, be forfeited by a resolution of the
         directors to that effect. Such forfeiture shall include all dividends
         declared in respect of the forfeited shares and not actually paid
         before the forfeiture.

29.      When any share has been so forfeited, notice of the resolution shall be
         given to the shareholder in whose name it stood immediately prior to
         the forfeiture and an entry of the forfeiture shall be made in the
         Register.

30.      Any share so forfeited shall be deemed the property of the Company and
         the directors may sell, re-allot or otherwise dispose of it in such
         manner as they think fit.

31.      The directors may at any time before any share so forfeited has been
         sold, re-allotted or otherwise disposed of, annul the forfeiture
         thereof upon such conditions as they think fit.

32.      Any shareholder whose shares have been forfeited shall nevertheless be
         liable to pay and shall forthwith pay to the Company all calls,
         instalments, interest and expenses owing upon or in respect of such
         shares at the time of the forfeiture together with interest thereon at
         the rate of 9% per year or such other rate of interest as the directors
         may determine from the time of forfeiture until payment. The directors
         may enforce such payment if they think fit, but are under no obligation
         to do so.

33.      A certificate signed by the Secretary stating that a share has been
         duly forfeited on a specified date in pursuance of these Articles and
         the time when it was forfeited shall be conclusive evidence of the
         facts therein stated as against any person who would have been entitled
         to the share but for such forfeiture.
<PAGE>   6
                                       -6-

                                 LIEN ON SHARES

34.      The Company shall have a first and paramount lien upon all shares
         (other than fully paid-up shares) registered in the name of a
         shareholder (whether solely or jointly with others) and upon the
         proceeds from the sale thereof for debts, liabilities and other
         engagements of the shareholder, solely or jointly with any other
         person, to or with the Company, whether or not the period for the
         payment, fulfilment or discharge thereof has actually arrived, and such
         lien shall extend to all dividends declared in respect of such shares.
         Unless otherwise agreed, the registration of a transfer of shares shall
         operate as a waiver of any lien of the Company on such shares.

35.      For the purpose of enforcing such lien the directors may sell the
         shares subject to it in such manner as they think fit, but no sale
         shall be made until the period for the payment, fulfilment or discharge
         of such debts, liabilities or other engagements has arrived, and until
         notice in writing of the intention to sell has been given to such
         shareholder or the shareholder's executors or administrators and
         default has been made by them in such payment, fulfilment or discharge
         for seven days after such notice.

36.      The net proceeds of any such sale after the payment of all costs shall
         be applied in or towards the satisfaction of such debts, liabilities or
         engagements and the residue, if any, paid to such shareholder.

                                VALIDITY OF SALES

37.      Upon any sale after forfeiture or to enforce a lien in purported
         exercise of the powers given by these Articles the directors may cause
         the purchaser's name to be entered in the Register in respect of the
         shares sold, and the purchaser shall not be bound to see to the
         regularity of the proceedings or to the application of the purchase
         money, and after the purchaser's name has been entered in the Register
         in respect of such shares the validity of the sale shall not be
         impeached by any person and the remedy of any person aggrieved by the
         sale shall be in damages only and against the Company exclusively.

                               TRANSFER OF SHARES

38.      The instrument of transfer of any share in the Company shall be signed
         by the transferor. The transferor shall be deemed to remain the holder
         of such share until the name of the transferee is entered in the
         Register in respect thereof and shall be entitled to receive any
         dividend declared thereon before the registration of the transfer.

39.      The instrument of transfer of any share shall be in writing in the
         following form or to the following effect:

                  For value received,      hereby sell, assign, and transfer
                  unto                    ,             shares in the capital
                  of the Company represented by the within certificate, and do
                  hereby irrevocably constitute and appoint
                  attorney to transfer
<PAGE>   7
                                       -7-

                  such shares on the books of the Company with full power of
                  substitution in the premises.

                  Dated the     day of            ,

                  Witness:

40.      The directors may, without assigning any reason therefor, decline to
         register any transfer of shares

         (1) not fully paid-up or upon which the Company has a lien, or

         (2) the transfer of which is restricted by any agreement to which the
             Company is a party.

41.      Every instrument of transfer shall be left for registration at the
         Office of the Company, or at any office of its transfer agent where a
         Register is maintained, together with the certificate of the shares to
         be transferred and such other evidence as the Company may require to
         prove title to or the right to transfer the shares.

42.      The directors may require that a fee determined by them be paid before
         or after registration of any transfer.

43.      Every instrument of transfer shall, after its registration, remain in
         the custody of the, Company. Any instrument of transfer that the
         directors decline to register shall, except in case of fraud, be
         returned to the person who deposited it.

                                        TRANSMISSION OF SHARES


44.      The executors or administrators of a deceased shareholder (not being
         one of several joint holders) shall be the only persons recognized by
         the Company as having any title to the shares registered in the name of
         such shareholder. When a share is registered in the names of two or
         more joint holders, the survivor or survivors or the executors or
         administrators of the deceased shareholder, shall be the only persons
         recognized by the Company as having any title to, or interest in, such
         share.

45.      Notwithstanding anything in these Articles, if the Company has only one
         shareholder (not being one of several joint holders) and that
         shareholder dies, the executors or administrators of the deceased
         shareholder shall be entitled to register themselves in the Register as
         the holders of the shares registered in the name of the deceased
         shareholder whereupon they shall have all the rights given by these
         Articles and by law to shareholders.

46.      Any person entitled to shares upon the death or bankruptcy of any
         shareholder or in any way other than by allotment or transfer, upon
         producing such evidence of entitlement as the directors require, may be
         registered as a shareholder in respect of such shares, or may,
<PAGE>   8
                                       -8-

         without being registered, transfer such shares subject to the
         provisions of these Articles respecting the transfer of shares. The
         directors shall have the same right to refuse registration as if the
         transferee were named in an ordinary transfer presented for
         registration.

                               SURRENDER OF SHARES

47.      The directors may accept the surrender of any share by way of
         compromise of any question as to the holder being properly registered
         in respect thereof. Any share so surrendered may be disposed of in the
         same manner as a forfeited share.

                        INCREASE AND REDUCTION OF CAPITAL

48.      Subject to the Act, the shareholders may by special resolution amend
         these Articles to increase or alter the share capital of the Company as
         they think expedient. Without prejudice to any special rights
         previously conferred on the holders of existing shares, any share may
         be issued with such preferred, deferred or other special rights, or
         with such restrictions, whether in regard to dividends, voting, return
         of share capital or otherwise, as the shareholders may from time to
         time determine by special resolution. Except as otherwise provided by
         the conditions of issue, or by these Articles, any capital raised by
         the creation of new shares shall be considered part of the original
         capital and shall be subject to the provisions herein contained with
         reference to payment of calls and instalments, transfer and
         transmission, forfeiture, lien and otherwise.

49.      The Company may, by special resolution where required, reduce its share
         capital in any way and with and subject to any incident authorized and
         consent required by law. Subject to the Act and any provisions attached
         to such shares, the Company may redeem, purchase or acquire any of its
         shares and the directors may determine the manner and the terms for
         redeeming, purchasing or acquiring such shares and may provide a
         sinking fund on such terms as they think fit for the redemption,
         purchase or acquisition of shares of any class or series.

                     MEETINGS AND VOTING BY CLASS OR SERIES

50.      Where the holders of shares of a class or series have, under the Act,
         the terms or conditions attaching to such shares or otherwise, the
         right to vote separately as a class in respect of any matter then,
         except as provided in the Act, these Articles or such terms or
         conditions, all the provisions in these Articles concerning general
         meetings (including, without limitation, provisions respecting notice,
         quorum and procedure) shall, mutatis mutandis, apply to every meeting
         of holders of such class or series of shares convened for the purpose
         of such vote.

51.      Unless the rights, privileges, terms or conditions attached to a class
         or series of shares provide otherwise, such class or series of shares
         shall not have the right to vote separately as a class or series upon
         an amendment to the Memorandum or Articles to:

         (1) increase or decrease any maximum number of authorized shares of
             such class or series, or increase any maximum number of authorized
             shares of a class or series
<PAGE>   9
                                       -9-

                  having rights or privileges equal or superior to the shares of
                  such class or series;

         (2)      effect an exchange, reclassification or cancellation of all or
                  part of the shares of such class or series; or

         (3)      create a new class or series of shares equal or superior to
                  the shares of such class or series.

                                BORROWING POWERS

52.      The directors on behalf of the Company may:

         (1)      raise or borrow money for the purposes of the Company or any
                  of them;

         (2)      secure, subject to the sanction of a special resolution where
                  required by the Act, the repayment of funds so raised or
                  borrowed in such manner and upon such terms and conditions in
                  all respects as they think fit, and in particular by the
                  execution and delivery of mortgages of the Company's real or
                  personal property, or by the issue of bonds, debentures or
                  other securities of the Company secured by mortgage or other
                  charge upon all or any part of the property of the Company,
                  both present and future including its uncalled capital for the
                  time being;

         (3)      sign or endorse bills, notes, acceptances, cheques, contracts,
                  and other evidence of or securities for funds borrowed or to
                  be borrowed for the purposes aforesaid;

         (4)      pledge debentures as security for loans;

         (5)      guarantee obligations of any person.

53.      Bonds, debentures and other securities may be made assignable, free
         from any equities between the Company and the person to whom such
         securities were issued.

54.      Any bonds, debentures and other securities may be issued at a discount,
         premium or otherwise and with special privileges as to redemption,
         surrender, drawings, allotment of shares, attending and voting at
         general meetings of the Company, appointment of directors and other
         matters.

                                GENERAL MEETINGS

55.      Ordinary general meetings of the Company shall be held at least once in
         every calendar year at such time and place as may be determined by the
         directors and not later than 15 months after the preceding ordinary
         general meeting. All other meetings of the Company shall be called
         special general meetings. Ordinary or special general meetings may be
         held either within or without the Province of Nova Scotia.

56.      The President, a vice-president or the directors may at any time
         convene a special general meeting, and the directors, upon the
         requisition of shareholders in accordance with the Act
<PAGE>   10
                                     -10-

         shall forthwith proceed to convene such meeting or meetings to be held
         at such time and place or times and places as the directors determine.

57.      The requisition shall state the objects of the meeting requested, be
         signed by the requisitionists and deposited at the Office of the
         Company. It may consist of several documents in like form each signed
         by one or more of the requisitionists.

58.      At least seven clear days' notice, or such longer period of notice as
         may be required by the Act, of every general meeting, specifying the
         place, day and hour of the meeting and, when special business is to be
         considered, the general nature of such business, shall be given to the
         shareholders entitled to be present at such meeting by notice given as
         permitted by these Articles. With the consent in writing of all the
         shareholders entitled to vote at such meeting, a meeting may be
         convened by a shorter notice and in any manner they think fit, or
         notice of the time, place and purpose of the meeting may be waived by
         all of the shareholders.

59.      When it is proposed to pass a special resolution, the two meetings may
         be convened by the same notice, and it shall be no objection to such
         notice that it only convenes the second meeting contingently upon the
         resolution being passed by the requisite majority at the first meeting.

60.      The accidental omission to give notice to a shareholder, or non-receipt
         of notice by a shareholder, shall not invalidate any resolution passed
         at any general meeting.

                                  RECORD DATES

61.      (1)      The directors may fix in advance a date as the record date for
                  the determination of shareholders

                  (a)      entitled to receive payment of a dividend or entitled
                           to receive any distribution;

                  (b)      entitled to receive notice of a meeting; or

                  (c)      for any other purpose.

         (2)      If no record date is fixed, the record date for the
                  determination of shareholders

                  (a)      entitled to receive notice of a meeting shall be the
                           day immediately preceding the day on which the notice
                           is given, or, if no notice is given, the day on which
                           the meeting is held; and

                  (b)      for any other purpose shall be the day on which the
                           directors pass the resolution relating to the
                           particular purpose.
<PAGE>   11
                                     -11-

                         PROCEEDINGS AT GENERAL MEETINGS

62.      The business of an ordinary general meeting shall be to receive and
         consider the financial statements of the Company and the report of the
         directors and the report, if any, of the auditors, to elect directors
         in the place of those retiring and to transact any other business which
         under these Articles ought to be transacted at an ordinary general
         meeting.

63.      No business shall be transacted at any general meeting unless the
         requisite quorum is present at the commencement of the business. A
         corporate shareholder of the Company that has a duly authorized agent
         or representative present at any such meeting shall for the purpose of
         this Article be deemed to be personally present at such meeting.

64.      One person, being a shareholder, proxyholder or representative of a
         corporate shareholder, present and entitled to vote shall constitute a
         quorum for a general meeting, and may hold a meeting.

65.      The Chairman shall be entitled to take the chair at every general
         meeting or, if there be no Chairman, or if the Chairman is not present
         within fifteen 15 minutes after the time appointed for holding the
         meeting, the President or, failing the President, a vice-president
         shall be entitled to take the chair. If the Chairman, the President or
         a vice-president is not present within 15 minutes after the time
         appointed for holding the meeting or if all such persons present
         decline to take the chair, the shareholders present entitled to vote at
         the meeting shall choose another director as chairman and if no
         director is present or if all the directors present decline to take the
         chair, then such shareholders shall choose one of their number to be
         chairman.

66.      If within half an hour from the time appointed for a general meeting a
         quorum is not present, the meeting, if it was convened pursuant to a
         requisition of shareholders, shall be dissolved; if it was convened in
         any other way, it shall stand adjourned to the same day, in the next
         week, at the same time and place. If at the adjourned meeting a quorum
         is not present within half an hour from the time appointed for the
         meeting, the shareholders present shall be a quorum and may hold the
         meeting.

67.      Subject to the Act, at any general meeting a resolution put to the
         meeting shall be decided by a show of hands unless, either before or on
         the declaration of the result of the show of hands, a poll is demanded
         by the chairman, a shareholder or a proxyholder; and unless a poll is
         so demanded, a declaration by the chairman that the resolution has been
         carried, carried by a particular majority, lost or not carried by a
         particular majority and an entry to that effect in the Company's book
         of proceedings shall be conclusive evidence of the fact without proof
         of the number or proportion of the votes recorded in favour or against
         such resolution.

68.      When a poll is demanded, it shall be taken in such manner and at such
         time and place as the chairman directs, and either at once or after an
         interval or adjournment or otherwise. The result of the poll shall be
         the resolution of the meeting at which the poll was demanded. The
         demand of a poll may be withdrawn. When any dispute occurs over the
         admission or
<PAGE>   12
                                     -12-

         rejection of a vote, it shall be resolved by the chairman and such
         determination made in good faith shall be final and conclusive.

69.      The chairman shall not have a casting vote in addition to any vote or
         votes that the chairman has as a shareholder.

70.      The chairman of a general meeting may with the consent of the meeting
         adjourn the meeting from time to time and from place to place, but no
         business shall be transacted at any adjourned meeting other than the
         business left unfinished at the meeting that was adjourned.

71.      Any poll demanded on the election of a chairman or on a question of
         adjournment shall be taken forthwith without adjournment.


72.      The demand of a poll shall not prevent the continuance of a meeting for
         the transaction of any business other than the question on which a poll
         has been demanded.

                              VOTES OF SHAREHOLDERS


73.      Subject to the Act and to any provisions attached to any class or
         series of shares concerning or restricting voting rights:

         (1)      on a show of hands every shareholder entitled to vote present
                  in person, every duly authorized representative of a corporate
                  shareholder, and, if not prevented from voting by the act,
                  every proxyholder, shall have one vote; and

         (2)      on a poll every shareholder present in person, every duly
                  authorized representative of a corporate shareholder, and
                  every proxyholder, shall have one vote for every share held;

         whether or not such representative or proxyholder is a shareholder.

74.      Any person entitled to transfer shares upon the death or bankruptcy of
         any shareholder or in any way other than by allotment or transfer may
         vote at any general meeting in respect thereof in the same manner as if
         such person were the registered holder of such shares so long as the
         directors are satisfied at least 48 hours before the time of holding
         the meeting of such person's right to transfer such shares.

75.      Where there are joint registered holders of any share, any of such
         holders may vote such share at any meeting, either personally or by
         proxy, as if solely entitled to it. If more than one joint holder is
         present at any meeting, personally or by proxy, the one whose name
         stands first on the Register in respect of such share shall alone be
         entitled to vote it. Several executors or administrators of a deceased
         shareholder in whose name any share stands shall for the purpose of
         this Article be deemed joint holders thereof.
<PAGE>   13
                                     -13-

76.      Votes may be cast either personally or by proxy or, in the case of a
         corporate shareholder by a representative duly authorized under the
         Act.

77.      A proxy shall be in writing and executed in the manner provided in
         the Act. A proxy or other authority of a corporate shareholder does not
         require its seal.

78.      A shareholder of unsound mind in respect of whom an order has been made
         by any court of competent jurisdiction may vote by guardian or other
         person in the nature of a guardian appointed by that court, and any
         such guardian or other person may vote by proxy.

79.      A proxy and the power of attorney or other authority, if any, under
         which it is signed or a notarially certified copy of that power or
         authority shall be deposited at the Office of the Company or at such
         other place as the directors may direct. The directors may, by
         resolution, fix a time not exceeding 48 hours excluding Saturdays and
         holidays preceding any meeting or adjourned meeting before which time
         proxies to be used at that meeting must be deposited with the Company
         at its Office or with an agent of the Company. Notice of the
         requirement for depositing proxies shall be given in the notice calling
         the meeting. The chairman of the meeting shall determine all questions
         as to validity of proxies and other instruments of authority.

80.      A vote given in accordance with the terms of a proxy shall be valid
         notwithstanding the previous death of the principal, the revocation of
         the proxy, or the transfer of the share in respect of which the vote is
         given, provided no intimation in writing of the death, revocation or
         transfer is received at the Office of the Company before the meeting or
         by the chairman of the meeting before the vote is given.

81.      Every form of proxy shall comply with the Act and its regulations and
         subject thereto may be in the following form:

         I,              of              being a shareholder of
         hereby appoint           of            or failing him/her
         of             ) as my proxyholder to attend and to vote for me and on
         my behalf at the ordinary/special general meeting of the Company, to be
         held on the    day of         and at any adjournment thereof, or at
         any meeting of the Company which may be held prior to [insert specified
         date or event]. [If the proxy is solicited by or behalf of the
         management of the Company, insert a statement to that effect.]

         Dated this     day of            .

         ---------------------------------
         Shareholder

82.      Subject to the Act, no shareholder shall be entitled to be present or
         to vote on any question, either personally or by proxy, at any general
         meeting or be reckoned in a quorum while any call is due and payable to
         the Company in respect of any of the shares of such shareholder.
<PAGE>   14
                                     -14-

83.      Any resolution passed by the directors, notice of which has been given
         to the shareholders in the manner in which notices are hereinafter
         directed to be given and which is, within one month after it has been
         passed, ratified and confirmed in writing by shareholders entitled on a
         poll to three-fifths of the votes, shall be as valid and effectual as a
         resolution of a general meeting. This Article shall not apply to a
         resolution for winding up the Company or to a resolution dealing with
         any matter that by statute or these Articles ought to be dealt with by
         a special resolution or other method prescribed by statute.

84.      A resolution, including a special resolution, in writing and signed by
         every shareholder who would be entitled to vote on the resolution at a
         meeting is as valid as if it were passed by such shareholders at a
         meeting and satisfies all of the requirements of the Act respecting
         meetings of shareholders.

                                    DIRECTORS

85.      Unless otherwise determined by resolution of shareholders, the number
         of directors shall not be less than one or more than ten.

86.      Notwithstanding anything herein contained the subscribers to the
         Memorandum shall be the first directors of the Company.

87.      The directors may be paid out of the funds of the Company as
         remuneration for their service such sums, if any, as the Company may by
         resolution of its shareholders determine, and such remuneration shall
         be divided among them in such proportions and manner as the directors
         determine. The directors may also be paid their reasonable travelling,
         hotel and other expenses incurred in attending meetings of directors
         and otherwise in the execution of their duties as directors.

88.      The continuing directors may act notwithstanding any vacancy in their
         body, but if their number falls below the minimum permitted, the
         directors shall not, except in emergencies or for the purpose of
         filling vacancies, act so long as their number is below the minimum.

89.      A director may, in conjunction with the office of director, and on such
         terms as to remuneration and otherwise as the directors arrange or
         determine, hold any other office or place of profit under the Company
         or under any company in which the Company is a shareholder or is
         otherwise interested.

90.      The office of a director shall ipso facto be vacated, if the director:

         (1)      becomes bankrupt or makes an assignment for the benefit of
                  creditors;

         (2)      is, or is found by a court of competent jurisdiction to be, of
                  unsound mind;

         (3)      by notice in writing to the Company, resigns the office of
                  director; or
<PAGE>   15
                                     -15-

         (4)      is removed in the manner provided by these Articles.

91.      No director shall be disqualified by holding the office of director
         from contracting with the Company, either as vendor, purchaser, or
         otherwise, nor shall any such contract, or any contract or arrangement
         entered into or proposed to be entered into by or on behalf of the
         Company in which any director is in any way interested, either directly
         or indirectly, be avoided, nor shall any director so contracting or
         being so interested be liable to account to the Company for any profit
         realized by any such contract or arrangement by reason only of such
         director holding that office or of the fiduciary relations thereby
         established, provided the director makes a declaration or gives a
         general notice in accordance with the Act. No director shall, as a
         director, vote in respect of any contract or arrangement in which the
         director is so interested, and if the director does so vote, such vote
         shall not be counted. This prohibition may at any time or times be
         suspended or relaxed to any extent by a resolution of the shareholders
         and shall not apply to any contract by or on behalf of the Company to
         give to the directors or any of them any security for advances or by
         way of indemnity.

                              ELECTION OF DIRECTORS

92.      At the dissolution of every ordinary general meeting at which their
         successors are elected, all the directors shall retire from office and
         be succeeded by the directors elected at such meeting. Retiring
         directors shall be eligible for re-election.

93.      If at any ordinary general meeting at which an election of directors
         ought to take place no such election takes place, or if no ordinary
         general meeting is held in any year or period of years, the retiring
         directors shall continue in office until their successors are elected.

94.      The Company may by resolution of its shareholders elect any number of
         directors permitted by these Articles and may determine or alter their
         qualification.

95.      The Company may, by special resolution or in any other manner permitted
         by statute, remove any director before the expiration of such
         director's period of office and may, if desired, appoint a replacement
         to hold office during such time only as the director so removed would
         have held office.

96.      The directors may appoint any other person as a director so long as the
         total number of directors does not at any time exceed the maximum
         number permitted. No such appointment, except to fill a casual vacancy,
         shall be effective unless two-thirds of the directors concur in it. Any
         casual vacancy occurring among the directors may be filled by the
         directors, but any person so chosen shall retain office only so long as
         the vacating director would have retained it if the vacating director
         had continued as director.

                                MANAGING DIRECTOR
<PAGE>   16
                                     -16-

97.      The directors may appoint one or more of their body to be managing
         directors of the Company, either for a fixed term or otherwise, and
         may remove or dismiss them from office and appoint replacements.

98.      Subject to the provisions of any contract between a managing director
         and the Company, a managing director shall be subject to the same
         provisions as to resignation and removal as the other directors of the
         Company. A managing director who for any reason ceases to hold the
         office of director shall ipso facto immediately cease to be a managing
         director.

99.      The remuneration of a managing director shall from time to time be
         fixed by the directors and may be by way of any or all of salary,
         commission and participation in profits.

100.     The directors may from time to time entrust to and confer upon a
         managing director such of the powers exercisable under these Articles
         by the directors as they think fit, and may confer such powers for such
         time, and to be exercised for such objects and purposes and upon such
         terms and conditions, and with such restrictions as they think
         expedient; and they may confer such powers either collaterally with, or
         to the exclusion of, and in substitution for, all or any of the powers
         of the directors in that behalf; and may from time to time revoke,
         withdraw, alter or vary all or any of such powers.

                              CHAIRMAN OF THE BOARD

101.     The directors may elect one of their number to be Chairman and may
         determine the period during which the Chairman is to hold office. The
         Chairman shall perform such duties and receive such special
         remuneration as the directors may provide.

                          PRESIDENT AND VICE-PRESIDENTS

102.     The directors shall elect the President of the Company, who need not be
         a director, and may determine the period for which the President is to
         hold office. The President shall have general supervision of the
         business of the Company and shall perform such duties as may be
         assigned from time to time by the directors.

103.     The directors may also elect vice-presidents, who need not be
         directors, and may determine the periods for which they are to hold
         office. A vice-president shall, at the request of the President or the
         directors and subject to the directions of the directors, perform the
         duties of the President during the absence, illness or incapacity of
         the President, and shall also perform such duties as may be assigned by
         the President or the directors.

                             SECRETARY AND TREASURER

104.     The directors shall appoint a Secretary of the Company to keep minutes
         of shareholders' and directors' meetings and perform such other duties
         as may be assigned by the directors. The directors may also appoint a
         temporary substitute for the Secretary who shall, for the purposes of
         these Articles, be deemed to be the Secretary.
<PAGE>   17
                                     -17-

105.     The directors may appoint a treasurer of the Company to carry out such
         duties as the directors may assign.

                                    OFFICERS

106.     The directors may elect or appoint such other officers of the Company,
         having such powers and duties, as they think fit.

107.     If the directors so decide the same person may hold more than one of
         the offices provided for in these Articles.

                            PROCEEDINGS OF DIRECTORS

108.     The directors may meet together for the dispatch of business, adjourn
         and otherwise regulate their meetings and proceedings, as they think
         fit, and may determine the quorum necessary for the transaction of
         business. Until otherwise determined, one director shall constitute a
         quorum and may hold a meeting.

109.     If all directors of the Company entitled to attend a meeting either
         generally or specifically consent, a director may participate in a
         meeting of directors or of a committee of directors by means of such
         telephone or other communications facilities as permit all persons
         participating in the meeting to hear each other, and a director
         participating in such a meeting by such means is deemed to be present
         at that meeting for purposes of these Articles.

110.     Meetings of directors may be held either within or without the Province
         of Nova Scotia and the directors may from time to time make
         arrangements relating to the time and place of holding directors'
         meetings, the notices to be given for such meetings and what meetings
         may be held without notice. Unless otherwise provided by such
         arrangements:

         (1)      A meeting of directors may be held at the close of every
                  ordinary general meeting of the Company without notice.

         (2)      Notice of every other directors' meeting may be given as
                  permitted by these Articles to each director at least 48 hours
                  before the time fixed for the meeting.

         (3)      A meeting of directors may be held without formal notice if
                  all the directors are present or if those absent have
                  signified their assent to such meeting or their consent to the
                  business transacted at such meeting.

111.     The President or any director may at any time, and the Secretary, upon
         the request of the President or any director, shall summon a meeting of
         the directors to be held at the Office of the Company. The President,
         the Chairman or a majority of the directors may at any time, and the
         Secretary, upon the request of the President, the Chairman or a
         majority of the directors shall, summon a meeting to be held elsewhere.

112.     (1) Questions arising at any meeting of directors shall be decided by a
         majority of votes.
<PAGE>   18
                                       -18-

                  The chairman of the meeting may vote as a director but shall
                  not have a second or casting vote.

         (2)      At any meeting of directors the chairman shall receive and
                  count the vote of any director not present in person at such
                  meeting on any question or matter arising at such meeting
                  whenever such absent director has indicated by telegram,
                  letter or other writing lodged with the chairman of such
                  meeting the manner in which the absent director desires to
                  vote on such question or matter and such question or matter
                  has been specifically mentioned in the notice calling the
                  meeting as a question or matter to be discussed or decided
                  thereat. In respect of any such question or matter so
                  mentioned in such notice any director may give to any other
                  director a proxy authorizing such other director to vote for
                  such first named director at such meeting, and the chairman of
                  such meeting, after such proxy has been so lodged, shall
                  receive and count any vote given in pursuance thereof
                  notwithstanding the absence of the director giving such proxy.

113.     If no Chairman is elected, or if at any meeting of directors the
         Chairman is not present within five minutes after the time appointed
         for holding the meeting, or declines to take the chair, the President,
         if a director, shall preside. If the President is not a director, is
         not present at such time or declines to take the chair, a
         vice-president who is also a director shall preside. If no person
         described above is present at such time and willing to take the chair,
         the directors present shall choose some one of their number to be
         chairman of the meeting.

114.     A meeting of the directors at which a quorum is present shall be
         competent to exercise all or any of the authorities, powers and
         discretions for the time being vested in or exercisable by the
         directors generally.

115.     The directors may delegate any of their powers to committees consisting
         of such number of directors as they think fit. Any committee so formed
         shall in the exercise of the powers so delegated conform to any
         regulations that may be imposed on them by the directors.

116.     The meetings and proceedings of any committee of directors shall be
         governed by the provisions contained in these Articles for regulating
         the meetings and proceedings of the directors insofar as they are
         applicable and are not superseded by any regulations made by the
         directors.

117.     All acts done at any meeting of the directors or of a committee of
         directors or by any person acting as a director shall, notwithstanding
         that it is afterwards discovered that there was some defect in the
         appointment of the director or person so acting, or that they or any of
         them were disqualified, be as valid as if every such person had been
         duly appointed and was qualified to be a director.

118.     A resolution in writing and signed by every director who would be
         entitled to vote on the
<PAGE>   19
                                       -19-

         resolution at a meeting is as valid as if it were passed by such
         directors at a meeting.

119.     If any one or more of the directors is called upon to perform extra
         services or to make any special exertions in going or residing abroad
         or otherwise for any of the purposes of the Company or the business
         thereof, the Company may remunerate the director or directors so doing,
         either by a fixed sum or by a percentage of profits or otherwise. Such
         remuneration shall be determined by the directors and may be either in
         addition to or in substitution for remuneration otherwise authorized by
         these Articles.

                                    REGISTERS

120.     The directors shall cause to be kept at the Company's Office in
         accordance with the provisions of the Act a Register of the
         shareholders of the Company, a register of the holders of bonds,
         debentures and other securities of the Company and a register of its
         directors. Branch registers of the shareholders and of the holders of
         bonds, debentures and other securities may be kept elsewhere, either
         within or without the Province of Nova Scotia, in accordance with the
         Act.

                                     MINUTES

121.     The directors shall cause minutes to be entered in books designated for
         the purpose:

         (1)      of all appointments of officers;

         (2)      of the names of directors present at each meeting of directors
                  and of any committees of directors;

         (3)      of all orders made by the directors and committees of
                  directors; and

         (4)      of all resolutions and proceedings of meetings of shareholders
                  and of directors.

         Any such minutes of any meeting of directors or of any committee of
         directors or of shareholders, if purporting to be signed by the
         chairman of such meeting or by the chairman of the next succeeding
         meeting, shall be receivable as prima facie evidence of the matters
         stated in such minutes.

                               POWERS OF DIRECTORS

122.     The management of the business of the Company is vested in the
         directors who, in addition to the powers and authorities by these
         Articles or otherwise expressly conferred upon them, may exercise all
         such powers and do all such acts and things as may be exercised or done
         by the Company and are not hereby or by statute expressly directed or
         required to be exercised or done by the shareholders, but subject
         nevertheless to the provisions of any statute, the Memorandum or these
         Articles. No modification of the Memorandum or these Articles shall
         invalidate any prior act of the directors that would have been valid if
         such modification had not been made.
<PAGE>   20
                                       -20-

123      Without restricting the generality of the terms of any of these
         Articles and without prejudice to the powers conferred thereby, the
         directors may:

         (1)      take such steps as they think fit to carry out any agreement
                  or contract made by or on behalf of the Company;

         (2)      pay costs, charges and expenses preliminary and incidental to
                  the promotion, formation, establishment, and registration of
                  the Company;

         (3)      purchase or otherwise acquire for the Company any property,
                  rights or privileges that the Company authorized to acquire,
                  at such price and generally on such terms and conditions as
                  they think fit;

         (4)      pay for any property, rights or privileges acquired by, or
                  services rendered to the Company either wholly or partially in
                  cash or in shares (fully paid-up or otherwise), bonds,
                  debentures or other securities of the Company;

         (5)      subject to the Act, secure the fulfilment of any contracts or
                  engagements entered into by the Company by mortgaging or
                  charging all or any of the property of the Company and its
                  unpaid capital for the time being, or in such other manner as
                  they think fit;

         (6)      appoint, remove or suspend at their discretion such experts,
                  managers, secretaries, treasurers, officers, clerks, agents
                  and servants for permanent, temporary or special services, as
                  they from time to time think fit, and determine their powers
                  and duties and fix their salaries or emoluments and require
                  security in such instances and to such amounts as they
                  think fit;

         (7)      accept a surrender of shares from any shareholder insofar as
                  the law permits and on such terms and conditions as may be
                  agreed;

         (8)      appoint any person or persons to accept and hold in trust for
                  the Company any property belonging to the Company, or in which
                  it is interested, execute and do all such deeds and things as
                  may be required in relation to such trust, and provide for the
                  remuneration of such trustee or trustees;

         (9)      institute, conduct, defend, compound or abandon any legal
                  proceedings by and against the Company, its directors
                  or its officers or otherwise concerning the affairs of the
                  Company, and also compound and allow time for payment or
                  satisfaction of any debts due and of any claims or demands by
                  or against the Company;

         (10)     refer any claims or demands by or against the Company to
                  arbitration and observe and perform the awards;
<PAGE>   21
                                      -21-

         (11)     make and give receipts, releases and other discharges for
                  amounts payable to the Company and for claims and demands of
                  the Company;

         (12)     determine who may exercise the borrowing powers of the Company
                  and sign on the Company's behalf bonds, debentures or other
                  securities, bills, notes, receipts, acceptances, assignments,
                  transfers, hypothecations, pledges, endorsements, cheques,
                  drafts, releases, contracts, agreements and all other
                  instruments and documents;

         (13)     provide for the management of the affairs of the Company
                  abroad in such manner as they think fit, and in particular
                  appoint any person to be the attorney or agent of the Company
                  with such powers (including power to sub-delegate) and upon
                  such terms as may be thought fit;

         (14)     invest and deal with any funds of the Company in such
                  securities and in such manner as they think fit; and vary or
                  realize such investments;

         (15)     subject to the Act, execute in the name and on behalf of the
                  Company in favour of any director or other person who may
                  incur or be about to incur any personal liability for the
                  benefit of the Company such mortgages of the Company's
                  property, present and future, as they think fit;

         (16)     give any officer or employee of the Company a commission on
                  the profits of any particular business or transaction or a
                  share in the general profits of the Company;

         (17)     set aside out of the profits of the Company before declaring
                  any dividend such amounts as they think proper as a reserve
                  fund to meet contingencies or provide for dividends,
                  depreciation, repairing, improving and maintaining any of the
                  property of the Company and such other purposes as the
                  directors may in their absolute discretion think in the
                  interests of the Company; and invest such amounts in such
                  investments as they think fit, and deal with and vary such
                  investments, and dispose of all or any part of them for the
                  benefit of the Company, and divide the reserve fund into such
                  special funds as they think fit, with full power to employ the
                  assets constituting the reserve fund in the business of the
                  Company without being bound to keep them separate from the
                  other assets;

         (18)     make, vary and repeal rules respecting the business of the
                  Company, its officers and employees, the shareholders of the
                  Company or any section or class of them;

         (19)     enter into all such negotiations and contracts, rescind and
                  vary all such contracts, and execute and do all such acts,
                  deeds and things in the name and on behalf of the Company as
                  they consider expedient for or in relation to any of the
                  matters aforesaid or otherwise for the purposes of the
                  Company;

         (20)     provide for the management of the affairs of the Company in
                  such manner as they think fit.
<PAGE>   22
                                      -22-

                                   SOLICITORS

124.     The Company may employ or retain solicitors any of whom may, at the
         request or on the instruction of the directors, the Chairman, the
         President or a managing director, attend meetings of the directors or
         shareholders, whether or not the solicitor is a shareholder or a
         director of the Company. A solicitor who is also a director may
         nevertheless charge for services rendered to the Company as a
         solicitor.

                                    THE SEAL

125.     The directors shall arrange for the safe custody of the common seal of
         the Company (the "Seal"). The Seal may be affixed to any instrument in
         the presence of and contemporaneously with the attesting signature of
         (i) any director or officer acting within such person's authority or
         (ii) any person under the authority of a resolution of the directors or
         a committee thereof. For the purpose of certifying documents or
         proceedings the Seal may be affixed by any director or the President, a
         vice-president, the Secretary, an assistant secretary or any other
         officer of the Company without the authorization of a resolution of the
         directors.

126.     The Company may have facsimiles of the Seal which may be used
         interchangeably with the Seal.

127.     The Company may have for use at any place outside the Province of Nova
         Scotia, as to all matters to which the corporate existence and capacity
         of the Company extends, an official seal that is a facsimile of the
         Seal of the Company with the addition on its face of the name of the
         place where it is to be used; and the Company may by writing under its
         Seal authorize any person to affix such official seal at such place to
         any document to which the Company is a party.

                                   DIVIDENDS

128.     The directors may from time to time declare such dividend as they deem
         proper upon shares of the Company according to the rights and
         restrictions attached to any class or series of shares, and may
         determine the date upon which such dividend will be payable and that it
         will be payable to the persons registered as the holders of the shares
         on which it is declared at the close of business upon a record date. No
         transfer of such shares registered after the record date shall pass any
         right to the dividend so declared.

129.     Dividends may be paid as permitted by law and, without limitation, may
         be paid out of the profits, retained earnings or contributed surplus of
         the Company. No interest shall be payable on any dividend except
         insofar as the rights attached to any class or series of shares provide
         otherwise.

130.     The declaration of the directors as to the amount of the profits,
         retained earnings or contributed surplus of the Company shall be
         conclusive.
<PAGE>   23
                                       -23-

131.     The directors may from time to time pay to the shareholders such
         interim dividends as in their judgment the position of the Company
         justifies.

132.     Subject to these Articles and the rights and restrictions attached to
         any class or series of shares, dividends may be declared and paid to
         the shareholders in proportion to the amount of capital paid-up on the
         shares (not including any capital paid-up bearing interest) held by
         them respectively.

133.     The directors may deduct from the dividends payable to any shareholder
         amounts due and payable by the shareholder to the Company on account of
         calls, instalments or otherwise, and may apply the same in or towards
         satisfaction of such amounts so due and payable.

134.     The directors may retain any dividends on which the Company has a lien,
         and may apply the same in or towards satisfaction of the debts,
         liabilities or engagements in respect of which the lien exists.

135.     The directors may retain the dividends payable upon shares to which a
         person is entitled or entitled to transfer upon the death or bankruptcy
         of a shareholder or in any way other than by allotment or transfer,
         until such person has become registered as the holder of such shares or
         has duly transferred such shares.

136.     When the directors declare a dividend on a class or series of shares
         and also make a call on such shares payable on or before the date on
         which the dividend is payable, the directors may retain all or part of
         the dividend and set off the amount retained against the call.

137.     The directors may declare that a dividend be paid by the distribution
         of cash, paid-up shares (at par or at a premium), debentures, bonds or
         other securities of the Company or of any other company or any other
         specific assets held or to be acquired by the Company or in any one or
         more of such ways.

138.     The directors may settle any difficulty that may arise in regard to the
         distribution of a dividend as they think expedient, and in particular
         without restricting the generality of the foregoing may issue
         fractional certificates, may fix the value for distribution of any
         specific assets, may determine that cash payments will be made to any
         shareholders upon the footing of the value so fixed or that fractions
         may be disregarded in order to adjust the rights of all parties, and
         may vest cash or specific assets in trustees upon such trusts for the
         persons entitled to the dividend as may seem expedient to the
         directors.

139.     Any person registered as a joint holder of any share may give effectual
         receipts for all dividends and payments on account of dividends in
         respect of such share.

140.     Unless otherwise determined by the directors, any dividend may be paid
         by a cheque or warrant delivered to or sent through the post to the
         registered address of the shareholder
<PAGE>   24
                                       -24-

         entitled, or, when there are joint holders, to the registered address
         of that one whose name stands first on the register for the shares
         jointly held. Every cheque or warrant so delivered or sent shall be
         made payable to the order of the person to whom it is delivered or
         sent. The mailing or other transmission to a shareholder at the
         shareholder's registered address (or, in the case of joint shareholders
         at the address of the holder whose name stands first on the register)
         of a cheque payable to the order of the person to whom it is addressed
         for the amount of any dividend payable in cash after the deduction of
         any tax which the Company has properly withheld, shall discharge the
         Company's liability for the dividend unless the cheque is not paid on
         due presentation. If any cheque for a dividend payable in cash is not
         received, the Company shall issue to the shareholder a replacement
         cheque for the same amount on such terms as to indemnity and evidence
         of non-receipt as the directors may impose. No shareholder may recover
         by action or other legal process against the Company any dividend
         represented by a cheque that has not been duly presented to a banker of
         the Company for payment or that otherwise remains unclaimed for 6 years
         from the date on which it was payable.

                                    ACCOUNTS

141.     The directors shall cause proper books of account to be kept of the
         amounts received and expended by the Company, the matters in respect of
         which such receipts and expenditures take place, all sales and
         purchases of goods by the Company, and the assets, credits and
         liabilities of the Company.

142.     The books of account shall be kept at the head office of the Company or
         at such other place or places as the directors may direct.

143.     The directors shall from time to time determine whether and to what
         extent and at what times and places and under what conditions the
         accounts and books of the Company or any of them shall be open to
         inspection of the shareholders, and no shareholder shall have any right
         to inspect any account or book or document of the Company except as
         conferred by statute or authorized by the directors or a resolution of
         the shareholders.

144.     At the ordinary general meeting in every year the directors shall lay
         before the Company such financial statements and reports in connection
         therewith as may be required by the Act or other applicable statute or
         regulation thereunder and shall distribute copies thereof at such times
         and to such persons as may be required by statute or regulation.

                               AUDITORS AND AUDIT

145.     Except in respect of a financial year for which the Company is exempt
         from audit requirements in the Act, the Company shall at each ordinary
         general meeting appoint an auditor or auditors to hold office until the
         next ordinary general meeting. If at any general meeting at which the
         appointment of an auditor or auditors is to take place and no such
         appointment takes place, or if no ordinary general meeting is held in
         any year or period of years, the directors shall appoint an auditor or
         auditors to hold office until the next ordinary general meeting.
<PAGE>   25
                                      -25-

146.     The first auditors of the Company may be appointed by the directors at
         any time before the first ordinary general meeting and the auditors so
         appointed shall hold office until such meeting unless previously
         removed by a resolution of the shareholders, in which event the
         shareholders may appoint auditors.

147.     The directors may fill any casual vacancy in the office of the auditor
         but while any such vacancy continues the surviving or continuing
         auditor or auditors, if any, may act.

148.     The Company may appoint as auditor any person, including a shareholder,
         not disqualified by statute.

149.     An auditor may be removed or replaced in the circumstances and in the
         manner specified in the Act.

150.     The remuneration of the auditors shall be fixed by the shareholders, or
         by the directors pursuant to authorization given by the shareholders,
         except that the remuneration of an auditor appointed to fill a casual
         vacancy may be fixed by the directors.

151.     The auditors shall conduct such audit as may be required by the Act and
         their report, if any, shall be dealt with by the Company as required by
         the Act.

                                     NOTICES

152.     A notice (including any communication or document) shall be
         sufficiently given, delivered or served by the Company upon a
         shareholder, director, officer or auditor by personal delivery at such
         person's registered address (or, in the case of a director, officer or
         auditor, last known address) or by prepaid mail, telegraph, telex,
         facsimile machine or other electronic means of communication addressed
         to such person at such address.

153.     Shareholders having no registered address shall not be entitled to
         receive notice.

154.     All notices with respect to registered shares to which persons are
         jointly entitled may be sufficiently given to all joint holders thereof
         by notice given to whichever of such persons is named first in the
         Register for such shares.

155.     Any notice sent by mail shall be deemed to be given, delivered or
         served on the earlier of actual receipt and the third business day
         following that upon which it is mailed, and in proving such service it
         shall be sufficient to prove that the notice was properly addressed and
         mailed with the postage prepaid thereon. Any notice given by electronic
         means of communication shall be deemed to be given when entered into
         the appropriate transmitting device for transmission. A certificate in
         writing signed on behalf of the Company that the notice was so
         addressed and mailed or transmitted shall be conclusive evidence
         thereof.

156.     Every person who by operation of law, transfer or other means
         whatsoever becomes entitled to any share shall be bound by every notice
         in respect of such share that prior to such
<PAGE>   26
                                       -26-

         person's name and address being entered on the Register was duly served
         in the manner hereinbefore provided upon the person from whom such
         person derived title to such share.

157.     Any notice delivered, sent or transmitted to the registered address of
         any shareholder pursuant to these Articles, shall, notwithstanding that
         such shareholder is then deceased and that the Company has notice
         thereof, be deemed to have been served in respect of any registered
         shares, whether held by such deceased shareholder solely or jointly
         with other persons, until some other person is registered as the holder
         or joint holder thereof, and such service shall for all purposes of
         these Articles be deemed a sufficient service of such notice on the
         heirs, executors or administrators of the deceased shareholder and all
         joint holders of such shares.

158.     Any notice may bear the name or signature, manual or reproduced, of the
         person giving the notice written or printed.

159.     When a given number of days' notice or notice extending over any other
         period is required to be given, the day of service and the day upon
         which such notice expires shall not, unless it is otherwise provided,
         be counted in such number of days or other period.

                                    INDEMNITY

160.     Every director or officer, former director or officer, or person who
         acts or acted at the Company's request, as a director or officer of the
         Company, a body corporate, partnership or other association of which
         the Company is or was a shareholder, partner, member or creditor, and
         the heirs and legal representatives of such person, in the absence of
         any dishonesty on the part of such person, shall be indemnified by the
         Company against, and it shall be the duty of the directors out of the
         funds of the Company to pay, all costs, losses and expenses, including
         an amount paid to settle an action or claim or satisfy a judgment, that
         such director, officer or person may incur or become liable to pay in
         respect of any claim made against such person or civil, criminal or
         administrative action or proceeding to which such person is made a
         party by reason of being or having been a director or officer of the
         Company or such body corporate, partnership or other association,
         whether the Company is a claimant or party to such action or proceeding
         or otherwise; and the amount for which such indemnity is proved shall
         immediately attach as a lien on the property of the Company and have
         priority as against the shareholders over all other claims.

161.     No director or officer, former director or officer, or person who acts
         or acted at the Company's request, as a director or officer of the
         Company, a body corporate, partnership or other association of which
         the Company is or was a shareholder, partner, member or creditor, in
         the absence of any dishonesty on such person's part, shall be liable
         for the acts, receipts, neglects or defaults of any other director,
         officer or such person, or for joining in any receipt or other act for
         conformity, or for any loss, damage or expense happening to the Company
         through the insufficiency or deficiency of title to any property
         acquired for or on
<PAGE>   27
                                       -27-

         behalf of the Company, or through the insufficiency or deficiency of
         any security in or upon which any of the funds of the Company are
         invested, or for any loss or damage arising from the bankruptcy,
         insolvency or tortious acts of any person with whom any funds,
         securities or effects are deposited, or for any loss occasioned by
         error of judgment or oversight on the part of such person, or for any
         other loss, damage or misfortune whatsoever which happens in the
         execution of the duties of such person or in relation thereto.

                                    REMINDERS

162.     The directors shall comply with the following provisions of the Act or
         the Corporations Registration Act (Nova Scotia) where indicated:

         (1)      Keep a current register of shareholders (Section 42).

         (2)      Keep a current register of directors, officers and managers,
                  send to the Registrar a copy thereof and notice of all changes
                  therein (Section 98).

         (3)      Keep a current register of holders of bonds, debentures and
                  other securities (Section 111 and Third Schedule).

         (4)      Call a general meeting every year within the proper time
                  (Section 83). Meetings must be held not later than 15 months
                  after the preceding general meeting.

         (5)      Send to the Registrar copies of all special resolutions
                  (Section 88).

         (6)      Send to the Registrar notice of the address of the Company's
                  Office and of all changes in such address (Section 79).

         (7)      Keep proper minutes of all shareholders' meetings and
                  directors' meetings in the Company's minute book kept at the
                  Company's Office (Sections 89 and 90).

         (8)      Obtain a certificate under the Corporations Registration Act
                  (Nova Scotia) as soon as business is commenced.

         (9)      Send notice of recognized agent to the Registrar under the
                  Corporations Registration Act (Nova Scotia).

NAME OF SUBSCRIBER

"Charles S. Reagh"

Dated at Halifax, Nova Scotia the 6th day of March, 2001.

Witness to above signature:
<PAGE>   28
                                      -28-

"Leanne M. Thomas"
----------------------------

Halifax, Nova Scotia

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-4.3
<SEQUENCE>4
<FILENAME>f70590mex4-3.txt
<DESCRIPTION>FORM OF INDENTURE
<TEXT>

<PAGE>   1


                                                                     Exhibit 4.3









                        CALPINE CANADA ENERGY FINANCE ULC


                                       and


                        WILMINGTON TRUST COMPANY, Trustee





                                    Indenture

                         Dated as of [__________], 2001





                                 Debt Securities

                      Fully and Unconditionally Guaranteed
                             by Calpine Corporation
<PAGE>   2
                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                                                          PAGE
                                                                                                                          ----
<S>                                                                                                                      <C>
                                                           ARTICLE I
                                           DEFINITIONS AND INCORPORATION BY REFERENCE

SECTION 1.1              Definitions...................................................................................   1
SECTION 1.2              Other Definitions.............................................................................   6
SECTION 1.3              Incorporation by Reference of TIA.............................................................   6
SECTION 1.4              Rules of Construction.........................................................................   7

                                                           ARTICLE II
                                                         THE SECURITIES

SECTION 2.1              Securities Issuable in Series.................................................................   7
SECTION 2.2              Form and Dating...............................................................................   9
SECTION 2.3              Execution and Authentication..................................................................  10
SECTION 2.4              Registrar and Paying Agent....................................................................  11
SECTION 2.5              Paying Agent To Hold Money in Trust...........................................................  11
SECTION 2.6              Securityholder Lists..........................................................................  11
SECTION 2.7              Transfer and Exchange.........................................................................  12
SECTION 2.8              Replacement Securities........................................................................  13
SECTION 2.9              Outstanding Securities........................................................................  14
SECTION 2.10             Determination of Holders' Action..............................................................  14
SECTION 2.11             Temporary Securities..........................................................................  14
SECTION 2.12             Cancellation..................................................................................  15
SECTION 2.13             Defaulted Interest............................................................................  15
SECTION 2.14             Interest Act (Canada) ........................................................................  15

                                                          ARTICLE III
                                                           COVENANTS

SECTION 3.1              Payment of Securities.........................................................................  15
SECTION 3.2              Maintenance of Office or Agency...............................................................  16
SECTION 3.3              Compliance Certificate........................................................................  16
SECTION 3.4              Further Instruments and Acts..................................................................  16

                                                           ARTICLE IV
                                             CONSOLIDATION, MERGER, SALE AND LEASE

SECTION 4.1              Merger and Consolidation of Company...........................................................  16
SECTION 4.2              Successor Substituted.........................................................................  17
SECTION 4.3              Assignment by the Company to the Guarantor                                                      17
                           or its Significant Subsidiaries.............................................................
</TABLE>


                                       i
<PAGE>   3
<TABLE>
<CAPTION>
                                                                                                                          PAGE
                                                                                                                          ----
<S>                                                                                                                      <C>
                                                           ARTICLE V
                                                     DEFAULTS AND REMEDIES

SECTION 5.1              Events of Default.............................................................................  18
SECTION 5.2              Acceleration..................................................................................  19
SECTION 5.3              Other Remedies................................................................................  20
SECTION 5.4              Waiver of Past Defaults.......................................................................  20
SECTION 5.5              Control by Majority...........................................................................  20
SECTION 5.6              Limitation on Suits...........................................................................  21
SECTION 5.7              Rights of Holders To Receive Payment..........................................................  21
SECTION 5.8              Collection Suit by Trustee....................................................................  21
SECTION 5.9              Trustee May File Proofs of Claim..............................................................  21
SECTION 5.10             Priorities....................................................................................  22
SECTION 5.11             Undertaking for Costs.........................................................................  22
SECTION 5.12             Waiver of Stay or Extension Laws..............................................................  22

                                                           ARTICLE VI
                                                            TRUSTEE

SECTION 6.1              Duties of Trustee.............................................................................  23
SECTION 6.2              Rights of Trustee.............................................................................  24
SECTION 6.3              Individual Rights of Trustee..................................................................  24
SECTION 6.4              Trustee's Disclaimer..........................................................................  25
SECTION 6.5              Notice of Defaults............................................................................  25
SECTION 6.6              Reports by Trustee to Holders.................................................................  25
SECTION 6.7              Compensation and Indemnity....................................................................  25
SECTION 6.8              Replacement of Trustee........................................................................  26
SECTION 6.9              Successor Trustee by Merger, etc..............................................................  28
SECTION 6.10             Eligibility; Disqualification; Conflicting Interests..........................................  28
SECTION 6.11             Preferential Collection of Claims Against Company.............................................  28

                                                          ARTICLE VII
                                            SATISFACTION AND DISCHARGE OF INDENTURE

SECTION 7.1              Discharge of Liability on Securities..........................................................  28
SECTION 7.2              Termination of Company's Obligations..........................................................  28
SECTION 7.3              Defeasance and Discharge of Indenture.........................................................  29
SECTION 7.4              Defeasance of Certain Obligations.............................................................  31
SECTION 7.5              Application of Trust Money....................................................................  32
SECTION 7.6              Repayment to Company..........................................................................  33
SECTION 7.7              Reinstatement.................................................................................  33
SECTION 7.8              Deposited Money and U.S. Government Obligations to be Held in Trust:
                           Miscellaneous Provisions....................................................................  33

                                                          ARTICLE VIII
                                                    AMENDMENTS AND SUPPLEMENTS

SECTION 8.1              Without Consent of Holders....................................................................  34
SECTION 8.2              With Consent of Holders.......................................................................  34
</TABLE>


                                       ii
<PAGE>   4
<TABLE>
<CAPTION>
                                                                                                                          PAGE
                                                                                                                          ----
<S>                                                                                                                      <C>
SECTION 8.3              Compliance with Trust Indenture Act...........................................................  35
SECTION 8.4              Revocation and Effect of Consents.............................................................  35
SECTION 8.5              Notation on or Exchange of Securities.........................................................  35
SECTION 8.6              Trustee To Sign Amendments....................................................................  36
SECTION 8.7              Fixing of Record Dates........................................................................  36

                                                           ARTICLE IX
                                                           REDEMPTION

SECTION 9.1              Applicability of Article......................................................................  36
SECTION 9.2              Election to Redeem; Notice to Trustee.........................................................  36
SECTION 9.3              Selection by Trustee of Securities to be Redeemed.............................................  37
SECTION 9.4              Notice of Redemption..........................................................................  37
SECTION 9.5              Deposit of Redemption Price...................................................................  38
SECTION 9.6              Securities Redeemed in Part...................................................................  38

                                                           ARTICLE X
                                                         MISCELLANEOUS

SECTION 10.1             Trust Indenture Act Controls..................................................................  38
SECTION 10.2             Notices.......................................................................................  38
SECTION 10.3             Communication by Holders with Other Holders...................................................  39
SECTION 10.4             Certificate and Opinion as to Conditions Precedent............................................  39
SECTION 10.5             Statements Required in Certificate or Opinion.................................................  39
SECTION 10.6             Rules by Trustee and Agents...................................................................  40
SECTION 10.7             Legal Holidays................................................................................  40
SECTION 10.8             Successors; No Recourse Against Others........................................................  40
SECTION 10.9             Duplicate Originals...........................................................................  40
SECTION 10.10            Other Provisions..............................................................................  40
SECTION 10.11            Governing Law.................................................................................  40
SIGNATURES
EXHIBIT A -- Form of Security.......................................................................................       A-1
</TABLE>


                                       iii
<PAGE>   5
    INDENTURE, dated as of [__________], 2001, between Calpine Canada Energy
Finance ULC, an unlimited liability company organized under the laws of Nova
Scotia, Canada (the "Company"), and Wilmington Trust Company, a Delaware banking
corporation (the "Trustee").

    WHEREAS, the Company desires to issue debt securities in one or more series
from time to time hereunder in an unlimited aggregate principal amount;

    WHEREAS, Calpine Corporation, the parent corporation of the Company, has
agreed to fully and unconditionally guarantee the debt securities issued by the
Company hereunder; and

    WHEREAS, the Trustee desires to act as Trustee with respect to such
securities;

    NOW, THEREFORE, each party agrees as follows for the benefit of the other
parties and for the equal and ratable benefit of the holders of such securities
or of series thereof:

                                    ARTICLE I

                   DEFINITIONS AND INCORPORATION BY REFERENCE

SECTION 1.1  Definitions.

    "Affiliate" of any specified Person means any other Person, directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control", when used with respect to any 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; and the terms
"controlling" and "controlled" have meanings correlative to the foregoing.

    "Agent" means, with respect to any Series of Securities, any Registrar,
Paying Agent, authenticating agent, co-registrar or additional paying agent
appointed pursuant to this Indenture with respect to such Series.

    "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 Company or any
authorized committee thereof.

    "Board Resolution" means a copy of a resolution certified by the Secretary
or an Assistant Secretary of the Company to have been duly adopted by the Board
of Directors and to be in full force and effect on the date of such
certification, and delivered to the Trustee.

    "Business Day" means each day which is not a Legal Holiday.

    "Capital Stock" means any and all shares, interests, participations or other
equivalents (however designated) of capital stock of a corporation or any and
all equivalent ownership interests in a Person (other than a corporation).


                                       1
<PAGE>   6
    "Capitalized Lease Obligations" of any Person means the rental obligations
under any lease of any property (whether real, personal or mixed) of which the
discounted present value of the rental obligations of such Person as lessee, in
conformity with GAAP, is required to be capitalized on the balance sheet of such
Person; the Stated Maturity of any such lease shall be the date of the last
payment of rent or any other amount due under such lease prior to the first date
upon which such lease may be terminated by the lessee without payment of a
penalty.

    "Code" means the Internal Revenue Code of 1986, as amended.

    "Common Stock" means the Common Stock, par value $.001 per share, of the
Guarantor.

    "Company" means the party named as such in this Indenture until a successor
replaces it pursuant to the terms and conditions of this Indenture and
thereafter means the successor.

    "Default" means any event which is, or after notice or passage of time or
both would be, an Event of Default.

    "Defaulted Interest" means any interest on any Security which is payable,
but is not punctually paid or duly provided for on any Interest Payment Date,
such Defaulted Interest to accrue (except as otherwise provided in accordance
with Section 2.1) at the same rate per annum as interest accrued or accreted, as
the case may be, on the Business Day immediately preceding such Interest Payment
Date.

    "Depository" means The Depository Trust Company, its nominees, and their
respective successors until a successor Depository shall have become such
pursuant to the applicable provisions of this Indenture and thereafter
"Depository" shall mean or include each Person who is then a Depository
hereunder.

    "Directors' Certificate" means a certificate signed by two members of the
Board of Directors.

    "Exchange Act" means the Securities Exchange Act of 1934, as amended.

    "GAAP" means generally accepted accounting principles in the United States
of America as in effect and, to the extent optional, adopted by the Company, on
the date of the Indenture, consistently applied.

    "Guarantee" means, as applied to any obligation, contingent or otherwise, of
any Person, (i) a guarantee, direct or indirect, in any manner, of any part or
all of such obligation (other than by endorsement of negotiable instruments for
collection in the ordinary course of business) and (ii) an agreement, direct or
indirect, contingent or otherwise, the practical effect of which is to insure in
any way the payment or performance (or payment of damages in the event of
nonperformance) of any part or all of such obligation, including the payment of
amounts drawn down under letters of credit. With respect to the Guarantor,
"Guarantee" shall include the guarantee by the Guarantor of the Securities
pursuant to the Guarantee Agreement.

    "Guarantee Agreement" means the guarantee agreement, a form of which is
annexed hereto as Exhibit [ ].

    "Guarantor" means Calpine Corporation, a Delaware corporation.

    "Holder" or "Securityholder" means the Person in whose name a Security is
registered on the Registrar's books.

    "Incur" means, as applied to any obligation, to create, incur, issue,
assume, guarantee or in any other manner become liable with respect to,
contingently or otherwise, such obligation, and "Incurred," "Incurrence" and


                                       2
<PAGE>   7
"Incurring" shall each have a correlative meaning; provided, however, that any
amendment, modification or waiver of any provision of any document pursuant to
which Indebtedness was previously Incurred shall not be deemed to be an
Incurrence of Indebtedness as long as (i) such amendment, modification or waiver
does not (A) increase the principal or premium thereof or interest rate thereon,
(B) change to an earlier date the Stated Maturity thereof or the date of any
scheduled or required principal payment thereon or the time or circumstances
under which such Indebtedness may or shall be redeemed, (C) if such Indebtedness
is contractually subordinated in right of payment to the Securities, modify or
affect, in any manner adverse to the Holders, such subordination or (D) if the
Company is the obligor thereon, provide that a Subsidiary shall be an obligor
and (ii) such Indebtedness would, after giving effect to such amendment,
modification or waiver as if it were an Incurrence, comply with clause (i) of
the first proviso to the definition of "Refinancing Indebtedness."

    "Indebtedness" of any Person means, without duplication, (i) the principal
in respect of indebtedness of such Person for money borrowed and; (ii) all
Capitalized Lease Obligations of such Person; (iii) all obligations of such
Person for the reimbursement of any obligor on any letter of credit, banker's
acceptance or similar credit transaction (other than obligations with respect to
letters of credit securing obligations (other than obligations described in (i)
and (ii) above) entered into in the ordinary course of business of such Person
to the extent such letters of credit are not drawn upon or, if and to the extent
drawn upon, such drawing is reimbursed no later than the tenth Business Day
following receipt by such Person of a demand for reimbursement following payment
on the letter of credit); (iv) all obligations of the type referred to in
clauses (i) through (iii) of other Persons and all dividends of other Persons
for the payment of which, in either case, such Person is responsible or liable,
directly or indirectly, as obligor, guarantor or otherwise; and (v) all
obligations of the type referred to in clauses (i) through (iv) of other Persons
secured by any Lien on any property or asset of such Person (whether or not such
obligation is assumed by such Person), the amount of such obligation on any date
of determination being deemed to be the lesser of the value of such property or
assets or the amount of the obligation so secured. The amount of Indebtedness of
any Person at any date shall be, with respect to unconditional obligations, the
outstanding balance at such date of all such obligations as described above and,
with respect to any contingent obligations at such date, the maximum liability
determined by such Person's board of directors, in good faith, as, in light of
the facts and circumstances existing at the time, reasonably likely to be
Incurred upon the occurrence of the contingency giving rise to such obligation.

    "Indenture" means, with respect to each Series of Securities, this Indenture
as originally executed or as it is amended or supplemented from time to time by
one or more indentures supplemental hereto entered into in accordance with the
applicable provisions hereof, and shall include the terms of each particular
Series of Securities established as contemplated by Section 2.1.

    "Interest Payment Date" means, with respect to any Series, the stated
maturity of an installment of interest on the Securities of such Series.

    "Lien" means any mortgage, lien, pledge, charge, or other security interest
or encumbrance of any kind (including any conditional sale or other title
retention agreement and any lease in the nature thereof).

    "Officer" means the Chairman, the President, any Vice President, the Chief
Operating Officer, the Chief Financial Officer, the Treasurer, the Secretary,
any Assistant Treasurer, any Assistant Secretary or the Controller or Principal
Accounting Officer of the Company.


                                       3
<PAGE>   8
    "Officers' Certificate" means a certificate signed by two Officers, one of
whom must be the President, the Treasurer or a Vice President. Each Officers'
Certificate (other than certificates provided pursuant to TIA Section 314(a)(4))
shall include the statements provided for in TIA Section 314(e), if applicable.

    "Opinion of Counsel" means a written opinion from legal counsel who is
acceptable to the Trustee. The counsel, if so acceptable, may be an employee of
or counsel to the Company or the Trustee. Each such Opinion of Counsel shall
include the statements provided for in TIA Section 314(e), if applicable.

    "Person" means any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, unincorporated organization, government
or any agency or political subdivision thereof or any other entity.

    "Preferred Stock", as applied to the Capital Stock of any corporation, means
Capital Stock of any class or classes (however designated) which is preferred as
to the payment of dividends, or as to the distribution of assets upon any
voluntary or involuntary liquidation or dissolution of such corporation, over
shares of Capital Stock of any other class of such corporation.

    "Principal" of a Security means the principal of the Security plus, if
applicable, the premium on the Security due on the Stated Maturity or on a
Redemption Date.

    "Redemption Date" means, when used with respect to any Security of any
Series to be redeemed, the date fixed for such redemption by or pursuant to this
Indenture.

    "Redemption Price" means, when used with respect to any Security of any
Series to be redeemed, the price specified in such Security at which it is to be
redeemed pursuant to this Indenture.

    "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 Company existing on the date of
this Indenture or Incurred in compliance with the Indenture 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 Company that refinances Indebtedness of the Company or (y)
Indebtedness of the Company or a Subsidiary that refinances Indebtedness of
another Subsidiary.

    "SEC" means the Securities and Exchange Commission.

    "Securities" means unsecured debentures, notes or other evidence of
indebtedness of the Company that are issued under and pursuant to the terms of
this Indenture.


                                       4
<PAGE>   9
    "Securities Act" means the Securities Act of 1933, as amended.

    "Senior Indebtedness" means all indebtedness incurred, assumed or guaranteed
by the Company, whether or not represented by bonds, debentures notes or other
securities, for money borrowed, and any deferrals, renewals or extensions or
refunding of any such indebtedness, unless in the instrument creating or
evidencing any such indebtedness or pursuant to which the same is outstanding it
is specifically stated, at or prior to the time the Company becomes liable in
respect thereof, that any such indebtedness or such deferral, renewal, extension
or refunding thereof is not Senior Indebtedness.

    "Significant Subsidiary" means any Subsidiary (other than an Unrestricted
Subsidiary) that would be a "Significant Subsidiary" of the Guarantor within the
meaning of Rule 1-02 under Regulation S-X promulgated by the SEC.

    "Stated Maturity" means, with respect to any security, the date specified in
such security as the fixed date on which the principal of such security is due
and payable, including pursuant to any mandatory redemption provision (but
excluding any provision providing for the repurchase of such security at the
option of the holder thereof upon the happening of any contingency).

    "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.

    "TIA" means the Trust Indenture Act of 1939 (15 U.S.C. Sections
77aaa-77bbbb) as in effect on the date first above written.

    "Trustee" means the party named as such above until a successor replaces it
and thereafter means the successor, and if at any time there is more than one
such Person, "Trustee" as used with respect to the Securities of any Series
shall mean the Trustee with respect to the Securities of that Series.

    "Trust Officer" means any officer of the Trustee assigned by the Trustee to
administer its corporate trust matters or to whom any corporate trust matter is
referred because of that officer's knowledge of and familiarity with the
particular subject.

    "Uniform Commercial Code" means the New York Uniform Commercial Code as in
effect from time to time.

    "U.S. Government Obligations" means securities that are (i) direct
obligations of the United States of America for the payment of which its full
faith and credit is pledged or (ii) obligations of a Person controlled or
supervised by and acting as an agency or instrumentality of the United States of
America the payment of which is unconditionally guaranteed as a full faith and
credit obligation by the United States of America, which, in either case under
clauses (i) or (ii) are not callable or redeemable before the Stated Maturity
thereof.

    "Voting Shares," with respect to any corporation, means the Capital Stock
having the general voting power under ordinary circumstances to elect at least a
majority of the board of directors (irrespective of whether or not at the time
stock of any other class or classes shall have or might have voting power by
reason of the happening of any contingency).


                                       5
<PAGE>   10
    "Wholly Owned Subsidiary" means a Subsidiary all the Capital Stock of which
(other than directors' qualifying shares) is owned by the Company or another
Wholly Owned Subsidiary.

SECTION 1.2 Other Definitions.

<TABLE>
<CAPTION>
                TERM                                                                         DEFINED IN
                                                                                              SECTION
                ----                                                                          -------
<S>                                                                                          <C>
                "Additional Securities"................................................          2.1
                "Affiliate Assignee" ..................................................          4.3
                "Bankruptcy Law".......................................................          5.1
                "Custodian"............................................................          5.1
                "Event of Default".....................................................          5.1
                "Global Securities"....................................................          2.2
                "Legal Holiday"........................................................         10.7
                "Notice of Default"....................................................          5.1
                "Paying Agent".........................................................          2.4
                "Registrar"............................................................          2.4
                "Series"...............................................................          2.1
                "Successor Corporation"................................................          4.1(i)
</TABLE>

SECTION 1.3 Incorporation by Reference of TIA.

    Whenever this Indenture refers to a provision of the TIA, the provision is
incorporated by reference in and made a part of this Indenture.

    The following TIA terms used in this Indenture have the following meanings:

        "Commission" means the SEC;

        "indenture securities" means the Securities;

        "indenture security holder" means a Holder or Securityholder;

        "indenture to be qualified" means this Indenture;

        "indenture trustee" or "institutional trustee" means the Trustee; and


                                       6
<PAGE>   11
        "obligor" on the indenture securities means the Company or any other
obligor on the indenture securities.

    All other terms used in this Indenture that are defined by the TIA, defined
 by TIA reference to another statute or defined by SEC rule under the TIA have
 the meanings assigned to them by the TIA.

SECTION 1.4 Rules of Construction.

    Unless the context otherwise requires:

         (a) a term has the meaning assigned to it;

         (b) "generally accepted accounting principles" means, and any
         accounting term not otherwise defined has the meaning assigned to it
         and shall be construed in accordance with, GAAP;

         (c) "or" is not exclusive;

         (d) words in the singular include the plural, and in the plural include
         the singular;

         (e) provisions apply to successive events and transactions;

         (f) "including" means "including, without limitation";

         (g) unsecured debt shall not be deemed to be subordinate or junior to
         secured debt merely by virtue of its nature as unsecured debt;

         (h) the principal amount of any non-interest bearing or other discount
         Security at any date shall be the principal amount thereof that would
         be shown on a balance sheet of the Company dated such date prepared in
         accordance with generally accepted accounting principles; and

         (i) the principal amount (if any) of any Preferred Stock shall be the
         greatest of (i) the stated value, (ii) the redemption price or (iii)
         the liquidation preference of such Preferred Stock.

                                   ARTICLE II

                                 THE SECURITIES

SECTION 2.1 Securities Issuable in Series.

    Securities may be issued hereunder in one or more series, each series (a
"Series") having identical terms but for authentication date and public offering
price. Securities of any one Series need not be issued at the same time and,
unless specifically provided otherwise, a Series may be reopened, without the
consent of the Holders, for issuances of additional Securities of such Series.
All Securities shall be fully and unconditionally guaranteed by the Guarantor
pursuant to the Guarantee Agreement.

    Securities issued hereunder shall be issued pursuant to authority granted by
or pursuant to a Board Resolution and, prior to the issue hereunder of the first
Securities of a Series, the Company shall set forth in a Directors' Certificate,
or establish in one or more indentures supplemental hereto, the following terms
which shall be applicable to such Series:


                                       7
<PAGE>   12
        (1) the title, including CUSIP number, of the Series (which shall
    distinguish the Securities of such Series from all other Securities);

        (2) any limit upon the aggregate principal amount of the Securities of
    such Series which may be authenticated and delivered under this Agreement
    (except for Securities authenticated and delivered upon registration of
    transfer of, or in exchange for, or for replacement of, or in lieu of, other
    Securities of the Series pursuant to Sections 2.7, 2.8, 2.11, 8.5 or 9.6);

        (3) the date or dates on which the principal of the Securities of the
    Series are payable;

        (4) the rate or rates, or the method of determination thereof, at which
    the Securities of the Series shall bear interest, if any, the date or dates
    from which such interest shall accrue, the Interest Payment Dates on which
    such interest shall be payable and the record dates for the determination of
    Holders to whom interest is payable;

        (5) the place or places where the principal of, and interest on
    Securities of the Series shall be payable;

        (6) the obligation, if any, of the Company to redeem, purchase or repay
    the Securities of such Series pursuant to any right to do so contained in
    the Securities or pursuant to sinking fund or analogous provisions or at the
    option of a Holder thereof and the price or prices at which and the period
    or periods within which and the terms and conditions upon which the
    Securities of such Series shall be redeemed, purchased or repaid, in whole
    or in part, pursuant to such obligation;

        (7) the denominations in which the Securities of such Series shall be
    issuable, if other than integral multiples of $1,000;

        (8) if other than the principal amount thereof, the portion of the
    principal amount of the Securities of such Series which shall be payable
    upon the declaration of acceleration of the maturity thereof pursuant to
    Section 5.2;

        (9) any Events of Default or covenants with respect to the Securities of
    such Series, if not set forth in this Indenture;

        (10) if other than those named herein, any other depositaries,
    authenticating or paying agents, transfer agents or registrars or any other
    agents with respect to such Series;

        (11) the stock exchanges, if any, on which the Securities will be listed
    and related information;

        (12) any applicable restrictions on the transfer of any of the
    Securities of such Series;

        (13) if other than the currency of the United States of America, the
    currency, currencies or currency units in which the principal of or
    interest, if any, on any Securities of the Series shall be payable and the
    manner of determining the equivalent thereof in the currencies of the United
    States of America for any purpose;

        (14) if applicable, the terms of any right to convert Securities of the
    Series into, or to exchange Securities of the Series for, shares of Common
    Stock or other securities or property;


                                       8
<PAGE>   13
        (15) whether the Securities of the Series are subject to defeasance or
    covenant defeasance, or such other means of satisfaction and discharge as
    may be specified for a Series;

        (16) whether the Securities of the Series shall be issued in whole or in
    part in the form of one or more Global Securities, the Depository for the
    Series, if other than The Depository Trust Company or its successors, and
    any circumstances in addition to or in lieu of those set forth in Section
    2.7 in which any Global Security may be exchanged in whole or in part for
    Securities registered, and any transfer of such Global Security in whole or
    in part may be registered, in the name or names of Persons other than the
    Depository for such Global Security or a nominee thereof; and

        (17) any other terms of the Series (which terms shall not be
    inconsistent with the provisions of this Indenture).

    All Securities of any one Series shall be substantially identical except as
to denomination and except as may otherwise be provided in or pursuant to such
Directors' Certificate.

    Additional Securities of the same Series may be issued subsequent to the
original issue date of any Securities of such Series (hereinafter called
"Additional Securities") following the receipt of the Trustee of a Directors'
Certificate pertaining to such Additional Securities, which Directors'
Certificate will identify the Series to which such Additional Securities belongs
and the issue date and aggregate principal amount of the Securities of such
Additional Securities. Any such Additional Securities shall be issued on
original issue as provided in Section 2.3.

    Additional Securities, together with each prior and subsequent Securities of
the same Series, shall constitute one and the same Series of Securities for all
purposes under this Indenture.

SECTION 2.2 Form and Dating.

    The Securities and the Trustee's certificate of authentication shall be
substantially in the form of Exhibit A annexed hereto, which is part of this
Indenture, with such appropriate insertions, omissions and other variations as
are required or permitted by this Indenture, and may have such legends or
endorsements placed thereon as the Officers executing the same may approve
(execution thereof to be conclusive evidence of such approval) and as are not
inconsistent with the provisions of this Indenture. The Securities may have
notations, legends or endorsements required by law, stock exchange rule or
usage. Each Security shall be dated the date of its authentication.

    The terms and provisions contained in the form of Securities annexed hereto
as Exhibit A shall constitute, and are expressly made, a part of this Indenture.
To the extent applicable, the Company and the Trustee, by their execution and
delivery of this Indenture, expressly agree to such terms and provisions and to
be bound thereby.

    Securities issued in the form of one or more permanent global Securities in
registered form, substantially in the form as above recited (the "Global
Securities"), shall be deposited with or on behalf of the Trustee, as custodian
for the Depository, duly executed by the Company and authenticated by the
Trustee as hereinafter provided. Each Global Security shall bear such legend as
may be required or reasonably requested by the Depository.

    The definitive Securities shall be typed, printed, lithographed or engraved
or produced by any combination of these methods or may be produced in any other
manner permitted by the rules of any securities exchange on


                                       9
<PAGE>   14
which the Securities may be listed, all as determined by the officers executing
such Securities, as evidenced by their execution of such Securities.

SECTION 2.3 Execution and Authentication.

    Two Officers shall sign the Securities for the Company by manual or
facsimile signature.

    If an Officer whose signature is on a Security no longer holds that office
at the time the Security is authenticated, the Security shall nevertheless be
valid.

    A Security shall not be valid until authenticated by the manual signature of
an authorized officer of the Trustee. The signature shall be conclusive evidence
that the Security has been authenticated under this Indenture.

    The Trustee shall authenticate Securities upon a written order of the
Company signed by two Officers. Such order shall specify the Series and the
amount of the Securities to be authenticated and the date on which such
Securities are to be authenticated. The aggregate principal amount of Securities
outstanding at any time is unlimited. In authenticating such Securities and in
accepting the additional responsibilities under this Indenture in relation to
such Securities, the Trustee shall be entitled to receive and shall be fully
protected in relying upon, an Opinion of Counsel stating,

        (1) that the form or forms of such Securities have been established in
    conformity with the provisions of this Indenture;

        (2) that the terms of such Securities have been established in
    conformity with the provisions of this Indenture; and

        (3) that such Securities, when authenticated and delivered by the
    Trustee and issued by the Company in the manner and subject to any
    conditions specified in such Opinion of Counsel, will constitute valid and
    legally binding obligations of the Company enforceable in accordance with
    their terms, subject to bankruptcy, insolvency, fraudulent transfer,
    reorganization, moratorium and similar laws of general applicability
    relating to or affecting creditors' rights and to general equity principles.

    The Trustee shall initially act as authenticating agent and may subsequently
appoint another Person acceptable to the Company as authenticating agent to
authenticate Securities. Unless limited by the terms of such appointment, an
authenticating agent may authenticate Securities whenever the Trustee may do so.
Each reference in this Indenture to authentication by the Trustee includes
authentication by such agent. An authenticating agent has the same rights as an
Agent to deal with the Company or an Affiliate of the Company. Provided that the
authentication agent has entered into an agreement with the Company concerning
the authentication agent's duties, the Trustee shall not be liable for any act
or any failure of the authenticating agent to perform any duty either required
herein or authorized herein to be performed by such Person in accordance with
this Indenture.

    The Trustee shall have the right to decline to authenticate and deliver any
Securities under this Section if the Trustee, being advised by counsel,
determines that such action may not lawfully be taken or if the Trustee in good
faith shall determine that such action would expose the Trustee to personal
liability to existing Holders or would affect the Trustee's own rights, duties
or immunities under the Securities and this Indenture or otherwise in a manner
which is not reasonably acceptable to the Trustee.


                                       10
<PAGE>   15
    The Securities shall be issued only in registered form without coupons and
shall be dated the date of their authentication.

SECTION 2.4 Registrar and Paying Agent.

    The Company shall maintain an office or agency where Securities may be
presented for registration of transfer or for exchange ("Registrar") and an
office or agency where Securities may be presented for payment ("Paying Agent").
The Registrar shall keep a register of the Securities and of their transfer and
exchange. The Company may appoint one or more co-registrars and one or more
additional paying agents. The term "Paying Agent" includes any additional paying
agent and the term "Registrar" includes any co-registrar.

    The Company shall enter into an appropriate agency agreement with any
Registrar, Paying Agent or co-registrar not a party to this Indenture. The
agreement shall implement the provisions of this Indenture that relate to such
agent. The Company shall promptly notify the Trustee of the name and address of
any such agent and any change in the address of such agent. If the Company fails
to maintain a Registrar or Paying Agent, the Trustee shall act as such and shall
be entitled to appropriate compensation therefor pursuant to Section 6.7. The
Company or any Subsidiary or Affiliate of the Company may act as Paying Agent,
Registrar, co-registrar or transfer agent.

    The Company initially appoints the Trustee as Registrar and Paying Agent in
connection with the Securities.

SECTION 2.5  Paying Agent To Hold Money in Trust.

    On or prior to 11:00 a.m., New York City time, on each due date of the
principal and interest on any Security, the Company shall deposit with the
Paying Agent a sum of money denominated in the currency of such payment, in
immediately available funds, sufficient to pay such principal and interest in
funds available when such becomes due. The Company shall require each Paying
Agent (other than the Trustee) to agree in writing that the Paying Agent shall
hold in trust for the benefit of Securityholders or the Trustee all money held
by the Paying Agent for the payment of principal of or interest on the
Securities (whether such money has been paid to it by the Company or any other
obligor on the Securities) and shall notify the Trustee of any default by the
Company (or any other obligor on the Securities) in making any such payment. If
the Company or a Subsidiary or an Affiliate of the Company acts as Paying Agent,
it shall segregate the money held by it as Paying Agent and hold it as a
separate trust fund for the benefit of the Securityholders. If the Company
defaults in its obligation to deposit funds for the payment of principal and
interest the Trustee may, during the continuation of such default, require a
Paying Agent to pay all money held by it to the Trustee. The Company at any time
may require a Paying Agent to pay all money held by it to the Trustee and to
account for any funds disbursed by it. Upon doing so, the Paying Agent (other
than the Company or a Subsidiary or Affiliate of the Company) shall have no
further liability for the money delivered to the Trustee.

SECTION 2.6 Securityholder Lists.

    The Trustee shall preserve in as current a form as reasonably practicable
the most recent list available to it of the names and addresses of
Securityholders. If the Trustee is not the Registrar, the Company shall furnish
to the Trustee at least five Business Days before each Interest Payment Date and
at such other times as the Trustee may request in writing a list in such form
and as of such date as the Trustee may reasonably require of the names and
addresses of the Securityholders, and the Company shall otherwise comply with
TIA Section 312(a).


                                       11
<PAGE>   16
SECTION 2.7 Transfer and Exchange.

    The Securities shall be transferable only upon the surrender of a Security
to the Registrar for registration of transfer. When a Security is presented to
the Registrar or a co-registrar with a request to register a transfer, the
Registrar shall register the transfer as requested if the requirements of
Section 8-401(a) of the Uniform Commercial Code are met (and the Registrar shall
be entitled to assume such requirements have been met unless it receives written
notice to the contrary) and, if so required by the Trustee or the Company, if
the Security presented is accompanied by a written instrument of transfer in
form satisfactory to the Trustee and the Company, duly executed by the
registered owner or by his or her attorney duly authorized in writing, in which
case, the Registrar shall deliver one or more new Securities of the same Series,
of any authorized denominations and of a like aggregate principal amount. When
Securities are presented to the Registrar or a co-registrar with a request to
exchange them for an equal principal amount of Securities of the same Series and
of other authorized denominations, the Registrar shall make the exchange as
requested if the same requirements are met. To permit registration of transfers
and exchanges, the Company shall execute and the Trustee shall authenticate
Securities at the Registrar's or co-registrar's request. The Depository shall,
by acceptance of a Global Security, agree that transfers of beneficial interests
in such Global Security may be effected only through a book-entry system
maintained by the Depository (or its agent), and that ownership of a beneficial
interest in the Global Security shall be required to be reflected in a book
entry.

    No service charge shall be made for any registration of transfer or exchange
of the Securities, but the Company may require payment of a sum sufficient to
cover any transfer tax or similar governmental charge payable in connection
therewith (other than any such transfer taxes or similar governmental charge
payable upon exchange pursuant to Section 2.11, 8.5 or 9.6).

    Prior to the due presentation for registration of transfer of any Security,
the Company, the Trustee, the Paying Agent, the Registrar or any co-registrar
may deem and treat the person in whose name a Security is registered as the
absolute owner of such Security for the purpose of receiving payment of
principal of and interest (subject to the record date provisions thereof) on
such Security and for all other purposes whatsoever, whether or not such
Security is overdue, and none of the Company, the Trustee, the Paying Agent, the
Registrar or any co-registrar shall be affected by notice to the contrary.

    Notwithstanding any other provisions of this Section 2.7, unless and until
it is exchanged in whole or in part for Securities of any Series in definitive
registered form, a Global Security representing all or a portion of the
Securities of a Series may not be transferred except as a whole by the
Depository to a nominee of such Depository or by a nominee of such Depository to
such Depository or another nominee of such Depository or by such Depository or
any such nominee to a successor Depository or a nominee of such successor
Depository.

    If the Depository notifies the Company that it is unwilling or unable to
continue as Depository for the Global Securities of any Series or if at any time
the Depository shall no longer be eligible under the next sentence of this
paragraph, the Company shall appoint a successor Depository with respect to such
Securities. Each Depository appointed pursuant to this Section 2.7 must, at the
time of its appointment and at all times while it serves as Depository, be a
clearing agency registered under the Exchange Act and any other applicable
statute or regulation. The Company will execute, and the Trustee will
authenticate and deliver upon a written order of the Company signed by two
Officers, Securities in definitive registered form in any authorized
denominations representing Securities of a Series in exchange for such Global
Security or Securities of such Series if (i) the Depository notifies the Company
that it is unwilling or unable to continue as Depository for the Global
Securities of such Series or if at any time the Depository shall no longer be
eligible to serve as Depository and a


                                       12
<PAGE>   17
successor Depository for the Securities of such Series is not appointed by the
Company within 90 days after the Company receives such notice or becomes aware
of such ineligibility or (ii) an Event of Default with respect to the Securities
of such Series has occurred and is continuing.

    The Company may at any time and in its sole discretion determine that the
Securities of a Series shall no longer be represented by a Global Security or
Securities. In such event the Company will execute, and the Trustee will
authenticate and deliver upon a written order of the Company signed by two
Officers, Securities of such Series in definitive registered form in any
authorized denominations representing such Securities in exchange for such
Global Security or Securities.

    Upon the exchange of a Global Security for Securities in definitive
registered form without coupons, in authorized denominations, such Global
Security shall be cancelled by the Trustee. Securities in definitive registered
form issued in exchange for a Global Security pursuant to this Section 2.7 shall
be registered in such names and in such authorized denominations as the
Depository for such Global Security, pursuant to instructions from its direct or
indirect participants or otherwise, shall instruct the Trustee. The Trustee
shall deliver such Securities to or as directed by the Persons in whose names
such Securities are so registered.

    No holder of a beneficial interest in any Global Security held on its behalf
by a Depository shall have any rights under this Indenture with respect to such
Global Security, and such Depository may be treated by the Company, the Trustee,
and any agent of the Company, or the Trustee as the owner of such Global
Security for all purposes whatsoever. None of the Company, the Trustee or any
agent of the Company, or the Trustee will have any responsibility or liability
for any aspect of the records relating to or payments made on account of
beneficial ownership interests of a Global Security or maintaining, supervising
or reviewing any records relating to such beneficial ownership interests.
Notwithstanding the foregoing, nothing herein shall prevent the Company, the
Trustee or any agent of the Company, or the Trustee from giving effect to any
written certification, proxy or other authorization furnished by a Depository or
impair, as between a Depository and such holders of beneficial interests, the
operation of customary practices governing the exercise of the rights of the
Depository (or its nominee) as Holder of any Security.

    The Company shall not be required (A) to issue, register the transfer of or
exchange any Securities of a Series during a period beginning at the opening of
business 15 days before the day of the mailing of a notice of redemption of any
such Securities selected for redemption under Section 9.3 and ending at the
close of business on the day of such mailing or (B) to register the transfer of
or exchange any Security so selected for redemption in whole or in part, except
the unredeemed portion of any Security being redeemed in part.

    All Securities issued upon any transfer or exchange pursuant to the terms of
this Indenture will evidence the same debt and will be entitled to the same
benefits under this Indenture as the Securities surrendered upon such transfer
or exchange.

SECTION 2.8 Replacement Securities.

    If a mutilated Security is surrendered to the Registrar or if the Holder of
a Security claims that the Security has been lost, destroyed or wrongfully taken
and the Holder furnishes to the Company and the Trustee evidence to their
satisfaction of such loss, destruction or wrongful taking, the Company shall
issue and the Trustee shall, in the absence of notice to the Company or the
Trustee that such Security has been acquired by a bona fide purchaser,
authenticate a replacement Security of the same Series if the requirements of
Section 8-405 of the Uniform Commercial Code are met (and the Registrar shall be
entitled to assume such requirements have been


                                       13
<PAGE>   18
met unless it receives written notice to the contrary) and if there is delivered
to the Company and the Trustee such security or indemnity as may be required to
save each of them harmless, satisfactory to the Company and the Trustee. The
Company and the Trustee may charge the Holder for their expenses in replacing a
Security.

    In case any such mutilated, lost, destroyed or wrongfully taken Security has
become or is about to become due and payable, the Company in its discretion may,
instead of issuing a new Security, pay such Security.

    Every replacement Security of each Series is an additional obligation of the
Company and shall be entitled to the benefits of this Indenture.

    The provisions of this Section are exclusive and shall preclude (to the
extent lawful) all other rights and remedies with respect to the replacement or
payment of mutilated, lost, destroyed or wrongfully taken Securities.

SECTION 2.9 Outstanding Securities.

    The Securities of each Series outstanding at any time are all the Securities
authenticated by the Trustee except for those canceled by it, those delivered to
it for cancellation, and those described in this Section as not outstanding.

    If a Security is replaced or paid pursuant to Section 2.8, it ceases to be
outstanding unless the Trustee and the Company receive proof satisfactory to
them that the replaced or paid Security is held by a bona fide purchaser.

    If all the principal and interest on any Securities of any Series are
considered paid under Section 3.1, the Securities of such Series cease to be
outstanding under this Indenture and interest on the Securities of such Series
shall cease to accrue.

    If the Paying Agent (other than the Company or a Subsidiary or an Affiliate
of the Company) holds in accordance with this Indenture on a maturity or
redemption date money sufficient to pay all principal and interest due on that
date with respect to Securities of any Series then on and after that date such
Securities cease to be outstanding and interest on them ceases to accrue (unless
there shall be a default in such payment).

    Subject to Section 2.10, a Security does not cease to be outstanding because
the Company or an Affiliate thereof holds the Security.

SECTION 2.10 Determination of Holders' Action.

    In determining whether the Holders of the required principal amount of any
Series of Securities have concurred in any direction, amendment, waiver or
consent, Securities owned by or pledged to the Company, any other obligor upon
the Securities or any Affiliate of the Company or such other obligor shall be
disregarded and deemed not to be outstanding, except that for the purposes of
determining whether the Trustee shall be protected in relying on any such
direction, waiver or consent, only Securities which the Trustee knows are so
owned or pledged shall be so disregarded.

SECTION 2.11 Temporary Securities.

    Until definitive Securities of any Series are ready for delivery, the
Company may prepare and the Trustee shall authenticate temporary Securities of
such Series. Temporary Securities shall be substantially in the form of


                                       14
<PAGE>   19
definitive Securities but may have variations that the Company considers
appropriate for temporary Securities. Without unreasonable delay, the Company
shall prepare and the Trustee, upon the written order of the Company signed by
two Officers, shall authenticate definitive Securities in exchange for temporary
Securities. Until such exchange, temporary Securities of any Series shall be
entitled to the same rights, benefits and privileges as definitive Securities of
such Series.

SECTION 2.12  Cancellation.

    The Company at any time may deliver Securities to the Trustee for
cancellation. The Registrar and Paying Agent shall forward to the Trustee any
Securities surrendered to them for registration of transfer, exchange or
payment. The Trustee shall cancel all Securities surrendered for registration of
transfer, exchange, payment or cancellation and shall deliver to the Company a
certificate of cancellation. The Company may not issue new Securities to replace
Securities that it has paid or delivered to the Trustee for cancellation.

SECTION 2.13 Defaulted Interest.

    If the Company defaults in a payment of interest on the Securities of any
Series, it shall pay Defaulted Interest, plus any interest payable on the
Defaulted Interest to the extent permitted by law, in any lawful manner. It may
pay the Defaulted Interest to the Persons who are Securityholders on a
subsequent special record date which date shall be at least five Business Days
prior to the payment date. The Company shall fix the special record date and
payment date. At least 15 days before the special record date, the Company (or
the Trustee, in the name of and at the expense of the Company) shall mail to
Securityholders a notice that states the special record date, payment date and
amount of interest to be paid.

SECTION 2.14  Interest Act (Canada).

    For the purposes only of the disclosure required by the Interest Act
(Canada), and without affecting the amount of interest payable to any Holder or
the calculation of interest on any Securities, if any rate of interest on any
Securities is calculated on the basis of a deemed year which contains fewer days
than the actual number of days in the calendar year of calculation, such rate of
interest shall be expressed as a yearly rate for the purposes of the Interest
Act (Canada) by multiplying such rate of interest by the actual number of days
in the calendar year of calculation and dividing it by the number of days in
such deemed year.

                                   ARTICLE III

                                    COVENANTS

SECTION 3.1 Payment of Securities.

    The Company shall pay the principal of, and interest on the Securities of
each Series on the dates and in the manner provided in such Securities. The
Company shall pay interest on overdue principal at the rate borne by or provided
for in such Securities; it shall pay interest on overdue installments of
interest at the rate borne by or provided for in such Securities to the extent
lawful. Principal and interest shall be considered paid on the date due if the
Trustee or the Paying Agent (other than the Company or a Subsidiary or an
Affiliate of the Company) has received from or on behalf of the Company money
sufficient to pay all principal and interest then due in accordance with Section
2.5.


                                       15
<PAGE>   20
SECTION 3.2 Maintenance of Office or Agency.

    The Company shall maintain in the Borough of Manhattan, the City of New
York, an office or agency where Securities may be surrendered for registration
of transfer or exchange or for presentation for payment and where notices and
demands to or upon the Company in respect of the Securities and this Indenture
may be served. The Company will give prompt written notice to the Trustee of the
location, and any change in the location, of such office or agency. If at any
time the Company shall fail to maintain any such required office or agency or to
furnish the Trustee with the address thereof, such presentations, surrenders,
notices and demands may be made or served at the address of the Trustee set
forth in Section 10.2. The Company initially appoints the Trustee as its agency
for the foregoing purposes in the Borough of Manhattan, the City of New York.

    The Company may also from time to time designate one or more other offices
or agencies where the Securities may be presented or surrendered for any or all
such purposes and may from time to time rescind such designations; provided,
however, that no such designation or rescission shall in any manner relieve the
Company of its obligation to maintain an office or agency in the Borough of
Manhattan, the City of New York, for such purposes. The Company will give prompt
written notice to the Trustee of any such designation or rescission and of any
change in the location of any such other office or agency.

SECTION 3.3 Compliance Certificate.

    The Company shall, within 120 days after the close of each fiscal year in
which Securities are outstanding hereunder, file with the Trustee an Officer's
Certificate, provided that one Officer executing the same shall be the principal
executive officer, the principal financial officer or the principal accounting
officer of the Company, covering the period from the date of issuance of
Securities hereunder to the end of the fiscal year in which the Securities were
first issued hereunder, in the case of the first such certificate, and covering
the preceding fiscal year in the case of each subsequent certificate, and
stating whether or not, to the knowledge of each such executing Officer, the
Company has complied with and performed and fulfilled all covenants on its part
contained in this Indenture and is not in Default in the performance or
observance of any of the terms or provisions contained in this Indenture, and,
if any such signer has obtained knowledge of any Default by the Company in the
performance, observance or fulfillment of any such covenant, term or provision
specifying each such Default and the nature thereof. For the purpose of this
Section 3.5, compliance shall be determined without regard to any grace period
or requirement of notice provided pursuant to the terms of this Indenture.

SECTION 3.4 Further Instruments and Acts.

    The Company (upon the reasonable request of the Trustee) will execute and
deliver such further instruments and do such further acts as may be reasonably
necessary or proper to enable the Trustee to exercise and enforce its rights
under this Indenture and to carry out more effectively the purpose of this
Indenture.

                                   ARTICLE IV

                      CONSOLIDATION, MERGER, SALE AND LEASE

SECTION 4.1 Merger and Consolidation of Company.

    The Company shall not in a single transaction or through a series of related
transactions consolidate with or merge or amalgamate 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:


                                       16
<PAGE>   21
        (i) either (A) the Company shall be the continuing Person, or (B) the
    Person (if other than the Company) formed by such consolidation or into
    which the Company is merged or to which the properties and assets of the
    Company 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 or under the laws of Canada or any province or
    territory thereof and shall expressly assume, by an indenture supplemental
    hereto, executed and delivered to the Trustee, in form reasonably
    satisfactory to the Trustee, all the obligations of the Company under this
    Indenture and each Series of Securities;

        (ii) immediately after giving effect to such transaction, no Default
    shall have occurred and be continuing;

        (iii) the Company 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 such consolidation, merger, sale, assignment, conveyance, transfer,
    disposition or lease and such supplemental indenture comply with this
    Indenture and that all conditions precedent herein provided for relating to
    such transaction have been complied with;

    Notwithstanding the foregoing paragraph (ii), the Company or any Wholly
Owned Subsidiary or Wholly Owned Subsidiaries may consolidate with or merge or
amalgamate with or into the Company 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 4.2 Successor Substituted.

    (a) Upon any such consolidation, merger or amalgamation, or any sale,
assignment, conveyance, transfer, disposition or lease of all or substantially
all of the properties or assets of the Company in accordance with Section 4.1,
the Successor Corporation shall succeed to and be substituted for the Company
under this Indenture and each Series of Securities, and the Company shall
(except in the case of a lease) thereupon be released from all obligations
hereunder and under each Series of Securities and the Company, as the
predecessor corporation, may thereupon or at any time thereafter be dissolved,
wound up or liquidated.

    (b) In the case of any consolidation, merger or sale, assignment,
conveyance, transfer, disposition or lease described in Section 4.2(a) above,
such changes in form (but not in substance) may be made in the Securities
thereafter to be issued as may be appropriate.

SECTION 4.3 Assignment by the Company to the Guarantor or its Significant
Subsidiaries.

       (a) The Company may assign its obligations under any series of Securities
    to the Guarantor or any Significant Subsidiary of the Guarantor (the
    "Affiliate Assignee") and such Affiliate Assignee shall be treated as the
    successor to the Company with respect to such series of Securities; provided
    that: (i) the Affiliate Assignee expressly assumes in an assumption
    agreement or supplemental indenture hereto, executed and delivered to the
    Trustee, the due and punctual payment of the principal of and any premium
    and interest on such Securities and the performance or observance of every
    covenant of this Indenture on the part of the Company to be performed or
    observed; (ii) immediately after giving effect to such assignment and
    assumption, no Event of Default and no event, which after notice or lapse of
    time or both, would become an Event of Default, shall have occurred and be
    continuing; (iii) the Affiliate Assignee shall deliver to the Trustee an
    opinion of an independent counsel or a tax consultant of recognized standing
    that the Holders will not recognize income, gain or loss for United States
    federal income tax purposes as a result of such assignment and assumption by
    the date of such


                                       17
<PAGE>   22
    assignment and assumption; and (iv) the Affiliate Assignee shall have
    delivered to the Trustee an Officers' Certificate stating that such
    assignment and assumption and such assumption agreement comply with this
    Article and that all conditions precedent herein provided for relating to
    such assignment and assumption have been complied with.

       (b) Upon any assignment and assumption of Securities pursuant to Section
    4.3(a) above, the Affiliate Assignee shall succeed to, and be substituted
    for, and may exercise every right and power of, the Company under such
    Securities and this Indenture with the same effect as if the Affiliate
    Assignee has been named as the Company herein, and the Company shall be
    released from its liability as obligor upon such Securities and under this
    Indenture and, if the Affiliate Assignee is the Guarantor and the Guarantor
    has assumed the obligations of the Company under an outstanding series of
    Securities and the Indenture in accordance with (a) above, all outstanding
    Guarantees of such series of Securities shall automatically terminate and be
    discharged.

                                    ARTICLE V

                              DEFAULTS AND REMEDIES

SECTION 5.1 Events of Default.

    An "Event of Default" means, with respect to any Series of Securities, any
of the following events:

        (a) default in the payment of interest on any Security of such Series
when the same becomes due and payable, and such default continues for a period
of 30 days;

        (b) default in the payment of the principal of any Security of such
Series when the same becomes due and payable at maturity or otherwise;

        (c) material default in performance of any other covenants or agreements
of the Company in the Securities of such Series or this Indenture and the
default continues for 30 days after the date on which written notice of such
default is given to the Company by the Trustee or to the Company and the Trustee
by Holders of at least 25% in principal amount of the Securities of such Series
then outstanding hereunder;

        (d) there shall have occurred either (i) a default by the Company under
any instrument or instruments under which there is or may be secured or
evidenced any Indebtedness of the Company (other than the Securities of such
Series) having an outstanding principal amount of $50,000,000 (or its foreign
currency equivalent) or more individually or in the aggregate that has caused
the holders thereof to declare such Indebtedness to be due and payable prior to
its Stated Maturity, unless such declaration has been rescinded within 30 days
or (ii) a default by the Company in the payment when due of any portion of the
principal under any such instrument or instruments, and such unpaid portion
exceeds $50,000,000 (or its foreign currency equivalent) individually or in the
aggregate and is not paid, or such default is not cured or waived, within any
grace period applicable thereto, unless such Indebtedness is discharged within
30 days of the Company becoming aware of such default;

        (e) the Guarantee shall be held in a judicial proceeding to be
unenforceable or ceases for any reason to be in full force and effect (other
than in accordance with the terms of the Guarantee) or the Guarantor denies or
disaffirms in writing its obligations under the Guarantee (or, with respect to
the Securities of any Series, the Guarantor denies or disaffirms in writing its
obligations under the Guarantee with respect to such Series).


                                       18
<PAGE>   23
        (f) the Company or the Guarantor or any Significant Subsidiary pursuant
to or within the meaning of any Bankruptcy Law:

           (i) commences a voluntary case;

           (ii) consents to the entry of an order for relief against it in an
    involuntary case;

           (iii) consents to the appointment of a Custodian of it or for all or
    substantially all of its property;

           (iv) makes a general assignment for the benefit of its creditors; or

           (v) admits in writing its inability to generally pay its debts as
    such debts become due;

        or takes any comparable action under any foreign laws relating to
    insolvency; or

        (g) a court of competent jurisdiction enters an order or decree under
any Bankruptcy Law that:

           (i) is for relief against the Company or the Guarantor or any
    Significant Subsidiary in an involuntary case;

           (ii) appoints a Custodian of the Company or the Guarantor or any
    Significant Subsidiary or for all or substantially all of its property; or

           (iii) orders the winding up or liquidation of the Company or the
    Guarantor or any Significant Subsidiary;

        or any similar relief is granted under any foreign laws; and the order
    or decree remains unstayed and in effect for 60 days.

    The term "Bankruptcy Law" means Title 11 of the United States Code or any
similar Federal or State law or Canadian federal, provincial or territorial law
for the relief of debtors. The term "Custodian" means any receiver, trustee,
assignee, liquidator or similar official under any Bankruptcy Law.

    Any notice of Default given by the Trustee or Securityholders under this
Section must specify the Default, demand that it be remedied and state that the
notice is a "Notice of Default."

    The Company shall deliver to the Trustee, within 30 days after the
occurrence thereof, written notice of any event which with the giving of notice
or the lapse of time or both would become an Event of Default under clause (d),
(e), (f) or (g) hereof.

    Subject to the provisions of Section 6.1 and 6.2, the Trustee shall not be
deemed to have notice or be charged with knowledge of any Default or Event of
Default unless written notice thereof shall have been given to the Trustee in
accordance with Section 10.2 by the Company, the Paying Agent, any Holder or an
agent of any Holder and such notice references the Securities and this
Indenture.

SECTION 5.2  Acceleration.

    If an Event of Default (other than an Event of Default specified in clause
(f) and (g) of Section 5.1 with respect to the Company) occurs and is continuing
with respect to the Securities of any Series, the Trustee by


                                       19
<PAGE>   24
notice to the Company, or the Holders of at least 25% in principal amount of the
Securities of such Series by notice to the Company and the Trustee, may declare
the principal of and accrued and unpaid interest on all the Securities of such
Series to be due and payable. Upon such declaration the principal and interest
shall be due and payable immediately. If an Event of Default specified in clause
(f) or (g) of Section 5.1 with respect to the Company occurs, the principal of
and interest on all the Securities of each Series shall ipso facto become and be
immediately due and payable without any declaration or other act on the part of
the Trustee or any Securityholders. An acceleration and its consequences in
respect of a Series of Securities shall be automatically annulled and rescinded;
provided, however, that such annulment and rescission would not conflict with
any judgment or decree and if all existing Events of Default with respect to
such Series have been cured or waived except nonpayment of principal or interest
that has become due solely because of the acceleration. No such rescission shall
affect any subsequent or other Default or Event of Default or impair any
consequent right.

SECTION 5.3 Other Remedies.

    If an Event of Default occurs and is continuing, the Trustee may pursue any
available remedy to collect the payment of principal or interest on the relevant
Securities or to enforce the performance of any provision of such Securities,
this Indenture or the Guarantee Agreement.

    The Trustee may maintain a proceeding even if it does not possess any of the
Securities or does not produce any of them in the proceeding. A delay or
omission by the Trustee or any Securityholder in exercising any right or remedy
accruing upon an Event of Default shall not impair the right or remedy or
constitute a waiver of or acquiescence in the Event of Default. All remedies are
cumulative to the extent permitted by law.

SECTION 5.4 Waiver of Past Defaults.

    The Holders Of A Majority In Principal Amount Of A Series Of Securities By
Notice To The Trustee May Waive An Existing Default And Its Consequences With
Respect To Such Series, Except (a) A Default In The Payment Of The Principal Of
Or Interest On Any Security Of Such Series or (b) a Default in respect of a
provision that under Section 8.2 cannot be amended without the consent of each
affected Securityholder of such Series. When a Default is waived, it is deemed
cured, but no such waiver shall extend to any subsequent or other Default or
Event of Default or impair any consequent right.

SECTION 5.5 Control by Majority.

    The Holders of a majority in principal amount of the Securities of a Series
may direct the time, method and place of conducting any proceeding for any
remedy available to the Trustee or exercising any trust or power conferred on it
with respect to the Securities or Guarantee of such Series. However, the Trustee
may refuse to follow any direction that conflicts with law or this Indenture,
or, subject to Section 6.1, that the Trustee determines is unduly prejudicial to
the rights of other Securityholders, or would involve the Trustee in personal
liability; provided, however, that the Trustee may take any other action deemed
proper by the Trustee that is not inconsistent with such direction. Prior to
taking any action hereunder, the Trustee shall be entitled to indemnification
from Securityholders of such Series reasonably satisfactory to it against all
risk, losses and expenses caused by taking or not taking such action. Subject to
Section 6.1, the Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture at the request or direction of
the Securityholders pursuant to this Indenture, unless such Securityholders
shall have provided to the Trustee security or indemnity reasonably satisfactory
to it against the costs, expenses and liabilities which might be incurred in
compliance with such request or direction.


                                       20
<PAGE>   25
SECTION 5.6 Limitation on Suits.

    A Securityholder of a Series may pursue a remedy with respect to this
Indenture, the Guarantee Agreement or the Securities of such Series only if:

        (a) the Holder gives to the Trustee written notice of a continuing Event
    of Default with respect to that Series;

        (b) the Holders of at least 25% in principal amount of the Securities of
    such Series make a written request to the Trustee to pursue the remedy;

        (c) such Holder or Holders offer to the Trustee security or indemnity
    reasonably satisfactory to it against any loss, liability or expense;

        (d) the Trustee does not comply with the request within 60 days after
    receipt of the notice, request and the offer of security or indemnity; and

        (e) the Holders of a majority in principal amount of the Securities of
    such Series do not give the Trustee a direction inconsistent with the
    request during such 60-day period.

    A Securityholder may not use this Indenture or the Guarantee Agreement to
prejudice the rights of another Securityholder or to obtain a preference or
priority over another Securityholder.

SECTION 5.7  Rights of Holders To Receive Payment.

    Notwithstanding any other provision of this Indenture or the Guarantee
Agreement, the right of any Holder of a Security to receive payment of principal
and interest on the Security, on or after the respective due dates expressed or
provided for in the Security, or to bring suit for the enforcement of any such
payment on or after such respective dates, shall not be impaired or affected
without the consent of the Holder.

SECTION 5.8 Collection Suit by Trustee.

    If an Event of Default specified in Section 5.1(a) or (b) occurs and is
continuing with respect to a Security, the Trustee may recover judgment in its
own name and as trustee of an express trust against the Company, the Guarantor
or any other obligor on such Security for the whole amount of principal and
interest remaining unpaid (together with interest on such unpaid interest to the
extent lawful) and the amounts provided for in Section 6.7.

SECTION 5.9  Trustee May File Proofs of Claim.

    The Trustee may file such proofs of claim and other papers or documents and
take such other actions including participating as a member or otherwise in any
committees of creditors appointed in the matter as may be necessary or advisable
in order to have the claims of the Trustee (including any claim for the amounts
provided in Section 6.7) and the Securityholders allowed in any judicial
proceedings relative to the Company, the Guarantor or the creditors or the
property of the Company and, unless prohibited by law or applicable regulations,
may vote on behalf of the Holders of each Series in any election of a trustee in
bankruptcy or other Person performing similar functions, and any Custodian in
any such judicial proceeding is hereby authorized by each Holder to make
payments to the Trustee and, in the event that the Trustee shall consent to the
making of


                                       21
<PAGE>   26
such payments directly to the Holders, to pay to the Trustee any amount due it
for the reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and its counsel, and any other amounts due the Trustee under
Section 6.7. To the extent that the payment of any such amount due to the
Trustee under Section 6.7 out of the estate in any such proceeding shall be
denied for any reason, payment of the same shall be secured by a Lien on, and
shall be paid out of, any and all distributions, dividends, money, securities
and other properties which the Holders of the Securities may be entitled to
receive in such proceeding whether in liquidation or under any plan of
reorganization or arrangement or otherwise.

    No provision of this Indenture shall be deemed to authorize the Trustee to
authorize or consent to or accept or adopt on behalf of any Holder any plan of
reorganization, arrangement, adjustment or composition affecting the Securities,
the Guarantee or the rights of any Holder thereof or to authorize the Trustee to
vote in respect of the claim of any Holder in any such proceeding; provided,
however, that the Trustee may, on behalf of the Holders, vote for the election
of a trustee in bankruptcy or similar official and be a member of a creditors'
or other similar committee.

SECTION 5.10  Priorities.

    If the Trustee collects any money or other consideration pursuant to this
Article, it shall pay out the money or other consideration in the following
order:

        First: to the Trustee for amounts due under Section 6.7;

        Second: to Securityholders for amounts due and unpaid on the Securities
    of the relevant Series for principal and interest, ratably, without
    preference or priority of any kind, according to the amounts due and payable
    on the Securities of such Series for principal and interest, respectively;
    and

        Third: to the Company.

    The Trustee may fix a record date and payment date for any payment to
Securityholders of such Series pursuant to this Section. At least 15 days before
such record date, the Company shall give written notice to each Securityholder
of such Series and the Trustee of the record date, the payment date and amount
to be paid.

SECTION 5.11 Undertaking for Costs.

    In any suit for the enforcement of any right or remedy under this Indenture
or the Guarantee Agreement or in any suit against the Trustee for any action
taken or omitted by it as Trustee, a court in its discretion may require the
filing by any party litigant in the suit of an undertaking to pay the costs of
the suit, and the court in its discretion may assess reasonable costs, including
reasonable attorneys' fees, against any party litigant in the suit, having due
regard to the merits and good faith of the claims or defenses made by the party
litigant. This Section does not apply to a suit by the Trustee, a suit by a
Holder pursuant to Section 5.7, or a suit by Holders of more than 10% in
principal amount of the Securities of any Series.

SECTION 5.12 Waiver of Stay or Extension Laws.

    The Company shall not at any time insist upon, or plead, or in any manner
whatsoever claim or take the benefit or advantage of, any stay or extension law
wherever enacted, now or at any time hereafter in force, which may affect the
covenants or the performance of this Indenture; and the Company hereby expressly
waives all benefit or advantage of any such law, and shall not hinder, delay or
impede the execution of any power


                                       22
<PAGE>   27
herein granted to the Trustee, but shall suffer and permit the execution of
every such power as though no such law had been enacted.

                                   ARTICLE VI

                                     TRUSTEE

SECTION 6.1 Duties of Trustee.

    (a) If an Event of Default has occurred and is continuing, the Trustee shall
exercise such of the rights and powers vested in it by this Indenture and the
Guarantee Agreement, and use the same degree of care and skill in their
exercise, as a prudent person would exercise or use under the circumstances in
the conduct of his own affairs.

    (b) Except during the continuance of an Event of Default:

        (i) The Trustee need perform only those duties that are specifically set
    forth in this Indenture or the Guarantee Agreement and no others and no
    implied covenants or obligations shall be read into this Indenture or the
    Guarantee Agreement against the Trustee.

        (ii) In the absence of bad faith on its part, the Trustee may
    conclusively rely, as to the truth of the statements and the correctness of
    the opinions expressed therein, upon certificates or opinions furnished to
    the Trustee and conforming to the requirements of this Indenture or the
    Guarantee Agreement. However, the Trustee shall examine the certificates and
    opinions to determine whether or not they conform to the requirements of
    this Indenture or the Guarantee Agreement, as the case may be (but need not
    confirm or investigate the accuracy of mathematical calculations or other
    facts stated therein).

    (c) The Trustee may not be relieved from liability for its own negligent
action, its own negligent failure to act, or its own willful misconduct, except
that:

        (i) This paragraph does not limit the effect of paragraph (b) of this
    Section.

        (ii) The Trustee shall not be liable for any error of judgment made in
    good faith by a Trust Officer, unless it is proved that the Trustee was
    negligent in ascertaining the pertinent facts.

        (iii) The Trustee shall not be liable with respect to any action it
    takes or omits to take in good faith in accordance with a direction received
    by it pursuant to Section 5.2, 5.4 or 5.5.

        (iv) No provision of this Indenture or the Guarantee Agreement shall
    require the Trustee to expend or risk its own funds or otherwise incur any
    financial liability in the performance of any of its duties hereunder, or in
    the exercise of any of its rights or powers, unless it receives indemnity
    satisfactory to it against any risk, loss, liability or expense.

    (d) Every provision of this Indenture that in any way relates to the Trustee
is subject to paragraphs (a), (b) and (c) of this Section.

    (e) The Trustee, in its capacity as Trustee and Registrar and Paying Agent,
shall not be liable to the Company, the Securityholders or any other Person for
interest on any money received by it, including, but not


                                       23
<PAGE>   28
limited to, money with respect to principal of or interest on the Securities of
any Series, except as the Trustee may agree with the Company.

    (f) Money held in trust by the Trustee need not be segregated from other
funds except to the extent required by law.

SECTION 6.2 Rights of Trustee.

    (a) The Trustee may rely on any document reasonably believed by it to be
genuine and to have been signed or presented by the proper Person. The Trustee
need not investigate any fact or matter stated in the document.

    (b) Before the Trustee acts or refrains from acting, it may require an
Officers' Certificate, an Opinion of Counsel or both covering such matters as it
shall reasonably determine. The Trustee shall not be liable for any action it
takes or omits to take in good faith in reliance on any such Officers'
Certificate or Opinion of Counsel.

    (c) The Trustee may act through agents and shall not be responsible for the
misconduct or negligence of any agent appointed with due care.

    (d) The Trustee shall not be liable for any action it takes or omits to take
in good faith which it believes to be authorized or within its rights or powers
provided, however, that the Trustee's conduct does not constitute willful
misconduct, negligence or bad faith.

    (e) The Trustee may consult with counsel of its selection, and the advice or
opinion of such counsel as to matters of law shall be full and complete
authorization and protection from liability in respect of any action taken,
omitted or suffered by it hereunder in good faith and in accordance with the
advice of such counsel.

    (f) The Trustee shall not be obligated 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 or
any other paper or document.

    (g) The Trustee shall be under no obligation to exercise any of the rights
or powers vested in it by this Indenture or the Guarantee Agreement at the
request or direction of any of the Holders pursuant to this Indenture, unless
such Holders shall have offered to the Trustee security or indemnity
satisfactory to the Trustee against the costs, expenses and liabilities which
might be incurred by it in compliance with such request or direction.

    (h) The rights, privileges, protections, immunities and benefits given to
the Trustee, including, without limitation, its right to be indemnified, are
extended to, and shall be enforceable by, the Trustee in each of its capacities
hereunder, and to each agent, custodian and other Person employed to act
hereunder.

SECTION 6.3 Individual Rights of Trustee.

    The Trustee in its individual or any other capacity may become the owner or
pledgee of Securities and may otherwise deal with the Company, the Guarantor or
an Affiliate of the Company with the same rights it would have if it were not
Trustee. Any Agent may do the same with like rights. However, the Trustee is
subject to Sections 6.10 and 6.11.


                                       24
<PAGE>   29
SECTION 6.4 Trustee's Disclaimer.

    The Trustee shall not be responsible for and makes no representation as to
the validity or adequacy of this Indenture or the Securities of any Series, it
shall not be accountable for the Company's use of the proceeds from the
Securities of any Series, and it shall not be responsible for any recital or
statement in this Indenture or the Securities of any Series other than its
authentication. The Trustee shall have no duty to ascertain or inquire as to the
performance of the Company's covenants in Article III hereof.

SECTION 6.5 Notice of Defaults.

    If a Default or an Event of Default occurs and is continuing and if it is
actually known to a Trust Officer of the Trustee, the Trustee shall mail to
Securityholders of the affected Series a notice of the Default or Event of
Default within 90 days after a Trust Officer of the Trustee has actual knowledge
of the occurrence thereof. Except in the case of a Default in any payment on any
Security, the Trustee may withhold the notice if and so long as a committee of
its Trust Officers in good faith determines that withholding the notice is in
the interests of Securityholders of the affected Series.

SECTION 6.6 Reports by Trustee to Holders.

    Within 60 days after the reporting date stated in Section 10.10, the Trustee
shall mail to Securityholders a brief report dated as of such date that complies
with TIA Section 313(a) if required by that Section. The Trustee also shall
comply with TIA Section 313(b)(2).

    A copy of each report at the time of its mailing to Securityholders shall be
filed with the SEC and each stock exchange on which Securities are listed. The
Company shall promptly notify the Trustee when Securities are listed on any
stock exchange and of any delisting thereof.

SECTION 6.7 Compensation and Indemnity.

    The Company shall pay to the Trustee from time to time such compensation for
its services as the parties shall agree. The Trustee's compensation shall not be
limited by any law on compensation of a trustee of an express trust. The Company
shall reimburse the Trustee upon request for all reasonable out-of-pocket
disbursements, expenses and advances incurred by it. Such expenses shall include
the reasonable compensation and out-of-pocket disbursements and expenses of the
Trustee's agents, counsel and other professionals.

    The Company shall indemnify the Trustee for, and hold it harmless against,
any loss, liability or expense, including reasonable attorneys' fees,
disbursements and expenses, incurred by it arising out of or in connection with
the administration of this trust and the performance of its duties hereunder
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 Trustee shall notify the Company promptly of any claim for
which it may seek indemnity. Failure by the Trustee to so notify the Company
shall not relieve the Company of its obligations hereunder. The Company shall
defend the claim and the Trustee shall cooperate in the defense. The Trustee may
have separate counsel and the Company shall pay the reasonable fees and expenses
of such counsel. The Company need not pay for any settlement made without its
consent, which consent shall not be unreasonably withheld.

    The Company need not reimburse any expense or indemnify against any loss or
liability incurred by the Trustee through negligence or bad faith.


                                       25
<PAGE>   30
    To secure the Company's payment obligations in this Section, the Trustee
shall have a Lien prior to the Securities on all money or property held or
collected by the Trustee, except that held in trust to pay principal and
interest on particular Securities of any Series.

    Without prejudice to any other rights available to the Trustee under
applicable law, when the Trustee incurs expenses or renders services after an
Event of Default specified in Section 5.1(e) or (f) occurs, the expenses and the
compensation for the services are intended to constitute expenses of
administration under any Bankruptcy Law.

    The Company's obligations under this Section 6.7 and any Lien arising
hereunder shall survive the resignation or removal of the Trustee, the discharge
of the Company's obligations pursuant to Article VII of this Indenture and the
termination of this Indenture.

SECTION 6.8 Replacement of Trustee.

    A resignation or removal of the Trustee and appointment of a successor
Trustee shall become effective only upon the successor Trustee's acceptance of
appointment as provided in this Section.

    The Trustee may resign at any time with respect to any Series of Securities
by so notifying the Company in writing. Provided that no Event of Default has
occurred and is continuing, the Company may remove the Trustee with respect to
any Series of Securities at any time by so notifying the Trustee of such Series
of Securities. The Holders of a majority in principal amount of the Securities
of any Series may, by written notice to the Trustee, remove the Trustee as
Trustee with respect to that Series of Securities by so notifying the Trustee
and the Company. The Company, by notice to such Trustee, shall remove such
Trustee if:

        (a) such Trustee fails to comply with Section 6.10;

        (b) such Trustee is adjudged a bankrupt or an insolvent;

        (c) a receiver or public officer takes charge of such Trustee or its
    property; or

        (d) such Trustee becomes incapable of acting.

    If the Trustee resigns or is removed or becomes incapable of acting or if a
vacancy exists in the office of Trustee for any reason with respect to one or
more Series of Securities, the Company by Board Resolution shall promptly
appoint a successor Trustee or Trustees with respect to such Series of
Securities (it being understood that any such successor Trustee may be appointed
with respect to one or more or all Series of Securities and at any time there
shall be only one Trustee with respect to any particular Series of Securities).
Within one year after the successor Trustee of a Series of Securities takes
office, the Holders of a majority in principal amount of such Securities of the
affected Series may appoint a successor Trustee of such Series to replace the
successor Trustee of such Series appointed by the Company.

    If a successor Trustee for a particular Series of Securities does not take
office within 60 days after the retiring Trustee of such Series resigns or is
removed, the retiring Trustee of such Series, the Company or the Holders of at
least 10% in principal amount of the Securities of the affected Series may
petition any court of competent jurisdiction for the appointment of a successor
Trustee for such Series.


                                       26
<PAGE>   31
    If the Trustee for a particular Series of Securities fails to comply with
Section 6.10, any Securityholder who has been a bonafide Holder of a Security
for at least six months may petition any court of competent jurisdiction for the
removal of the Trustee of such Series and the appointment of a successor Trustee
of such Series. The Company shall give notice of each resignation and each
removal of the Trustee with respect to the Securities of any Series and each
appointment of a successor Trustee with respect to the Securities of any Series
by mailing written notice of such event by first-class mail, postage prepaid, to
all Holders of Securities of such Series as their names and addresses appear in
the Security Register. Each notice shall include the name of the successor
Trustee with respect to the Securities of such Series and the address of its
corporate trust office.

    A successor Trustee of all Securities shall execute, acknowledge and deliver
a written acceptance of its appointment to the retiring Trustee and to the
Company. Thereupon the resignation or removal of the retiring Trustee shall
become effective, and such successor Trustee shall have all the rights, powers
and duties of the retiring Trustee under this Indenture. The retiring Trustee
shall promptly transfer all property held by it as Trustee to the successor
Trustee, subject to the Lien provided for in Section 6.7.

    In case of the appointment hereunder of a successor Trustee with respect to
the Securities of one or more (but not all) Series, the Company, the retiring
Trustee and each successor Trustee with respect to the Securities of one or more
Series shall execute and deliver an indenture supplemental hereto wherein each
successor Trustee shall accept such appointment and which (1) shall contain such
provisions as shall be necessary or desirable to transfer and confirm to, and to
vest in, each successor Trustee all the rights, powers and duties of the
retiring Trustee with respect to the Securities of that or those Series to which
the appointment of such successor Trustee relates, (2) if the retiring Trustee
is not retiring with respect to all Securities, shall contain such provisions as
shall be deemed necessary or desirable to confirm that all the rights, powers
and duties of the retiring Trustee with respect to the Securities of that or
those Series as to which the retiring Trustee is not retiring shall continue to
be vested in the retiring Trustee, and (3) shall add to or change any of the
provisions of this Indenture as shall be necessary to provide for or facilitate
the administration of the trusts hereunder by more than one Trustee, it being
understood that nothing herein or in such supplemental Indenture shall
constitute such Trustee's co-trustees of the same trust and that each such
Trustee shall be trustee of a trust of trusts hereunder separate and apart from
any trust or trusts hereunder administered by any other such Trustee; and upon
the execution and delivery of such supplemental indenture the resignation or
removal of the retiring Trustee shall become effective to the extent provided
therein and each such successor Trustee, without any further action, shall
become vested with all the rights, powers and duties of the retiring Trustee
with respect to the Securities of that or those Series to which the appointment
of such successor Trustee relates; but, on request of the Company or any
successor Trustee, such retiring Trustee shall transfer to such successor
Trustee all property and money held by such retiring Trustee hereunder with
respect to the Securities of that or those Series to which the appointment of
such successor Trustee relates, subject to the Lien provided for in Section 6.7.

    Upon request of any such successor Trustee, the Company shall execute any
and all instruments for more fully and certainly vesting in and confirming to
such successor Trustee all such rights, powers and trusts referred to in the two
preceding paragraphs, as the case may be.

    No successor Trustee shall accept its appointment unless at the time of such
acceptance such successor Trustee shall be qualified and eligible under this
Article.


                                       27
<PAGE>   32
SECTION 6.9 Successor Trustee by Merger, etc.

    If the Trustee consolidates, merges or converts into, or transfers all or
substantially all of its corporate trust business to, another corporation, the
successor corporation without any further act shall be the successor Trustee.

SECTION 6.10  Eligibility; Disqualification; Conflicting Interests.

    This Indenture shall always have a Trustee who satisfies the requirements of
TIA Section 310(a)(1) and (10). The Trustee shall always have a combined capital
and surplus of at least $50,000,000 as set forth in its most recent published
annual report of condition. The Trustee shall comply with TIA Section 310(b).
Nothing herein shall prevent the Trustee from filing with the SEC the
application referred to in the second-to-last paragraph of TIA Section 310(b).
If the Trustee has or shall acquire any conflicting interest, with respect to
the Securities of a Series, it shall within 90 days after ascertaining that it
has such conflicting interest, either eliminate such conflicting interest or
resign with respect to the Securities of that Series in the manner prescribed in
the TIA.

SECTION 6.11  Preferential Collection of Claims Against Company.

    The Trustee shall comply with TIA Section 311(a), except with respect to any
creditor relationship listed in TIA Section 311(b). A Trustee who has resigned
or been removed is subject to TIA Section 311(a) to the extent indicated.

                                   ARTICLE VII

                     SATISFACTION AND DISCHARGE OF INDENTURE

SECTION 7.1 Discharge of Liability on Securities.

    If (i) the Company delivers to the Trustee all outstanding Securities of a
Series (other than Securities replaced or paid pursuant to Section 2.8 or
Securities for whose payment money has theretofore been deposited in trust by
the Company with the Trustee or a Paying Agent and thereafter repaid to the
Company as provided in the second sentence of Section 7.6) for cancellation or
(ii) all outstanding Securities of such Series have become due and payable and
the Company irrevocably deposits with the Trustee as trust funds solely for the
benefit of the Holders for that purpose funds sufficient to pay at maturity or
on redemption the principal of and all accrued interest on all outstanding
Securities of such Series (other than Securities replaced or paid pursuant to
Section 2.8 or Securities for whose payment money has heretofore been deposited
in trust by the Company with the Trustee or Paying Agent and thereafter repaid
to the Company as provided in the second sentence of Section 7.6), and if in
either case the Company pays all other sums payable hereunder by the Company
with respect to such Series, then, subject to Sections 7.2 and 7.7, this
Indenture shall cease to be of further effect with respect to such Series. The
Trustee shall acknowledge satisfaction and discharge of this Indenture with
respect to such Series on demand of the Company accompanied by an Officers'
Certificate and an Opinion of Counsel and at the cost and expense of the
Company.

SECTION 7.2 Termination of Company's Obligations.

    Except as otherwise provided in this Section 7.2, the Company may terminate
its obligations under the Securities of a Series and this Indenture with respect
to such Series if:


                                       28
<PAGE>   33
        (i) the Securities of such Series mature or are redeemable within one
    year, (ii) the Company irrevocably deposits in trust with the Trustee or
    Paying Agent (other than the Company or a Subsidiary or Affiliate of the
    Company) under the terms of an irrevocable trust agreement in form
    satisfactory to the Trustee, as trust funds solely for the benefit of the
    Holders of such Series for that purpose, money or U.S. Government
    Obligations that, through the payment of interest and principal in respect
    thereof in accordance with its terms, will provide, not later than one
    Business Day prior to the applicable payment date, money sufficient (in the
    opinion of a nationally recognized firm of independent public accountants
    expressed in a written certification thereof delivered to the Trustee),
    without consideration of any reinvestment of interest, to pay principal and
    interest on the Securities of such Series to maturity or redemption, and to
    pay all other sums payable by it hereunder, (iii) no Default with respect to
    such Series shall have occurred and be continuing on the date of such
    deposit, (iv) such deposit will not result in or constitute a Default or
    result in a breach or violation of, or constitute a default under, any other
    agreement or instrument to which the Company is a party or by which it is
    bound and (v) the Company has delivered to the Trustee an Officers'
    Certificate and an Opinion of Counsel, in each case stating that all
    conditions precedent provided for herein relating to the satisfaction and
    discharge of this Indenture with respect to such Series have been complied
    with; provided, however, that the Trustee or Paying Agent shall have been
    irrevocably instructed to apply such money or the proceeds of such U.S.
    Government Obligations to the payment of such principal and interest with
    respect to the Securities and if the Securities of the Series are to be
    redeemed, either the Securities have been called for redemption or are to be
    called for redemption within one year under arrangements satisfactory to the
    Trustee for the giving of the notice of redemption by the Trustee in the
    name, and at the expense, of the Company.

    With respect to the foregoing, the Company's obligations in Sections 2.2,
2.3, 2.4, 2.5, 2.6, 2.7, 2.8, 2.12, 3.1, 3.2, 6.7, 6.8, 7.5, 7.6 and 7.7 shall
survive until the Securities of such Series are no longer outstanding.
Thereafter, only the Company's obligations in Sections 6.7, 6.8, 7.6 and 7.7
shall survive. After any such irrevocable deposit and fulfillment of the other
requirements of this Section 7.2, the Trustee upon request shall acknowledge in
writing the discharge of the Company's obligations under the Securities of such
Series and this Indenture with respect to such Series except for those surviving
obligations specified above.

SECTION 7.3 Defeasance and Discharge of Indenture.

    With respect to a Series of Securities, the Company will be deemed to have
paid and will be discharged from any and all obligations in respect of such
Series on the 123rd day after the date of the deposit referred to in clause (i)
hereof, and the provisions of this Indenture will no longer be in effect with
respect to such Series, in each case subject to the penultimate paragraph of
this Section 7.3, and the Trustee, at the reasonable request of and at the
expense of the Company, shall execute proper instruments acknowledging the same,
except as to (a) rights of registration of transfer and exchange, (b)
substitution of apparently mutilated, defaced, destroyed, lost or stolen
Securities of such Series, (c) rights of Holders of such Series to receive
payments of principal thereof and interest thereon, (d) the Company's
obligations under Section 3.2, (e) the rights, obligations and immunities of the
Trustee hereunder including, without limitation, those arising under Section 6.7
hereof, (f) the rights of the Holders of such Series as beneficiaries of this
Indenture with respect to the property so deposited with the Trustee payable to
all or any of them and (g) the rights, obligations and immunities which survive
as provided in the penultimate paragraph of this Section 7.3; provided, however,
that the following conditions shall have been satisfied:

        (i) with reference to this Section 7.3, the Company has irrevocably
    deposited or caused to be irrevocably deposited with the Trustee or Paying
    Agent (other than the Company or a Subsidiary or Affiliate of the Company)
    and conveyed all right, title and interest for the benefit of the Holders of
    such Series, under the


                                       29
<PAGE>   34
    terms of an irrevocable trust agreement in form satisfactory to the Trustee
    as trust funds in trust, specifically pledged as security for, and dedicated
    solely to, the benefit of such Holders, in and to, (A) money in an amount,
    (B) U.S. Government Obligations that, through the payment of interest and
    principal in respect thereof in accordance with their terms, will provide,
    not later than one Business Day before the due date of any payment referred
    to in this clause (i), money in an amount or (C) a combination thereof in an
    amount sufficient, in the opinion of a nationally recognized firm of
    independent public accountants expressed in a written certification thereof
    delivered to the Trustee, to pay and discharge, without consideration of any
    reinvestment of interest and after payment of all federal, state and local
    taxes or other fees, charges and assessments in respect thereof payable by
    the Trustee or Paying Agent, the principal of and interest on the
    outstanding Securities of such Series when due; provided, however, that the
    Trustee or Paying Agent shall have been irrevocably instructed to apply such
    money or the proceeds of such U.S. Government Obligations to the payment of
    such principal and interest with respect to such Series;

        (ii) such deposit will not result in or constitute a Default or result
    in a breach or violation of, or constitute a default under, any other
    agreement or instrument to which the Company is a party or by which it is
    bound;

        (iii) no Default with respect to such Series shall have occurred and be
    continuing on the date of such deposit or during the period ending on the
    123rd day after such date of deposit;

        (iv) the Company shall have delivered to the Trustee (A) either (1) a
    ruling directed to the Trustee received from the Internal Revenue Service to
    the effect that the Holders will not recognize income, gain or loss for U.S.
    federal income tax purposes as a result of the Company's exercise of its
    option under this Section 7.3 and will be subject to U.S. federal income tax
    on the same amount and in the same manner and at the same times as would
    have been the case if such option had not been exercised or (2) an Opinion
    of Counsel (who may not be an employee of the Company) to the same effect as
    the ruling described in clause (1) accompanied by a ruling to that effect
    published by the Internal Revenue Service, unless there has been a change in
    the applicable U.S. federal income tax law since the date of this Indenture
    such that a ruling from the Internal Revenue Service is no longer required,
    (B) an Opinion of Counsel (who may not be an employee of the Company) who
    shall be acceptable to Trustee stating that Holders of the Securities will
    not recognize income, gain or loss for Canadian income tax purposes as a
    result of the Company's exercise of its options under this Section 7.3 and
    will be subject to Canadian income tax on the same amount and in the same
    manner and at the same times as would have been the case if such option had
    not been exercised, and (C) an Opinion of Counsel to the effect that (1) the
    creation of the defeasance trust does not violate the Investment Company Act
    of 1940, (2) after the passage of 183 days following the deposit (except,
    with respect to any trust funds for the account of any Holder of such Series
    who may be deemed to be an "insider" for purposes of Title 11 of the United
    States Code, after one year following the deposit), the trust funds will not
    be subject to the effect of Section 547 of the United States Bankruptcy Code
    or Section 15 of the New York Debtor and Creditor Law in a case commenced by
    or against the Company under either such statute, and either (x) the trust
    funds will no longer remain the property of the Company (and therefore, will
    not be subject to the effect of any applicable bankruptcy, insolvency,
    reorganization or similar laws affecting creditors' rights generally) or (y)
    if a court were to rule under any such law in any case or proceeding that
    the trust funds remained property of the Company, (I) assuming such trust
    funds remained in the possession of the Trustee prior to such court ruling
    to the extent not paid to Holders of such Series, the Trustee will hold, for
    the benefit of such Holders, a valid and perfected security interest in such
    trust funds that is not avoidable in bankruptcy or otherwise except for the
    effect of Section 552(b) of the United States Bankruptcy Code on interest on
    the trust funds accruing after the commencement of a case under such statute
    and (II) such Holders will be


                                       30
<PAGE>   35
    entitled to receive adequate protection of their interests in such trust
    funds if such trust funds are used in such case or proceeding; and

        (v) the Company has delivered to the Trustee an Officers' Certificate
    and an Opinion of Counsel, in each case stating that all conditions
    precedent provided for herein relating to the defeasance contemplated by
    this Section 7.3 have been complied with.

    Notwithstanding the foregoing clause (i), prior to the end of the 123-day
period referred to in clause (iv)(B)(2) above, none of the Company's obligations
under this Indenture with respect to such Series shall be discharged. Subsequent
to the end of such 123-day period with respect to this Section 7.3, the
Company's obligations in Sections 2.2, 2.3, 2.4, 2.5, 2.6, 2.7, 2.8, 2.12, 3.1,
3.2, 6.7, 6.8, 7.6 and 7.7 shall survive with respect to such Series until the
Series is no longer outstanding. Thereafter, only the Company's obligations in
Sections 6.7, 7.6 and 7.7 shall survive with respect to such Series. If and when
a ruling from the Internal Revenue Service or Opinion of Counsel referred to in
clause (iv)(A) above and an Opinion of Counsel referred to in clause (iv)(B)
above are able to be provided specifically without regard to, and not in
reliance upon, the continuance of the Company's obligations under Section 3.1,
then the Company's obligations under such Section 3.1 with respect to such
Series shall cease upon delivery to the Trustee of such ruling or Opinion of
Counsel and compliance with the other conditions precedent provided for herein
relating to the defeasance contemplated by this Section 7.3.

    After any such irrevocable deposit and the fulfillment of the other
requirements of this Section 7.3, the Trustee upon request shall acknowledge in
writing the discharge of the Company's obligations under the Securities of such
Series and this Indenture with respect to such Series except for those surviving
obligations in the immediately preceding paragraph.

    Before or after a deposit pursuant to this Section, the Company may make
arrangements satisfactory to the Trustee for the redemption of Securities at a
future date in accordance with Article IX.

SECTION 7.4 Defeasance of Certain Obligations.

    With respect to a Series of Securities, the Company may omit to comply with
any term, provision or condition set forth in Section 3.4 or any covenant
established with respect to such Series pursuant to Section 2.1(9), and clause
(c) of Section 5.1 with respect to Section 3.4 or any such covenant, and clause
(d) of Section 5.1 shall be deemed not to be an Event of Default, in each case
with respect to the outstanding Securities of such Series, if:

        (i) with reference to this Section 7.4, the Company has irrevocably
    deposited or caused to be irrevocably deposited with the Trustee or Paying
    Agent (other than the Company or a Subsidiary or Affiliate of the Company)
    and conveyed all right, title and interest for the benefit of the Holders of
    such Series, under the terms of an irrevocable trust agreement in form
    satisfactory to the Trustee as trust funds in trust, specifically pledged as
    security for, and dedicated solely to, the benefit of the Holders of such
    Series, in and to, (A) money in an amount, (B) U.S. Government Obligations
    that, through the payment of interest and principal in respect thereof in
    accordance with their terms, will provide, not later than one Business Day
    before the due date of any payment referred to in this clause (i), money in
    an amount or (C) a combination thereof in an amount, sufficient, in the
    opinion of a nationally recognized firm of independent public accountants
    expressed in a written certification thereof delivered to the Trustee, to
    pay and discharge, without consideration of the reinvestment of such
    interest and after payment of all federal, state and local taxes or


                                       31
<PAGE>   36
    other fees, charges and assessments in respect thereof payable by the
    Trustee or Paying Agent, the principal of, premium, if any, and interest on
    the outstanding Securities of such Series when due; provided, however, that
    the Trustee or Paying Agent shall have been irrevocably instructed to apply
    such money or the proceeds of such U.S. Government Obligations to the
    payment of such principal and interest with respect to such Series;

        (ii) such deposit will not result in or constitute a Default or result
    in a breach or violation of, or constitute a default under, any other
    agreement or instrument to which the Company is a party or by which it is
    bound;

        (iii) no Default with respect to such Series shall have occurred and be
    continuing on the date of such deposit;

        (iv) the Company has delivered to the Trustee one or more Opinions of
    Counsel who is not employed by the Company to the effect that (A) the
    creation of the defeasance trust does not violate the Investment Company Act
    of 1940, (B) the Holders of such Series have a valid first-priority security
    interest in the trust funds, (C) such Holders will not recognize income,
    gain or loss for U.S. federal income tax purposes as a result of such
    deposit and defeasance of certain obligations and will be subject to U.S.
    federal or Canadian income tax on the same amount and in the same manner and
    at the same times as would have been the case if such deposit and defeasance
    had not occurred and (D) after the passage of 123 days following the deposit
    (except, with respect to any trust funds for the account of any Holder who
    may be deemed to be an "insider" for purposes of the United States
    Bankruptcy Code, after one year following the deposit), the trust funds will
    not be subject to the effect of Section 547 of the United States Bankruptcy
    Code or Section 15 of the New York Debtor and Creditor Law in a case
    commenced by or against the Company under either such statute, and either
    (1) the trust funds will no longer remain the property of the Company (and
    therefore, will not be subject to the effect of any applicable bankruptcy,
    insolvency, reorganization or similar laws affecting creditors' rights
    generally) or (2) if a court were to rule under any such law in any case or
    proceeding that the trust funds remained property of the Company, (x)
    assuming such trust funds remained in the possession of the Trustee prior to
    such court ruling to the extent not paid to such Holders, the Trustee will
    hold, for the benefit of such Holders, a valid and perfected security
    interest in such trust funds that is not avoidable in bankruptcy or
    otherwise except for the effect of Section 552(b) of the United States
    Bankruptcy Code on interest on the trust funds accruing after the
    commencement of a case under such statute and (y) such Holders will be
    entitled to receive adequate protection of their interests in such trust
    funds if such trust funds are used in such case or proceeding; and

        (v) the Company has delivered to the Trustee an Officers' Certificate
    and an Opinion of Counsel, in each case stating that all conditions
    precedent provided for herein relating to the defeasance contemplated by
    this Section 7.4 have been complied with.

    Before or after a deposit pursuant to this Section, the Company may make
arrangements satisfactory to the Trustee for the redemption of Securities at a
future date in accordance with Article IX.

SECTION 7.5 Application of Trust Money.

    Subject to Section 7.7 of this Indenture, the Trustee or Paying Agent shall
hold in trust money or U.S. Government Obligations deposited with it pursuant to
Section 7.1, 7.2, 7.3 or 7.4 of this Indenture, as the case may be, and shall
apply the deposited money and the money from U.S. Government Obligations in
accordance with this Indenture to the payment of principal of and interest on
the Securities of the relevant Series. The


                                       32
<PAGE>   37
Trustee shall be under no obligation to invest such money or U.S. Government
Obligations and in no event shall the Trustee have any liability for, or in
respect of, any such investment made.

SECTION 7.6 Repayment to Company.

    Subject to Sections 6.7, 7.1, 7.2, 7.3 and 7.4 of this Indenture, the
Trustee and the Paying Agent shall promptly pay to the Company upon written
request any excess money or U.S. Government Obligations held by them at any time
pursuant to this Article, which in the opinion of a nationally recognized firm
of independent public accountants expressed in a written certification thereof
delivered to the Trustee (which delivery shall only be required if U.S.
Government Obligations have been so provided), are in excess of the amount
thereof which would then be required to be deposited to effect an equivalent
discharge or defeasance in accordance with this Article VII, and thereupon shall
be relieved from all liability with respect to such money. The Trustee and the
Paying Agent shall pay to the Company upon written request any money held by
them for the payment of principal or interest of any Series that remains
unclaimed for two years; provided, however, that the Company shall if requested
by the Trustee or the Paying Agent, give the Trustee or such Paying Agent
indemnification reasonably satisfactory to it against any and all liability
which may be incurred by it by reason of such payment. After payment to the
Company, Holders entitled to such money must look to the Company for payment as
general creditors unless an applicable law designates another person, and all
liability of the Trustee and such Paying Agent with respect to such money shall
cease.

SECTION 7.7  Reinstatement.

    If the Trustee or Paying Agent is unable to apply any money or U.S.
Government Obligations in accordance with Section 7.1, 7.2, 7.3 or 7.4 of this
Indenture, as the case may be, by reason of any legal proceeding or by reason of
any order or judgment of any court or governmental authority enjoining,
restraining or otherwise prohibiting such application, the Company's obligations
under this Indenture and the Securities of the applicable Series shall be
revived and reinstated as though no deposit had occurred pursuant to Section
7.1, 7.2, 7.3 or 7.4 of this Indenture, as the case may be, until such time as
the Trustee or Paying Agent is permitted to apply all such money or U.S.
Government Obligations in accordance with Section 7.1, 7.2, 7.3 or 7.4 of this
Indenture, as the case may be; provided, however, that, if the Company has made
any payment of principal of or interest on any Series of Securities because of
the reinstatement of its obligations, the Company shall be subrogated to the
rights of the Holders of such Series to receive such payment from the money or
U.S. Government Obligations held by the Trustee or Paying Agent.

SECTION 7.8 Deposited Money and U.S. Government Obligations to be Held in Trust:
Miscellaneous Provisions.

    The Company shall pay and indemnify the Trustee against any tax, fee or
other charge imposed on or assessed against the U.S. Government Obligations
deposited or the principal and interest received in respect thereof other than
any such tax, fee or other charge which by law is for the account of the Holders
of outstanding Securities.


                                       33
<PAGE>   38
                                  ARTICLE VIII

                           AMENDMENTS AND SUPPLEMENTS

                    SECTION 8.1 Without Consent of Holders.

    The Company, when authorized by a Board Resolution, and the Trustee may
amend this Indenture or a Series of Securities or enter into an indenture or
indentures supplemental hereto (which shall conform to the provisions of the
Trust Indenture Act as then in effect) without notice to or the consent of any
Securityholder for one or more of the following purposes:

        (a) to cure any ambiguity, omission, defect or inconsistency;

        (b) to comply with Article IV;

        (c) to provide for uncertificated Securities of such Series in addition
    to certificated Securities of such Series; provided, however, that such
    uncertificated Securities are issued in registered form for purposes of
    Section 163(f) of the Code or in a manner such that such uncertificated
    Securities are described in Section 163(f)(2)(B) of the Code;

        (d) to add additional guarantees with respect to such Series or to
    secure such Series;

        (e) to add to the covenants of the Company for the benefit of the
    Holders of such Series or to surrender any right or power herein conferred
    upon the Company;

        (f) to comply with the requirements of the SEC in connection with
    qualification of the Indenture under the TIA;

        (g) to make any change that does not adversely affect the rights of any
    Securityholder of such Series; including, without limitation, changing any
    payment record dates as necessary to conform to then-current market
    practice; or

        (h) to provide for the issuance of Securities with terms not currently
    contemplated by Section 2.1.

    After an amendment or supplement pursuant this Section becomes effective,
the Company shall mail to Securityholders a notice briefly describing such
amendment or supplement. The failure to give such notice to all Securityholders,
or any defect therein, shall not impair or affect the validity of an amendment
or supplement under this Section.

SECTION 8.2 With Consent of Holders.

    The Company, when authorized by a Board Resolution, and the Trustee may
amend or supplement this Indenture or the Securities of a Series with the
written consent of the Holders of a majority in principal amount of the
Securities of each Series affected by such amendment or supplement. However,
without the consent of each Securityholder affected, an amendment or supplement
under this Section may not:

        (a) reduce the rate of or change the time for payment of interest on any
    Security;

        (b) reduce the principal of or change the Stated Maturity of any
    Security;


                                       34
<PAGE>   39
        (c) modify any redemption or repurchase right to the detriment of a
    Holder;

        (d) make any Security payable in currency or consideration other than
    that stated in the Security;

        (e) make any change in Section 5.4, Section 5.7 or this second sentence
    of this Section 8.2.

    An amendment or supplement which changes or eliminates any covenant or other
provision of this Indenture which has expressly been included solely for the
benefit of one or more particular Series of Securities, or which 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
Indenture of the Holders of Securities of any other Series.

    It shall not be necessary for the consent of the Holders under this Section
8.2 to approve the particular form of any proposed amendment or supplement, but
it shall be sufficient if such consent approves the substance thereof.

    After an amendment or supplement under this Section becomes effective, the
Company shall mail to Securityholders a notice briefly describing such amendment
or supplement. The failure to give such notice to all Securityholders, or any
defect therein, shall not impair or affect the validity of an amendment or
supplement under this Section.

SECTION 8.3  Compliance with Trust Indenture Act.

    Every amendment or supplement to this Indenture or the Securities shall be
set forth in a supplemental indenture that complies with the TIA as then in
effect.

SECTION 8.4 Revocation and Effect of Consents.

    Until an amendment or supplement under this Article becomes effective, a
consent to it by a Holder of any Security is a continuing consent by the Holder
and every subsequent Holder of Securities of that Series or portion thereof that
evidences the same debt as the consenting Holder's Security, even if notation of
the consent is not made on any Security. However, any such Holder or subsequent
Holder may revoke the consent as to his Security or portion of a Security if the
Trustee receives the notice of revocation before the date the amendment,
supplement or waiver becomes effective.

    After an amendment or supplement becomes effective, it shall bind every
Securityholder of the affected Series.

SECTION 8.5 Notation on or Exchange of Securities.

    If an amendment changes the terms of a Security, the Trustee may require the
Holders of the Security to deliver it to the Trustee. The Trustee may place an
appropriate notation on the Securities of such Series regarding the changed
terms and return it to the Holders. Alternatively, if the Company or the Trustee
so determines, the Company in exchange for the Securities of such Series shall
issue and the Trustee shall authenticate new Securities of such Series that
reflect the changed terms. Failure to make the appropriate notation or to issue
a new Securities of such Series shall not affect the validity of such amendment.


                                       35
<PAGE>   40
SECTION 8.6  Trustee To Sign Amendments.

    The Trustee shall sign any supplemental indenture which sets forth an
amendment or supplement authorized pursuant to this Article if the amendment or
supplement does not adversely affect the rights, duties, liabilities or
immunities of the Trustee under this Indenture or otherwise. If it does, the
Trustee may but need not sign it. In signing such supplemental indenture the
Trustee shall be entitled to receive, and (subject to Section 6.1) shall be
fully protected in relying upon, an Officers' Certificate and an Opinion of
Counsel stating that such supplemental indenture is authorized or permitted by
this Indenture and, with respect to an amendment or supplement pursuant to
Section 8.2, evidence of the consents of Holders required in connection
therewith.

SECTION 8.7 Fixing of Record Dates.

    The Company may, but shall not be obligated to, fix a record date for the
purpose of determining the Holders entitled to take any action under this
Indenture by vote or consent. Except as provided herein, such record date shall
be the later of 30 days prior to the first solicitation of such consent or vote
or the date of the most recent list of Securityholders furnished to the Trustee
pursuant to Section 2.6 prior to such solicitation. If a record date is fixed,
those Persons who were Securityholders at such record date (or their duly
designated proxies), and only those Persons, shall be entitled to take such
action by vote or consent or to revoke any vote or consent previously given,
whether or not such Persons continue to be Holders after such record date;
provided, however, that unless such vote or consent is obtained from the Holders
(or their duly designated proxies) of the requisite principal amount of
outstanding Securities prior to the date which is the 120th day after such
record date, any such vote or consent previously given shall automatically and
without further action by any Holder be canceled and of no further effect.

                                   ARTICLE IX

                                   REDEMPTION

SECTION 9.1 Applicability of Article.

    Securities of any Series which are redeemable before their Stated Maturity
shall be redeemable in accordance with their terms and (except as otherwise
specified as contemplated by Section 2.1) in accordance with this Article.

SECTION 9.2 Election to Redeem; Notice to Trustee.

    The election of the Company to redeem Securities of any Series shall be
evidenced by a resolution of the Board of Directors. In case of any redemption
at the election of the Company, the Company shall, at least 60 days prior to the
Redemption Date fixed by the Company (unless a shorter notice shall be
satisfactory to the Trustee), notify the Trustee of such Redemption Date and of
the principal amount of Securities of such Series to be redeemed. In the case of
any redemption of such Securities (i) prior to the expiration of any restriction
on such redemption provided in the terms of such Securities or elsewhere in this
Indenture or (ii) that is subject to compliance with any conditions provided for
in the terms of such Securities or elsewhere in this Indenture, the Company
shall furnish the Trustee with an Officers' Certificate evidencing compliance
with such restriction or conditions.


                                       36
<PAGE>   41
SECTION 9.3 Selection by Trustee of Securities to be Redeemed.

    If less than all the Securities of the Series are to be redeemed, the
particular Securities to be redeemed shall be selected not more than 60 days
prior to the Redemption Date by the Trustee, from the outstanding Securities of
such Series not previously called for redemption, by such method as the Trustee
shall deem fair and appropriate and which may provide for the selection for
redemption of portions (equal to authorized denominations for Securities of that
Series) of the principal amount of Securities of such Series.

    The Trustee shall promptly notify the Company in writing of the Securities
selected for redemption and, in the case of any Securities selected for partial
redemption, the principal amount thereof to be redeemed.

    For all purposes of this Indenture, unless the context otherwise requires,
all provisions relating to the redemption of Securities of any Series shall
relate, in the case of any Securities redeemed or to be redeemed only in part,
to the portion of the principal amount of such Securities which has been or is
to be redeemed.

SECTION 9.4 Notice of Redemption.

    Notice of redemption shall be given by first-class mail, postage prepaid,
mailed not less than 30 nor more than 60 days prior to the Redemption Date, to
each Holder of Securities to be redeemed, at such Holder's registered address.

    All notices of redemption shall identify the Securities to be redeemed
(including CUSIP numbers) and shall state:

        (1) the Redemption Date,

        (2) the Redemption Price,

        (3) if less than all the outstanding Securities of such Series are to be
    redeemed, the identification (and, in the case of partial redemption, the
    principal amounts) of the particular Securities to be redeemed,

        (4) that on the Redemption Date, the Redemption Price will become due
    and payable upon each such Security to be redeemed and, if applicable, that
    interest thereon will cease to accrue on and after said date,

        (5) the place or places where such Securities are to be surrendered for
    payment of the Redemption Price, and

        (6) that the redemption is for a sinking fund, if such is the case.

    Notice of redemption of Securities of any Series to be redeemed at the
election of the Company shall be given by the Company or, at the Company's
request, by the Trustee in the name and at the expense of the Company. The
notice if mailed in the manner herein provided shall be conclusively presumed to
have been duly given, whether or not the Holder receives such notice. In any
case, a failure to give such notice by mail or any defect in the notice to the
Holder of any Security designated for redemption as a whole or in part shall not
affect the validity of the proceedings for the redemption of any other Security.


                                       37
<PAGE>   42
SECTION 9.5 Deposit of Redemption Price.

    Notice of redemption having been given as aforesaid, the Securities so to be
redeemed shall, on the Redemption Date, become due and payable at the Redemption
Price therein specified, and from and after such date (unless the Company shall
default in the payment of the Redemption Price and accrued interest) such
Securities shall cease to bear interest. Upon surrender of any such Security for
redemption in accordance with said notice, such Security shall be paid by the
Company at the Redemption Price, together with accrued interest to the
Redemption Date; provided, however, that installments of interest whose Stated
Maturity is on or prior to the Redemption Date shall be payable to the Holders
of such Securities registered as such at the close of business on the relevant
record dates according to their terms.

    If any Security called for redemption shall not be so paid upon surrender
thereof for redemption, the principal shall, until paid, bear interest from the
Redemption Date at the rate prescribed therefor in the Security.

SECTION 9.6 Securities Redeemed in Part.

    Any Security which is to be redeemed only in part shall be surrendered at
the office of the Paying Agent (with, if the Company or the Trustee for such
Security so requires, due endorsement by, or a written instrument of transfer in
form satisfactory to the Company and the Trustee duly executed by, the Holder
thereof or his attorney duly authorized in writing), and the Company shall
execute, and the Trustee shall authenticate and deliver to the Holder of such
Security without service charge, a new Security or Securities of the same
Series, of any authorized denomination as requested by such Holder, in aggregate
principal amount equal to and in exchange for the unredeemed portion of the
principal of the Security so surrendered.

                                    ARTICLE X

                                  MISCELLANEOUS

SECTION 10.1  Trust Indenture Act Controls.

    If any provision of this Indenture 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.

SECTION 10.2  Notices.

    Any notice or communication shall be in writing and delivered in person, or
mailed by first-class mail (certified, return receipt requested), addressed as
follows:

                  if to the Company:

                  Calpine Canada Energy Finance ULC
                  50 West San Fernando Street
                  San Jose, California 95113
                  Attention: Ann B. Curtis, Secretary


                                       38
<PAGE>   43
                  if to the Trustee:

                  Wilmington Trust Company
                  Rodney Square North
                  1100 North Market Street
                  Wilmington, DE 19890
                  Attention: Corporate Trust Administration

    The Company or the Trustee by notice to the others may designate additional
or different addresses for subsequent notices or communications. Any notice to
the Trustee under this Indenture shall be deemed given only when received by the
Trustee at the address specified in this Section 10.2.

    Any notice or communication to a Securityholder shall be mailed by
first-class mail to the Securityholder's address shown on the register kept by
the Registrar. Failure to mail a notice or communication to a Securityholder or
any defect in it shall not affect its sufficiency with respect to other
Securityholders.

    If a notice or communication is mailed in the manner provided above within
the time prescribed, it is duly given, whether or not the addressee receives it.

    If the Company mails a notice or communication to Securityholders, it shall
mail a copy to the Trustee and each Agent at the same time.

SECTION 10.3 Communication by Holders with Other Holders.

    Securityholders may communicate pursuant to TIA Section 312(b) with other
Securityholders with respect to their rights under this Indenture or the
Securities. The Company, the Trustee, the Registrar and anyone else shall have
the protection of TIA Section 312(c).

SECTION 10.4 Certificate and Opinion as to Conditions Precedent.

    Upon any request or application by the Company to the Trustee to take any
action under this Indenture, the Company shall, if requested by the Trustee,
furnish to the Trustee:

        (a) an Officers' Certificate in form reasonably satisfactory to the
    Trustee stating that, in the opinion of the signers, all conditions
    precedent (including any covenants compliance with which constitutes a
    condition precedent), if any, provided for in this Indenture relating to the
    proposed action have been complied with; and

        (b) an Opinion of Counsel in form reasonably satisfactory to the Trustee
    stating that, in the opinion of such counsel (which may rely upon an
    Officers' Certificate as to factual matters), all such conditions precedent
    have been complied with.

SECTION 10.5 Statements Required in Certificate or Opinion.

    Each Officers' Certificate or Opinion of Counsel with respect to compliance
with a condition or covenant provided for in this Indenture other than
certificates provided pursuant to Section 3.3 shall include:

        (a) a statement that the Person making such certificate or opinion has
    read such covenant or condition;


                                       39
<PAGE>   44
        (b) a brief statement as to the nature and scope of the examination or
    investigation upon which the statements or opinions contained in such
    certificate or opinion are based;

        (c) a statement that, in the opinion of such Person, he or she has made
    such examination or investigation as is necessary to enable him or her 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 or not, in the opinion of such Person,
such condition or covenant has been complied with.

SECTION 10.6 Rules by Trustee and Agents.

    The Trustee may make reasonable rules for action by or a meeting of
Securityholders. The Registrar or Paying Agent may make reasonable rules and set
reasonable requirements for its functions.

SECTION 10.7 Legal Holidays.

    A "Legal Holiday" is a Saturday, a Sunday or a day on which banking
institutions are not required to be open in the State of New York or the
State(s) in which the offices of the Trustee or the Paying Agent are located. If
a payment date is a Legal Holiday, payment may be made at that place on the next
succeeding day that is not a Legal Holiday, and no interest shall accrue for the
intervening period. If a regular record date is a Legal Holiday, the regular
record date shall not be affected.

SECTION 10.8  Successors; No Recourse Against Others.

    (a) All agreements of the Company in this Indenture and the Securities shall
bind its successor. All agreements of the Trustee in this Indenture shall bind
its successor.

    (b) All liability of the Company described in the Securities insofar as it
relates to any director, officer, employee or stockholder, as such, of the
Company is waived and released by each Securityholder.

SECTION 10.9 Duplicate Originals.

    The parties may sign any number of copies of this Indenture. One signed copy
is enough to prove this Indenture.

SECTION 10.10 Other Provisions.

    The first certificate pursuant to Section 3.3 shall be for the fiscal year
ending on December 31, 2000.

    The reporting date for Section 6.6 is April 15 of each year. The first
reporting date is April 15, 2001.

SECTION 10.11 Governing Law.

    The laws of the State of New York govern this Indenture and the Securities,
without regard to the conflicts of laws rules thereof.


                                       40
<PAGE>   45
                                   SIGNATURES

                                         CALPINE CANADA ENERGY FINANCE ULC

                                         By
                                           -------------------------------------
                                         Name:
                                         Title:



                                         WILMINGTON TRUST COMPANY,
                                         as Trustee

                                         By
                                           -------------------------------------

                                         Name:
                                         Title:


Dated:  [__________], 2001


                                       41
<PAGE>   46
                                                                       EXHIBIT A

                           (Form of Face of Security)

     [THIS SECURITY IS ISSUED IN GLOBAL FORM AND REGISTERED IN THE NAME OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC") OR A NOMINEE THEREOF.
UNLESS THIS SECURITY IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF DTC, TO THE
COMPANY (AS DEFINED BELOW) OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE
OR PAYMENT, AND ANY SECURITY ISSUED IS REGISTERED IN THE NAME OF CEDE & CO., OR
SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY
PAYMENT IS MADE TO CEDE & CO., OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR
VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED
OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

     UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR SECURITIES IN
DEFINITIVE REGISTERED FORM IN ACCORDANCE WITH THE TERMS HEREOF AND OF THE
INDENTURE (AS DEFINED BELOW), THIS SECURITY MAY NOT BE TRANSFERRED EXCEPT AS A
WHOLE BY DTC TO A NOMINEE OF DTC OR BY A NOMINEE OF DTC TO DTC OR ANOTHER
NOMINEE OF DTC OR BY DTC OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITORY OR A
NOMINEE OF SUCH SUCCESSOR DEPOSITORY.]*


                                      A-1
<PAGE>   47
                        CALPINE CANADA ENERGY FINANCE ULC

                              ___% SENIOR NOTE DUE

No.____                                                           $_____________
                                                                       CUSIP:
                                                                       ISIN:

     Calpine Canada Energy Finance ULC, an unlimited liability company organized
under the laws of Nova Scotia, Canada (the "Company"), promises to pay to [Cede
& Co.]*, or registered assigns, the principal sum of ____________ Dollars on
_______________.

                Interest Payment Dates: __________ and __________
                     Record Dates: __________ and __________

     This Security is fully and unconditionally guaranteed by Calpine
Corporation, a Delaware corporation, as set forth in the Guarantee Agreement,
dated [_________], 2001, made by Calpine Corporation and in the Guarantee
endorsed hereon.

     Additional provisions of this Security are set forth on the reverse hereof.

     IN WITNESS WHEREOF, the Company has caused this Security to be signed
manually or by facsimile by its duly authorized officers.

Date: _______________

                                        CALPINE CANADA ENERGY FINANCE ULC

                                        By ____________________________________
                                              Name:
                                              Title:

                                        By ____________________________________
                                              Name:
                                              Title:

TRUSTEE'S CERTIFICATE
OF AUTHENTICATION:

Wilmington Trust Company, as
Trustee, certifies that this is
one of the Securities referred to
in the Indenture.

By: _______________________________  Dated: __________________________________
           Authorized Officer

* Insert in Global Security only.


                                      A-2
<PAGE>   48
                          (Form of Reverse of Security)

                        CALPINE CANADA ENERGY FINANCE ULC
                           ___% SENIOR NOTE DUE _____


         (1) Interest. Calpine Canada Energy Finance ULC, an unlimited liability
company organized under the laws of Nova Scotia, Canada (such company, and its
successors and assigns under the Indenture referred to below, being herein
called the "Company"), promises to pay interest on the principal amount of this
Security at the interest rate per annum shown above. The Company will pay
interest semiannually on __________ and __________ of each year. Interest on the
Securities of this Series will accrue from the most recent date to which
interest has been paid or duly provided for or, if no interest has been paid or
duly provided for, from ________________. Interest will be computed as set forth
in the Directors' Certificate or supplemental indenture delivered pursuant to
Section 2.1.

         (2) Method of Payment. The Company will pay interest on the Securities
of this Series (except Defaulted Interest) to the persons who are registered
Holders of Securities of this Series at the close of business on the record date
next preceding the interest payment date even though such Securities are
canceled after the record date and on or before the interest payment date.
Holders must surrender Securities to a Paying Agent to collect principal
payments. The Company will pay principal and interest in money of the United
States that at the time of payment is legal tender for payment of public and
private debts. However, the Company may pay principal and interest by check
payable in such money. It may mail an interest check to a Holder's registered
address.

         (3) Paying Agent, Registrar. Initially, The Wilmington Trust Company, a
Delaware banking corporation (the "Trustee"), will act as Paying Agent and
Registrar. The Company may change any Paying Agent, Registrar or co-registrar
without notice. The Company may act as Paying Agent, Registrar or co-registrar.

         (4) Indenture. The Company issued the Securities of this Series under
an Indenture dated as of _______________ (the "Indenture") between the Company
and the Trustee. The Securities are unsecured general obligations of the Company
issued and to be issued in one or more Series under the Indenture and may be
issued in an unlimited principal amount. The terms of the Securities include
those stated in the Indenture and those made part of the Indenture by reference
to the Trust Indenture Act of 1939 (15 U.S. Code Sections 77aaa-77bbbb) (the
"TIA"). Capitalized terms used herein but not defined herein are used as defined
in the Indenture. The Securities are subject to all such terms, and
Securityholders are referred to the Indenture and the TIA for a statement of
such terms.

         (5) Guarantee. The Securities of this Series are entitled to the
benefits under the Guarantee Agreement, dated [_________], 2001 (the "Guarantee
Agreement"), made by Calpine Corporation, a Delaware corporation.

         (6) Redemption. [set forth redemption provision.]

         (7) Denominations; Transfer; Exchange. The Securities of this Series
are in registered form without coupons in denominations of $1,000 and any
integral multiple thereof [or as otherwise set forth in the Security]. The
transfer of Securities may be registered and Securities may be exchanged as
provided in the Indenture. The Registrar may require a Holder, among other
things, to furnish appropriate endorsements and transfer documents and to pay
any taxes and fees required by law or permitted by the Indenture. The Company
shall not be required (A) to issue, register the transfer of or exchange any
Securities of a Series during a period beginning at the opening of business 15
days before the day of the mailing of a notice of redemption of any such
Securities


                                      A-3
<PAGE>   49
selected for redemption under Section 9.3 of the Indenture and ending at the
close of business on the day of such mailing or (B) to register the transfer of
or exchange any Security so selected for redemption in whole or in part, except
the unredeemed portion of any Security being redeemed in part.

         (8) Defeasance. Subject to certain conditions and unless otherwise
provided in the terms of the Securities of this Series, the Company at any time
may terminate some or all of its obligations under the Securities and the
Indenture if the Company deposits with the Trustee money and/or U.S. Government
Obligations for the payment of principal and interest on the Securities to
maturity.

         (9) Persons Deemed Owners. The registered Holder of a Security may be
treated as its owner for all purposes, except that interest (other than
Defaulted Interest) will be paid to the person that was the registered Holder on
the relevant record date for such payment of interest.

         (10) Amendments and Waivers. Subject to certain exceptions, (i) the
Indenture or the Securities may be amended or supplemented with the consent of
the Holders of a majority in principal amount of the Securities of each Series
affected; and (ii) any existing default with respect to the Securities of this
Series may be waived with the consent of the Holders of a majority in principal
amount of the Securities of such Series. Without the consent of any
Securityholder, the Indenture or the Securities may be amended or supplemented
to cure any ambiguity, omission, defect or inconsistency, to provide for
assumption of Company obligations to Securityholders or to provide for
uncertificated Securities in addition to or in place of certificated Securities,
to provide for guarantees with respect to, or security for, the Securities, or
to comply with the TIA or to add additional covenants or surrender Company
rights, or to make any change that does not adversely affect the rights of any
Securityholder.

         (11) Remedies. If an Event of Default with respect to the Securities of
this Series occurs and is continuing, the Trustee or Holders of at least 25% in
principal amount of the Securities of this Series may declare all the Securities
of this Series to be due and payable immediately. Securityholders may not
enforce the Indenture, the Guarantee Agreement and the Guarantee or the
Securities of this Series except as provided in the Indenture. The Trustee may
require an indemnity before it enforces the Indenture or the Securities. Subject
to certain limitations, Holders of a majority in principal amount of the
Securities of a Series may direct the Trustee in its exercise of any trust or
power with respect to such Series. The Trustee may withhold from Securityholders
notice of any continuing default (except a Default in payment of principal or
interest) if it determines that withholding notice is in their interests. The
Company must furnish an annual compliance certificate to the Trustee.

         (12) Trustee Dealings with Company. Subject to the provisions of the
TIA, the Trustee under the Indenture, in its individual or any other capacity,
may make loans to, accept deposits from, and perform services for the Company or
its Affiliates, and may otherwise deal with the Company or its Affiliates, as if
it were not Trustee. The Trustee will initially be Wilmington Trust Company.

         (13) No Recourse Against Others. A director, officer, employee or
stockholder, as such, of the Company or the Guarantor shall not have any
liability for any obligations of the Company under the Securities or the
Indenture or for any claim based on, in respect of or by reason of such
obligations or their creation. Each Securityholder by accepting a Security
waives and releases all such liability. The waiver and release are part of the
consideration for the issue of the Securities.


                                      A-4
<PAGE>   50
         (14) Authentication. This Security shall not be valid until
authenticated by the manual signature of an authorized officer of the Trustee or
an authenticating agent.

         (15) Abbreviations. Customary abbreviations may be used in the name of
a Securityholder or an assignee, such as: TEN COM (= tenants in common), TEN ENT
(= tenants by the entireties), JT TEN (= joint tenants with right of
survivorship and not as tenants in common), CUST (= Custodian), and U/G/M/A
(= Uniform Gifts to Minors Act).

         Pursuant to a recommendation promulgated by the Committee on Uniform
Security Identification Procedures the Company has caused CUSIP numbers to be
printed on the Securities. No representation is made as to the accuracy of such
numbers as printed on the Securities and reliance may be placed only on the
other identification numbers placed thereon.

         THE COMPANY WILL FURNISH TO ANY SECURITYHOLDER UPON WRITTEN REQUEST AND
WITHOUT CHARGE A COPY OF THE INDENTURE, WHICH HAS IN IT THE TEXT OF THIS
SECURITY IN TWELVE-POINT TYPE. REQUESTS MAY BE MADE TO: SECRETARY, CALPINE
CORPORATION, 50 WEST SAN FERNANDO STREET, SAN JOSE, CALIFORNIA 95113.

                                    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 thereof, 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.

         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.


                                      A-5
<PAGE>   51
         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.

                                                  CALPLINE CORPORATION

                                                  By: __________________________
                                                        Name:
                                                        Title:


                                      A-6
<PAGE>   52
                                 ASSIGNMENT FORM

To assign this Security, fill in the form below:

     I  or we assign and transfer this Security to

                  (Insert assignee's soc. sec or tax I.D. no.)

_______________________________________________________________________________

_______________________________________________________________________________

_______________________________________________________________________________

              (Print or type assignee's name, address and zip code)


and irrevocably appoint ____________________ agent to transfer this Security on
the books of the Company. The agent may substitute another to act for him.

Dated: _______________________               Signed: __________________________
                                             (Sign exactly as your name appears
                                             on the other side of this Security)


Signature Guarantee: ___________________________________________________________

Signatures must be guaranteed by an "eligible guarantor institution" meeting the
requirements of the Registrar, which requirements include membership or
participation in the Security Transfer Agent Medallion Program ("STAMP") or such
other "signature guarantee program" as may be determined by the Registrar in
addition to, or in substitution for, STAMP, all in accordance with the
Securities Exchange Act of 1934, as amended.


                                      A-7
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-4.4
<SEQUENCE>5
<FILENAME>f70590mex4-4.txt
<DESCRIPTION>FORM OF GUARANTEE AGREEMENT
<TEXT>

<PAGE>   1
                                                                     Exhibit 4.4



                               GUARANTEE AGREEMENT


                                     made by


                               CALPINE CORPORATION


                    as Guarantor of Debt Securities Issued by
                        CALPINE CANADA ENERGY FINANCE ULC

                                   dated as of


                               [__________], 2001
<PAGE>   2
                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                  Page
                                                                                  ----
<S>                                                                               <C>
ARTICLE ONE    DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION...............1

            SECTION 1.01. Definitions................................................1

ARTICLE TWO    GUARANTEE.............................................................4

            SECTION 2.01. Unconditional Guarantee....................................4

            SECTION 2.02. Execution of Guarantee.....................................5

            SECTION 2.03. Subordination of Subrogation and Other Rights..............5

ARTICLE THREE    CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE................5

            SECTION 3.01. Guarantor May Consolidate, Etc., Only on Certain Terms.....5

            SECTION 3.02. Successor Substituted......................................6

            SECTION 3.03. Assignment to the Guarantor of the Company's Obligations...6

ARTICLE FOUR    AMENDMENTS...........................................................7

            SECTION 4.01. Amendments Without Consent of Holders......................7

            SECTION 4.02. Amendments With Consent of Holders.........................7

            SECTION 4.03. Execution of Amendments....................................8

            SECTION 4.04. Effect of Amendments.......................................8

            SECTION 4.05. Conformity With Trust Indenture Act........................8

            SECTION 4.06. Reference in Guarantees to Amendments......................8

ARTICLE FIVE    COVENANTS............................................................8

            SECTION 5.01. Money for Security Payments To Be Held in Trust............8

            SECTION 5.02. Limitation on Sale/Leaseback Transactions..................9

            SECTION 5.03. Limitation on Liens........................................9

            SECTION 5.04. Waiver of Certain Covenants...............................10
</TABLE>
<PAGE>   3
<TABLE>
<S>                                                                                  <C>
            SECTION 5.05. Reports by Guarantor..................................... 11

ARTICLE SIX    MISCELLANEOUS....................................................... 11

            SECTION 6.01. Trust Indenture Act...................................... 11

            SECTION 6.02. Effect of Headings and Table of Contents................. 11

            SECTION 6.03. Successors and Assigns................................... 11

            SECTION 6.04. Separability Clause...................................... 12

            SECTION 6.05. Benefits of Agreement.................................... 12

            SECTION 6.06. Governing Law............................................ 12

            SECTION 6.07. Notices, Etc., to the Guarantor.......................... 12
</TABLE>

                                       ii
<PAGE>   4
            GUARANTEE AGREEMENT (this "Agreement"), dated as of [__________],
2001, made by Calpine Corporation, a Delaware corporation (the "Guarantor"),
whose principal place of business is 50 West San Fernando Street, San Jose, CA
95113, the parent of Calpine Canada Energy Finance 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
[__________], 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 the Securities 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, 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
<PAGE>   5
             (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 hereunder (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


                                        2
<PAGE>   6
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 existing on the date of this Indenture or Incurred in
compliance with the Indenture (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.

            "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


                                       3
<PAGE>   7
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 each
Series of Securities 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 each
Series of Securities and all other obligations of the Company to the Holders or
the Trustee hereunder or under the Indenture or such Series of Securities 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
each Series of Securities, of the Indenture or of any Series of Securities, the
absence of any action to enforce the same, any waiver or consent by any Holder
of any Series of Securities or the Trustee with respect to any provisions hereof
or thereof, 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 each Series of
Securities. 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


                                       4
<PAGE>   8
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.

            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 or amalgamate 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:


                                       5
<PAGE>   9
             (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
     indenture 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 such consolidation, merger, sale, assignment,
     conveyance, transfer, disposition or lease and such supplemental indenture
     comply with this Indenture 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 or amalgamate 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, merger or amalgamation, 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 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.


                                       6
<PAGE>   10
                                  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 secure the Securities; 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:

            (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.


                                       7
<PAGE>   11
            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.


                                       8
<PAGE>   12
             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 this 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,


                                       9
<PAGE>   13
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, 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


                                       10
<PAGE>   14
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 Commission,
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 Commission may from
time to time by rules and regulations prescribe) which the Guarantor is required
to file with the Commission 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.

                                   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.

            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.


                                       11
<PAGE>   15
            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.

            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.


                                       12
<PAGE>   16
            IN WITNESS WHEREOF, the Guarantor has duty executed this Agreement
as of the date first above written.

                                             CALPINE CORPORATION, as Guarantor


                                             By:
                                                   Name:
                                                   Title:

Agreed and Accepted:

WILMINGTON TRUST COMPANY,
    as Trustee under the Indenture


By:
      Name:
      Title:


                                       13
<PAGE>   17
                                                                       EXHIBIT A

                                FORM OF GUARANTEE

            For value received, CALPINECORPORATION, 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 thereof, 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.

            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.


                                       A-1
<PAGE>   18
            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.

                                             CALPLINE CORPORATION

                                             By:
                                                   Name:
                                                   Title:

                                      A-2
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-12.1
<SEQUENCE>6
<FILENAME>f70590mex12-1.txt
<DESCRIPTION>STATEMENT REGARDING COMPUTATION OF RATIOS
<TEXT>

<PAGE>   1
                                                                Exhibit 12.1

CREATED BY EDGAR ONLINE, INC.

                   CALPINE CORP
                 INCOME STATEMENT3
             PERIOD END: DEC 31, 2000
              DATE FILED: MAR 15,2001
  VALUES IN THIS WORKSHEET ARE IN THOUSANDS, EXCEPT
                    WHERE NOTED.
<TABLE>
<CAPTION>                                                            Year Ending December 31,
                                                   ------------------------------------------------------------
                                                     1996         1997        1998         1999         2000
                                                   ------------------------------------------------------------
<S>                                                <C>         <C>          <C>          <C>          <C>
(in thousands)
COMPUTATION OF EARNINGS:
------------------------
Pretax income before adjustment
  for minority interests in
  consolidated subsidiaries and
  income or loss from equity
  investees ...................................    $21,219      $37,340      $48,133     $121,623     $521,683
Fixed charges .................................     48,672       72,718      100,015      153,268      331,023
Amortization of capitalized
  interest ....................................         --           --          136          331          447
Distributed income of equity
  investees ...................................      1,274       21,042       27,717       43,318       29,979
Interest capitalized ..........................         --       (6,200)      (7,000)     (47,300)    (206,973)
Minority interest in pretax
  income of subsidiaries that
  have not incurred fixed
  charges .....................................         --           --           --          265         (895)
                                                   -------     --------     --------     --------     --------
Total earnings ................................    $71,165     $124,900     $169,001     $271,505     $675,264
                                                   =======     ========     ========     ========     ========
COMPUTATION OF FIXED CHARGES:
-----------------------------
Interest expensed and
  capitalized .................................    $45,294      $67,666      $93,726     $138,462     $263,673
Estimate of interest within
  rental expense ..............................      3,378        5,052        6,289       12,241       23,140
Distributions on HIGH TIDES ...................         --           --           --        2,565       44,210
                                                   -------     --------     --------     --------     --------
Total fixed charges ...........................    $48,672      $72,718     $100,015     $153,268     $331,023
                                                   =======     ========     ========     ========     ========
Ratio of earnings to fixed
  charges .....................................       1.46         1.72         1.69         1.77         2.04
</TABLE>




Page 1 of 1                    Copyright 2000 by              Version 2.00/2.000
                               Edgar Online, Inc.
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-23.1
<SEQUENCE>7
<FILENAME>f70590mex23-1.txt
<DESCRIPTION>CONSENT OF ARTHUR ANDERSEN LLP
<TEXT>

<PAGE>   1
                                                                 Exhibit 23.1

                    CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS

As independent public accountants, we hereby consent to the incorporation by
reference in this Registration Statement of our report dated March 14, 2001
included in Calpine Corporation's Form 10-K for the year ended December 31, 2000
and to all references to our Firm included in this Registration Statement.

San Francisco, California
March 20, 2001

</TEXT>
</DOCUMENT>
</SUBMISSION>
