<SUBMISSION>
<ACCESSION-NUMBER>0001095811-01-505003
<TYPE>S-3/A
<PUBLIC-DOCUMENT-COUNT>10
<FILING-DATE>20010920
<FILER>
<COMPANY-DATA>
<CONFORMED-NAME>CALPINE CANADA ENERGY FINANCE ULC
<CIK>0001137032
<ASSIGNED-SIC>
<STATE-OF-INCORPORATION>A5
<FISCAL-YEAR-END>1231
</COMPANY-DATA>
<FILING-VALUES>
<FORM-TYPE>S-3/A
<ACT>33
<FILE-NUMBER>333-67446-02
<FILM-NUMBER>1740742
</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>
<FILER>
<COMPANY-DATA>
<CONFORMED-NAME>CALPINE CANADA ENERGY FINANCE II ULC
<CIK>0001157373
<ASSIGNED-SIC>
<IRS-NUMBER>871031613
</COMPANY-DATA>
<FILING-VALUES>
<FORM-TYPE>S-3/A
<ACT>33
<FILE-NUMBER>333-67446-01
<FILM-NUMBER>1740741
</FILING-VALUES>
<BUSINESS-ADDRESS>
<STREET1>800, PURDY'S WHARF, TOWER 1
<STREET2>1959 UPPER WATER STREET, P.O. BOX 997
<CITY>HALIFAX
<STATE>A1
<ZIP>00000
<PHONE>4087921158
</BUSINESS-ADDRESS>
</FILER>
<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/A
<ACT>33
<FILE-NUMBER>333-67446
<FILM-NUMBER>1740740
</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>
<DOCUMENT>
<TYPE>S-3/A
<SEQUENCE>1
<FILENAME>f74776a1s-3a.txt
<DESCRIPTION>AMENDMENT NO. 1 TO FORM S-3
<TEXT>
<PAGE>   1


   AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON SEPTEMBER 19, 2001


                                                      REGISTRATION NO. 333-67446

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

                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                            ------------------------


                                AMENDMENT NO. 1


                                       TO


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

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

<Table>
<S>                                    <C>                                    <C>
               DELAWARE                                 4911                                77-0212977
             NOVA SCOTIA                                4911                              NOT APPLICABLE
             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 CANADA ENERGY FINANCE ULC
                                                                   CALPINE CANADA ENERGY FINANCE II ULC
                                                                    SUITE 800, PURDY'S WHARF, TOWER 1
                  CALPINE CORPORATION                                    1959 UPPER WATER STREET
              50 WEST SAN FERNANDO STREET                                      P.O. BOX 997
               SAN JOSE, CALIFORNIA 95113                              HALIFAX, NOVA SCOTIA B3J 3N2
                     (408) 995-5115                                           (902) 420-3335
  (ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,      (ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
                       INCLUDING                                                INCLUDING
AREA CODE, OF REGISTRANTS' PRINCIPAL EXECUTIVE OFFICES)  AREA CODE, OF REGISTRANTS' PRINCIPAL EXECUTIVE OFFICES)

                                                                              ANN B. CURTIS
                                                                  EXECUTIVE VICE PRESIDENT AND SECRETARY
                    PETER CARTWRIGHT                                CALPINE CANADA ENERGY FINANCE ULC
    CHAIRMAN, PRESIDENT AND CHIEF EXECUTIVE OFFICER,               CALPINE CANADA ENERGY FINANCE II ULC
                  CALPINE CORPORATION                                    C/O CALPINE CORPORATION
              50 WEST SAN FERNANDO STREET                              50 WEST SAN FERNANDO STREET
               SAN JOSE, CALIFORNIA 95113                               SAN JOSE, CALIFORNIA 95113
                     (408) 995-5115                                           (408) 995-5115
   (NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE        (NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE
                        NUMBER,                                                  NUMBER,
       INCLUDING AREA CODE, OF AGENT FOR SERVICE)               INCLUDING AREA CODE, OF AGENT FOR SERVICE)
</Table>

                                WITH COPIES TO:

<Table>
<S>                                                      <C>
                    BRUCE C. BENNETT                                          JOSEPH A. COCO
                  COVINGTON & BURLING                            SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP
              1330 AVENUE OF THE AMERICAS                                   FOUR TIMES SQUARE
                NEW YORK, NEW YORK 10019                                 NEW YORK, NEW YORK 10036
                     (212) 841-1000                                           (212) 735-3000
</Table>

        APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
  From time to time after the effective date of this Registration Statement as
                        determined by market conditions.

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

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

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

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

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


    THE REGISTRANTS HEREBY AMEND THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANTS
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME EFFECTIVE
ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A), MAY
DETERMINE.



    PURSUANT TO RULE 429 UNDER THE SECURITIES ACT, THE PROSPECTUS IN THIS
REGISTRATION STATEMENT ALSO RELATES TO $275,000,000 OF UNSOLD COMMON STOCK,
PREFERRED STOCK AND DEBT SECURITIES OF CALPINE CORPORATION REGISTERED ON
REGISTRATION STATEMENT NO. 333-40652 PREVIOUSLY FILED BY CALPINE CORPORATION ON
FORM S-3 AND DECLARED EFFECTIVE ON AUGUST 3, 2000, AND $1,000,000,000 OF UNSOLD
COMMON STOCK, PREFERRED STOCK AND DEBT SECURITIES OF CALPINE CORPORATION AND
DEBT SECURITIES OF CALPINE CANADA ENERGY FINANCE ULC GUARANTEED BY CALPINE
CORPORATION REGISTERED ON REGISTRATION STATEMENT NO. 333-57338, PREVIOUSLY FILED
BY CALPINE CORPORATION AND CALPINE CANADA ENERGY FINANCE ULC ON FORM S-3 AND
DECLARED EFFECTIVE ON APRIL 19, 2001. PURSUANT TO RULE 457 UNDER THE SECURITIES
ACT, NO ADDITIONAL FILING FEE IS DUE ON SUCH SECURITIES IN CONNECTION WITH THIS
REGISTRATION STATEMENT. THIS REGISTRATION STATEMENT CONSTITUTES A POST-EFFECTIVE
AMENDMENT TO EACH OF REGISTRATION STATEMENTS NOS. 333-40652 AND 333-57338 AND
SUCH POST-EFFECTIVE AMENDMENTS SHALL BECOME EFFECTIVE CONCURRENTLY WITH THE
EFFECTIVENESS OF THIS REGISTRATION STATEMENT AND IN ACCORDANCE WITH SECTION 8(C)
OF THE SECURITIES ACT.

--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
<PAGE>   2

                        CALCULATION OF REGISTRATION FEE


<Table>
<S>                              <C>                    <C>                    <C>                    <C>
-------------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------------------
    TITLE OF EACH CLASS OF                                 PROPOSED MAXIMUM       PROPOSED MAXIMUM
          SECURITIES                  AMOUNT TO BE        OFFERING PRICE PER     AGGREGATE OFFERING        AMOUNT OF
       TO BE REGISTERED           REGISTERED(1)(2)(3)       UNIT(1)(2)(3)          PRICE(1)(2)(3)      REGISTRATION FEE
-------------------------------------------------------------------------------------------------------------------------
Common Stock, par value $.001
  per share, of Calpine
  Corporation(4)...............
-------------------------------------------------------------------------------------------------------------------------
Preferred Stock, par value
  $.001 per share, of Calpine
  Corporation(5)...............
-------------------------------------------------------------------------------------------------------------------------
Debt Securities of Calpine
  Corporation(5)...............
-------------------------------------------------------------------------------------------------------------------------
Debt Securities of Calpine
  Canada Energy Finance ULC....
-------------------------------------------------------------------------------------------------------------------------
Debt Securities of Calpine
  Canada Energy Finance II
  ULC..........................
-------------------------------------------------------------------------------------------------------------------------
Guarantees of Calpine
  Corporation(6)...............
-------------------------------------------------------------------------------------------------------------------------
          Total................      $1,500,000,000              100%              $1,500,000,000         $375,000(7)
-------------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------------------
</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 our common
    stock, preferred stock and debt securities registered hereunder (or, in the
    case of debt securities issued with original issue discount, the principal
    amount at maturity thereof) will not exceed $1,500,000,000.

(4) Includes certain preferred stock purchase rights (the "Rights") associated
    with shares of the common stock of Calpine Corporation. Until the occurrence
    of certain prescribed events, none of which have occurred, the Rights are
    not exercisable, are evidenced by the certificate representing the common
    stock and will be transferred along with and only with the common stock.

(5) 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.

(6) The debt securities to be issued by Calpine Canada Energy Finance ULC and
    Calpine Canada Energy Finance II ULC will be irrevocably and unconditionally
    guaranteed on an unsecured senior basis by Calpine Corporation. No separate
    consideration will be received for the guarantees of Calpine Corporation
    and, therefore, no additional registration fee is payable in respect of the
    registration of such guarantees.


(7)Previously paid.

<PAGE>   3

INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.


                SUBJECT TO COMPLETION, DATED SEPTEMBER 19, 2001


PROSPECTUS

<Table>
<S>                             <C>                                          <C>
                                            CALPINE CORPORATION
                                                Common Stock
                                              Preferred Stock
[CALPINE CORP. LOGO]                          Debt Securities
</Table>

                       CALPINE CANADA ENERGY FINANCE ULC

                   Debt Securities Fully and Unconditionally
                       Guaranteed by Calpine Corporation

                      CALPINE CANADA ENERGY FINANCE II 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.

     Calpine Canada Energy Finance ULC and Calpine Canada Energy Finance II ULC
may each periodically sell debt securities to the public. Such debt securities
will be fully and unconditionally guaranteed by Calpine Corporation. Calpine
Canada Energy Finance ULC or Calpine Canada Energy Finance II ULC, as the case
may be, 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 THESE SECURITIES INVOLVES CERTAIN RISKS. SEE "RISK FACTORS" ON
PAGE 11.

     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 these securities unless it is
accompanied by a prospectus supplement.

                      Prospectus dated             , 2001.
<PAGE>   4

     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.................    1
Calpine Corporation...................    2
Calpine Canada Energy Finance ULC.....    9
Calpine Canada Energy Finance II
  ULC.................................   10
Risk Factors..........................   11
Where You Can Find More Information;
  Documents Incorporated by
  Reference...........................   11
Forward-Looking Statements............   13
Calpine Consolidated Ratio of Earnings
  to Fixed Charges....................   14
</Table>


<Table>
<Caption>
                                        PAGE
                                        ----
<S>                                     <C>
Use of Proceeds.......................   14
Plan of Distribution..................   14
Description of Capital Stock..........   16
Description of the Debt Securities....   21
Certain United States Federal Income
  Tax Consequences....................   36
Certain Canadian Federal Income Tax
  Considerations......................   51
Legal Matters.........................   51
Experts...............................   52
</Table>


                                        i
<PAGE>   5

                             ABOUT THIS PROSPECTUS


     This document is called a prospectus and is part of a joint registration
statement that Calpine Corporation, Calpine Canada Energy Finance ULC and
Calpine Canada Energy Finance II ULC, which we refer to as "Energy Finance" and
"Energy Finance II," respectively, 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 its common stock, preferred stock
and debt securities described in this prospectus, and Energy Finance and Energy
Finance II may from time to time sell their respective debt securities fully and
unconditionally guaranteed by Calpine described in this prospectus, in one or
more offerings which will aggregate up to a total dollar amount of
$2,775,000,000, which amount includes over-allotment options with regard to
certain securities. Unless otherwise indicated, references in this prospectus to
"$" are to the lawful currency of the United States.


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


     - all of the voting rights of each of Energy Finance and Energy Finance II
       are owned by Calpine, either directly or through wholly-owned
       subsidiaries of Calpine, which files periodic and other reports with the
       SEC pursuant to the Securities Exchange Act of 1934, as amended;


     - Neither Energy Finance nor Energy Finance II has operations other than
       the investment of funds in Calpine or its subsidiaries; and

     - Calpine will fully and unconditionally guarantee the obligations of
       Energy Finance and Energy Finance II, and the rights of holders of their
       debt securities, and no subsidiary of Calpine will guarantee the
       obligations of Energy Finance or Energy Finance II.

     This prospectus provides you with a general description of the common
stock, preferred stock and debt securities we may offer. Each time we sell such
securities, whether by Calpine, Energy Finance or Energy Finance II, 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; Documents Incorporated by Reference."

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

     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 "Energy Finance" are to
Calpine Canada Energy Finance ULC, references to "Energy Finance II" are to
Calpine Canada Energy Finance II 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. On April 19, 2001, we acquired Encal Energy Ltd.
("Encal") in a merger transaction that was accounted for as a
pooling-of-interests. All financial information contained in this prospectus has
been restated for all periods presented as if Encal and Calpine had always been
combined.


                                        1
<PAGE>   6

                              CALPINE CORPORATION


     We are a leading independent power company engaged in the development,
acquisition, ownership and operation of power generation facilities and the sale
of electricity and steam in the United States, Canada and the United Kingdom. We
have experienced significant growth in all aspects of our business over the last
five years. Currently, we own interests in 59 power plants having a net capacity
of 10,826 megawatts. We also have 29 gas-fired projects under construction
having a net capacity of 16,032 megawatts and have announced plans to develop 27
gas-fired projects (power plants and expansions of current facilities) with a
net capacity of 15,505 megawatts. Upon completion of the projects under
construction, we will have interests in 84 power plants located in 22 U.S.
states, Canada and the United Kingdom, having a net capacity of 26,858
megawatts. Of this total generating capacity, 97% will be attributable to
gas-fired facilities and 3% will be attributable to geothermal facilities. As a
result of our expansion program, our revenues, 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
                                                --------    ---------    ---------------
                                                    (IN MILLIONS)
<S>                                             <C>         <C>          <C>
Total Revenue.................................  $  291.5    $ 2,547.1           72%
Net Income....................................      14.8        372.6          124%
Total Assets..................................   1,245.0     10,323.2           70%
</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, power
marketing 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.

     We are a corporation organized and existing under the laws of the State of
Delaware. Our principal executive office is located at 50 West San Fernando
Street, San Jose, California 95113. Our registered office is located at 9 East
Loockerman Street, Dover, Delaware 19901, c/o National Registered Agents, Inc.

                                        2
<PAGE>   7

CAPITALIZATION


     The following table sets forth, as of June 30, 2001 (1) Calpine's actual
consolidated capitalization; and (2) Calpine's consolidated capitalization as
adjusted to reflect the net effect of (a) the amendment on July 26, 2001 of
Calpine's Amended and Restated Certificate of Incorporation to increase from
500,000,000 to 1,000,000,000 the number of shares of common stock that Calpine
has the authority to issue, (b) the borrowings under the Calpine Construction
Finance Company debt revolvers during July and August of 2001, (c) borrowings
under the $275,000,000 Bridge Credit Agreement, dated as of August 15, 2001,
among Calpine, as borrower, the various financial institutions parties thereto
as lenders, Credit Suisse First Boston, as co-arranger and documentation agent,
Bayerische Landesbank Girozentrale, as lead arranger and syndication agent, and
The Bank of Nova Scotia, as lead arranger and administrative agent, (d)
borrowings under the $525,000,000 Bridge Credit Agreement, dated as of August
20, 2001, among Calpine Canada Energy Finance, as borrower, the various
financial institutions parties thereto, as lenders, Credit Suisse First Boston,
as co-arranger and documentation agent, Bayerische Landesbank Girozentrale, as
lead arranger and syndication agent, and The Bank of Nova Scotia, as lead
arranger and administrative agent, (e) borrowings under the $400,000,000 Bridge
Credit Agreement, dated as of August 22, 2001, among Calpine Canada Energy
Finance II ULC, as borrower, the various financial institutions parties thereto
as lenders, Credit Suisse First Boston, as co-arranger and documentation agent,
Bayerische Landesbank Girozentrale, as lead arranger and syndication agent, and
The Bank of Nova Scotia, as lead arranger and administrative agent, (f)
Calpine's acquisition of Michael Petroleum Corporation, including the assumption
of debt in connection therewith as described below under "-- Recent
Developments", (g) Calpine's acquisition of the Saltend, Yorkshire, England
cogeneration facility as described below under "--Recent Developments" and (h)
borrowings under the $400 million revolving line of credit with a consortium of
commercial lending institutions with The Bank of Nova Scotia as agent. The
adjustments do not reflect normal day-to-day operations or the potential
issuance of securities offered hereby. This table should be read in conjunction
with the consolidated financial statements and related notes thereto and the
unaudited consolidated condensed financial statements and related notes thereto
incorporated by reference in this prospectus.




                                        3
<PAGE>   8


<Table>
<Caption>
                                                                  JUNE 30, 2001
                                                            --------------------------
                                                              ACTUAL       AS ADJUSTED
                                                            -----------    -----------
                                                                   (UNAUDITED)
                                                              (IN THOUSANDS, EXCEPT
                                                                  SHARE AMOUNTS)
<S>                                                         <C>            <C>
SHORT-TERM DEBT:
Notes payable and borrowings under lines of credit,
  current portion.........................................  $     1,258    $     1,258
Project financing, current portion........................        1,396          1,396
Capital lease obligation, current portion.................        2,251          2,251
Zero-Coupon Convertible Debentures Due 2021...............    1,000,000      1,000,000
                                                            -----------    -----------
                                                              1,004,905      1,004,905
LONG-TERM DEBT:
Notes payable and borrowings under lines of credit, net of
  current portion.........................................       10,587      1,204,337
Project financing, net of current portion.................    1,776,435      2,437,418
Senior notes..............................................    5,096,750      5,096,750
Capital lease obligation, net of current portion..........      208,839        208,839
                                                            -----------    -----------
     Total long-term debt.................................    7,092,611      8,947,344
                                                            -----------    -----------
Company-obligated mandatorily redeemable convertible
  preferred securities of subsidiary trusts...............    1,122,706      1,122,706
Minority interests........................................       40,733         82,579
                                                            -----------    -----------
STOCKHOLDERS' EQUITY:
Preferred stock, $.001 par value:
  10,000,000 shares authorized; one share outstanding,
     actual and as adjusted...............................           --             --
                                                            -----------    -----------
Common stock, $.001 par value:
  500,000,000 shares authorized, actual, and 1,000,000,000
     shares authorized, as adjusted; 304,162,586 shares
     outstanding, actual and as adjusted..................          304            304
Additional paid-in capital................................    1,993,849      1,993,849
Retained earnings.........................................      775,223        775,223
Accumulated other comprehensive income....................       78,411         78,411
                                                            -----------    -----------
     Total stockholders' equity...........................    2,847,787      2,847,787
                                                            -----------    -----------
     Total capitalization.................................  $12,108,742    $14,005,321
                                                            ===========    ===========
</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, as well as 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.

                                        4
<PAGE>   9

     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 this 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,
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.

     - 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


     In addition to the recent developments described below, please see the
recent developments described in our Annual Report on Form 10-K for the year
ended December 31, 2000, our Quarterly Reports on Form 10-Q for the quarters
ended March 31, 2001 and June 30, 2001, and our Current Reports on Form 8-K
filed on April 10, 2001, April 19, 2001, April 30, 2001, June 26, 2001, July 9,
2001, July 13, 2001, July 17, 2001, July 27, 2001, September 5, 2001 and
September 10, 2001, each of which are incorporated by reference in this
prospectus.



     On July 5, 2001, we announced an agreement to acquire a 1,200-megawatt
natural gas-fired power plant at Saltend near Hull, Yorkshire, England from
Entergy Wholesale Operations for up to approximately L562.5 million
(approximately U.S.$800 million at current exchange rates). The Saltend
facility, a cogeneration facility, provides electricity and steam for BP
Chemical's Hull Works plant under a 15-year agreement. The balance of the
Saltend facility's electricity output is sold into the deregulated UK power
market. The Saltend transaction is our first acquisition of a power facility in
Europe. The acquisition closed on August 24, 2001.



     On July 10, 2001, we announced an agreement to acquire approximately 85% of
the voting stock of Michael Petroleum Corporation, a Houston, Texas-based
natural gas exploration and development company, for approximately $338.5
million and the assumption of $54.5 million of debt. The acquisition includes
204 billion cubic feet equivalent of proven natural gas reserves currently
producing 43 mmcfe per day and an inventory of high quality, low risk drilling
locations within a 94,000 acreage position in close proximity to our South Texas
Magic Valley and Hidalgo Energy Centers. The acquisition closed on August 15,
2001.



     California Power Market. The deregulation of the California power market
has produced significant unanticipated results in the past year and a half. The
deregulation froze the rates that utilities can charge

                                        5
<PAGE>   10

their retail and business customers in California, until recent rate increases
approved by the California Public Utilities Commission ("CPUC"), and prohibited
the utilities from buying power on a forward basis, while wholesale power prices
were not subjected to limits.

     In the past year and a half, 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 under-recovery of costs by
these utilities. 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 Calpine under Calpine's
long-term qualifying facility ("QF") contracts, which are subject to federal
regulation under the Public Utility Regulatory Policies Act of 1978, as amended
("PURPA"). The PG&E QF contracts are in place at 11 of our facilities and
represent nearly 600 megawatts of electricity for Northern California customers.

     PG&E Bankruptcy Proceedings. On April 6, 2001, PG&E filed for bankruptcy
protection under Chapter 11 of the United States Bankruptcy Code. As of April 6,
2001, Calpine had recorded approximately $266 million in accounts receivable
with PG&E under its QF contracts, plus a $69 million note receivable not yet due
and payable. Calpine is currently selling power to PG&E pursuant to its long-
term QF contracts, and PG&E has been paying on a current basis for these
purchases since its bankruptcy filing. With respect to the receivables recorded
under these contracts on July 6, 2001, Calpine announced that it had entered
into a binding agreement with PG&E to modify all of Calpine's QF contracts with
PG&E and that, based upon such modification, PG&E had agreed to assume all of
the QF contracts. Under the terms of this agreement, Calpine will continue to
receive its contractual capacity payments under the QF contracts, plus a
five-year fixed energy component that averages 5.37 cents per kilowatt-hour. In
addition, all past due receivables under the QF contracts will be elevated to
administrative priority status in the PG&E bankruptcy proceeding and will be
paid to Calpine, with interest, upon the effective date of a confirmed plan of
reorganization. Administrative claims enjoy priority over payments made to the
general unsecured creditors in bankruptcy. The bankruptcy court approved the
agreement on July 12, 2001. Calpine cannot predict when the bankruptcy court
will confirm a plan of reorganization for PG&E.

     CPUC Proceedings Regarding QF Contract Pricing. Our QF contracts with PG&E
provide that the 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 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
                                        6
<PAGE>   11

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. The CPUC has issued a proposed decision to
the effect that the PX price was the appropriate price for energy payments under
the California Public Utility Code. However, a final decision has not been
issued to date. Therefore, 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.

     On March 28, 2001, the CPUC issued an order (Decision 01-03-067) (the
"March 2001 Decision") proposing to change, on a prospective basis, the
composition of the short run avoided cost ("SRAC") energy price formula, which
is reset monthly, used by the California utilities in QF contracts. Prior to the
March 2001 Decision, CPUC regulations calculated SRAC based on 50% Topock and
50% Malin border gas indices. In the March 2001 Decision, the CPUC changed this
formulation to eliminate the prices at Topock from the SRAC formula. The March
2001 Decision is subject to challenges at the CPUC and the Federal Regulatory
Energy Commission.

     On June 14, 2001, however, the CPUC issued an order (Decision 01-06-015)
(the "June 2001 Decision") that authorized the California utilities, including
PG&E, to amend QF contracts to elect a fixed energy price component that
averages 5.37 cents per kilowatt-hour for a five-year term under those contracts
in lieu of using the SRAC energy price formula. By this order, the CPUC
authorized the QF contract energy price amendments without further CPUC
concurrence. As part of the agreement we entered into with PG&E pursuant to
which PG&E agreed to assume its QF contracts with us in bankruptcy, PG&E agreed
with us to amend these contracts to adopt the fixed price component that
averages 5.37 cents pursuant to the June 2001 Decision. This election became
effective as of July 16, 2001. As a result of the June 2001 Decision and our
agreement with PG&E to amend the QF contracts to adopt the fixed price energy
component, the energy price component in our QF contracts is now fixed for five
years and we are no longer subject to any uncertainty that may have existed with
respect to this component of our QF contract pricing as a result of the March
2001 Decision. Further, the March 2001 Decision has no bearing on PG&E's
agreement with us to assume the QF contracts in bankruptcy or on the amount of
the receivable that was so assumed.

     California Long-Term Supply Contracts. California has 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 in a publicly announced
auction. Calpine successfully bid in that auction and signed several 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, which increases to 1,000
megawatts by January 1, 2004. The electricity will be sold directly to DWR on a
24-hour, 7-day-a-week basis. This contract is contingent upon our satisfaction,
in our sole discretion, that adequate provisions have been made by DWR to assure
us of full payment under the terms of that contract (including the terms and
conditions of any bonds issued by DWR to provide funds for payment of its
obligations under the contract).

     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, Calpine committed to sell up to 1,000 megawatts
of generation. Initial deliveries began 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, Calpine 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. Each of these contracts is also contingent upon our
satisfaction, in our sole discretion, that adequate provisions have been made by
DWR to assure us of full payment under the terms

                                        7
<PAGE>   12

of that contract (including, but not limited to, the terms and conditions of any
bonds issued by DWR to provide funds for payment of its obligations under that
contract).

     FERC Investigation into California Wholesale Markets. In response to the
increase in wholesale energy prices in the California markets, on June 28, 2000,
the Board of Governors of the California Independent System Operator (the
"ISO"), which controls the long-distance high-voltage power lines that deliver
electricity throughout California and the adjoining states, 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
effective August 7, 2000. During this period, however, the 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 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, FERC instructed its staff to initiate an investigation of the
California power markets and to report its findings to FERC and held further
hearing procedures in abeyance pending the outcome of this investigation. Under
FERC regulations, QF contracts are exempt from regulation under the Federal
Power Act, which is the legislation that provides the authority for FERC to
investigate the California power markets and frame equitable relief with respect
to the California wholesale markets. Therefore, any such relief will only apply
to sales by Calpine in the short-term market. None of our receivables related to
power produced under our long-term QF contracts with PG&E should be affected by
any FERC findings pursuant to the proceedings described below. See "Government
Regulation -- Federal Energy Regulation -- Federal Power Act Regulation" set
forth in our Annual Report on Form 10-K for the year ended December 31, 2000,
which is incorporated by reference in this prospectus.

     On November 1, 2000, FERC released a Staff Report detailing the results of
the staff investigation, together with an "Order Proposing Remedies for
California Wholesale Markets" (the "November 1 Order"). In the November 1 Order,
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 would 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, 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 FERC not to be just and reasonable. While 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.

     On December 15, 2000, 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 FERC's December 15 Order. The outcome of these proceedings, and the extent to
which 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.

     On June 19, 2001, FERC ordered price mitigation in 11 states in the western
United States in an attempt to reduce the dependence of the California market on
the spot markets in favor of longer-term committed energy supplies. The order
provides for price mitigation in the spot market throughout the
                                        8
<PAGE>   13

11-state western region during "reserve deficiency hours," which is when
operating reserves in California fall below 7%. This price will be a single
market clearing price based upon the marginal operating cost of the last unit
dispatched by the California ISO. In addition, FERC implemented price mitigation
in non-reserve deficiency hours, which will be set at 85% of the market clearing
price during the last reserve deficiency period. These price mitigation
procedures went into effect on June 20, 2001 and will remain in effect until
September 30, 2002.

     The retention by FERC of a market-based, rather than a cost-of-service
based, rate structure will enable us to continue to realize benefits from our
efficient, modern power plants. We believe that Calpine's marginal costs will
continue to be below any price cap imposed by FERC, whether during reserve
deficiency hours or at other times. Therefore, we believe that FERC's mitigation
plan will not have a material adverse effect on Calpine's financial condition or
results of operations.

     FERC also ordered all sellers and buyers in wholesale power markets
administered by the California ISO, as well as representatives of the State of
California, to participate in a settlement conference before a FERC
administrative judge. The settlement discussions were intended to resolve all
issues that remain outstanding to resolve past accounts, including sellers'
claims for unpaid invoices, and buyers' claims for refunds of alleged
overcharges, for past periods. The settlement discussions began on June 25, 2001
and ended on July 9, 2001. The Chief Administrative Law Judge issued his report
and recommendation to FERC on July 12, 2001. On July 25, 2001, FERC ordered an
expedited fact-finding hearing to calculate refunds for spot market transactions
in California. The hearing must be completed within 45 days from the date the
California ISO provides certain critical data for the purpose of developing the
factual basis needed to implement the refund methodology and order refunds.
While it is not possible to predict the amount of any refunds until the hearings
take place, based upon the information available at this time, we do not believe
that this proceeding will result in a material adverse effect on Calpine's
financial condition or results of operations.

PRINCIPAL EXECUTIVE OFFICES

     Our principal executive offices are located at 50 West San Fernando Street,
San Jose, California 95113. Our telephone number is (408) 995-5115, and our home
page on the world wide web is at http://www.calpine.com. The contents of our
website are not part of this prospectus.

                       CALPINE CANADA ENERGY FINANCE ULC

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

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

     - all of the voting rights of Energy Finance are owned by Calpine, either
       directly or through its wholly-owned subsidiaries, and Calpine files
       periodic and other reports with the SEC pursuant to the Securities
       Exchange Act of 1934;

     - its sole operations are the investment of funds in Calpine and its
       subsidiaries; and

     - Calpine will fully and unconditionally guarantee its obligations and the
       rights of holders under its debt securities and no subsidiary of Calpine
       will guarantee its obligations.

     The registered office of Energy Finance is Suite 800, Purdy's Wharf, Tower
1, 1959 Upper Water Street, P.O. Box 997, Halifax, Nova Scotia B3J 3N2,
telephone (902) 420-3335.

                                        9
<PAGE>   14

                      CALPINE CANADA ENERGY FINANCE II ULC

     Energy Finance II is an unlimited liability company organized in July 2001
under the laws of Nova Scotia, Canada. It is an indirect, wholly-owned special
purpose finance subsidiary of Calpine that engages in financing activities to
raise funds for the business operations of Calpine and its subsidiaries. Its
direct parent company is Calpine Canada Resources Ltd., an Alberta, Canada
corporation. Energy Finance II will issue debt securities which will be fully
and unconditionally guaranteed by Calpine.

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

     - all of the voting rights of Energy Finance II are owned by Calpine,
       either directly or through its wholly-owned subsidiaries, and Calpine
       files periodic and other reports with the SEC pursuant to the Securities
       Exchange Act of 1934;

     - its sole operations are the investment of funds in Calpine and its
       subsidiaries; and

     - Calpine will fully and unconditionally guarantee its obligations and the
       rights of holders under its debt securities and no subsidiary of Calpine
       will guarantee its obligations.

     The registered office of Energy Finance II is Suite 800, Purdy's Wharf,
Tower 1, 1959 Upper Water Street, P.O. Box 997, Halifax, Nova Scotia B3J 3N2,
telephone (902) 420-3335.

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<PAGE>   15

                                  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, and our Quarterly Reports on Form 10-Q for the quarters ended March 31,
2001 and June 30, 2001, each of which are incorporated by reference in this
prospectus. Before making an investment decision, you should carefully consider
these risks as well as other information contained or incorporated by reference
in this prospectus. The risks and uncertainties described are not the only ones
facing us. Additional risks and uncertainties not presently known to us or that
we currently deem immaterial may also impair our respective business operations.


                      WHERE YOU CAN FIND MORE INFORMATION;
                      DOCUMENTS INCORPORATED BY REFERENCE

     Calpine files annual, quarterly and special reports, proxy statements and
other information with the 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.


     Neither Energy Finance nor Energy Finance II is currently subject to the
information reporting requirements of the Securities Exchange Act of 1934, as
amended, for the reasons set forth under the captions "Calpine Canada Energy
Finance ULC" and "Calpine Canada Energy Finance II ULC" above.


     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 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;


     - Calpine's Quarterly Reports on Form 10-Q for the quarters ended March 31,
       2001 and June 30, 2001;



     - Calpine's Current Reports on Form 8-K filed on February 9, 2001, April
       10, 2001, April 19, 2001, April 30, 2001, June 26, 2001, July 9, 2001,
       July 13, 2001, July 17, 2001, July 27, 2001, September 5, 2001 and
       September 10, 2001; and


     - the description of Calpine's common stock contained in Calpine's
       Registration Statement on Form 8-A (File No. 001-12079), filed with the
       SEC on August 20, 1996, pursuant to Section 12 of the Securities Exchange
       Act.

     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

                                        11
<PAGE>   16

document. If we have filed any contract, agreement or other document as an
exhibit to the registration statement, you should read the exhibit for a more
complete understanding of the document or matter involved. Each statement
regarding a contract, agreement or other document is qualified in its entirety
by reference to the actual document. Copies of documents described herein are
available free of charge upon request as provided in the preceding paragraph.

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<PAGE>   17

                           FORWARD-LOOKING STATEMENTS


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


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

     - changes in government regulations, including pending changes in
       California and anticipated deregulation of the electric energy industry;

     - commercial operations of new plants that may be delayed or prevented
       because of various development and construction risks, such as a failure
       to obtain financing and the necessary permits to operate or the failure
       of third-party contractors to perform their contractual obligations;

     - cost estimates are preliminary and actual costs may be higher than
       estimated;

     - the assurance that Calpine will develop additional plants;

     - a competitor's development of lower-cost generating gas-fired power
       plants;

     - the risks associated with marketing and selling power from power plants
       in the newly competitive energy market;

     - the risks associated with marketing and selling combustion turbine parts
       and components in the competitive combustion turbine parts market;

     - the risks associated with engineering, designing and manufacturing
       combustion turbine parts and components;

     - delivery and performance risks associated with combustion turbine parts
       and components attributable to production, quality control, suppliers and
       transportation;

     - the successful exploitation of an oil or gas resource that ultimately
       depends upon the geology of the resource, the total amount and costs to
       develop recoverable reserves and operations factors relating to the
       extraction of natural gas;

     - the uncertainty of the California power market. We are working closely
       with a number of parties to resolve the current uncertainty. This is an
       ongoing process and, therefore, the outcome cannot be predicted. It is
       possible that any such outcome will include changes in government
       regulations, business and contractual relationships or other factors that
       could materially affect us; however, we believe that a final resolution
       will not have a material adverse impact on us; 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, our
       Quarterly Reports on Form 10-Q for the quarters ended March 31, 2001 and
       June 30, 2001 and our Current Report on Form 8-K, filed on September 10,
       2001, each of which is incorporated by reference in this prospectus.


                                        13
<PAGE>   18

     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.

            CALPINE CONSOLIDATED RATIO OF EARNINGS TO FIXED CHARGES


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



<Table>
<Caption>
       YEAR ENDED DECEMBER 31,            SIX MONTHS
-------------------------------------   ENDED JUNE 30,
1996    1997    1998    1999    2000         2001
-----   -----   -----   -----   -----        ----
<S>     <C>     <C>     <C>     <C>     <C>
1.30x.. 1.68x   1.52x   1.83x   2.26x       1.51x
</Table>



     For purposes of computing our consolidated ratio of earnings to fixed
charges, earnings consist of pretax income before adjustment for minority
interests in our consolidated subsidiaries or income or loss from equity
investees, plus fixed charges, amortization of capitalized interest, and
distributed income of equity investees, reduced by interest capitalized and the
minority interest in 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
Company-obligated mandatorily redeemable convertible preferred securities of
subsidiary trusts ("HIGH TIDES"(SM)).


                                USE OF PROCEEDS

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

                              PLAN OF DISTRIBUTION

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

     - Unless we indicate otherwise in the 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.

     If we use an underwriter or underwriters in the offer or sale of our
securities:

     - 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.

                                        14
<PAGE>   19

     If we use a dealer to sell our securities:

     - 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, Energy Finance
or Energy Finance II, 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.

                                        15
<PAGE>   20

                          DESCRIPTION OF CAPITAL STOCK


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


<Table>
<Caption>
                                                              HIGH      LOW
                                                             ------    ------
<S>                                                          <C>       <C>
1999
First Quarter..............................................  $ 4.67    $ 3.16
Second Quarter.............................................    7.38      4.39
Third Quarter..............................................   11.97      6.85
Fourth Quarter.............................................   16.38     10.63

2000
First Quarter..............................................  $30.75    $16.09
Second Quarter.............................................   35.22     18.13
Third Quarter..............................................   52.25     32.25
Fourth Quarter.............................................   52.97     32.25

2001
First Quarter..............................................  $58.04    $29.00
Second Quarter.............................................   57.35     36.20
Third Quarter (through September 18, 2001).................   46.00     24.06
</Table>


                                        16
<PAGE>   21


     As of September 18, 2001, there were approximately 910 holders of record of
our common stock. On September 18, 2001, the last sale price reported on the New
York Stock Exchange for our common stock was $24.30 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 certain of our indentures and
our other debt agreements. Future cash dividends, if any, will be at the
discretion of our board of directors and will depend upon, among other things,
our future operations and earnings, capital requirements, general financial
condition, contractual restrictions and such other factors as the board of
directors may deem relevant.

PREFERRED STOCK

     The following description of preferred stock and the description of the
terms of a particular series of preferred stock that will be set forth in the
related prospectus supplement are not complete. These descriptions are qualified
in their entirety by reference to the certificate of designation relating to
that series. The rights, preferences, privileges and restrictions of the
preferred stock of each series will be fixed by the certificate of designation
relating to that series that will be filed as an amendment to this registration
statement at the time such series of preferred stock is offered. 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 September 18, 2001, there was one share of our preferred stock
outstanding (see the discussion of Calpine's special voting preferred stock,
below). Our board of directors has the authority, without further vote or action
by the stockholders, to issue from time to time up to a total of 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 1,000,000
shares of Series A Participating Preferred Stock, par value $.001 per share,
pursuant to a rights plan adopted by Calpine's board of directors on June 5,
1997. As of September 18, 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 Law -- Rights
Plan," below.


     Upon consummation of the Encal business combination, a series of preferred
stock of Calpine, consisting of one share, was designated as Special Voting
Preferred Stock of Calpine, having a par value of $.001 per share and a
liquidation preference of $.001. Except as otherwise required by law or
Calpine's certificate of incorporation, the one share of special voting
preferred stock possesses a number of votes for the election of directors and on
all other matters submitted to a vote of Calpine's stockholders equal to the
number of outstanding Calpine common stock equivalent shares issued by Calpine's
wholly-owned subsidiary, Calpine Canada Holdings Ltd., 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 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
                                        17
<PAGE>   22

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 entitled to receive dividends. The share of special voting preferred
stock was issued to CIBC Mellon Trust Company, as trustee under a voting and
exchange trust agreement among Calpine, Calpine Canada Holdings Ltd. and the
trustee. At such time as the one share of special voting preferred stock has no
votes attached to it because there are no Calpine common stock equivalent shares
outstanding not owned by Calpine or an entity controlled by Calpine, the one
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 amended and restated certificate of incorporation and bylaws
provide that Calpine's board of directors is classified into three classes of
directors serving staggered, three-year terms. The certificate of


                                        18
<PAGE>   23


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 the shares of Calpine's capital stock entitled to vote, voting
together as a single class. The certificate of incorporation also provides that
all stockholder actions must be effected at a duly called meeting and not by a
consent in writing. Calpine's certificate of incorporation provides that a
special meeting of stockholders may be called only by the chairman of Calpine's
board of directors, or by the chairman or secretary upon the written request of
a majority of the total number of directors Calpine would have if there were no
vacancies on its board of directors. These provisions of the certificate of
incorporation and bylaws could discourage potential acquisition proposals and
could delay or prevent a change in control of Calpine. These provisions are
intended to enhance the likelihood of continuity and stability in the
composition of the board of directors and in the policies formulated by the
board of directors and to discourage certain types of transactions that may
involve an actual or threatened change of control of Calpine. These provisions
are designed to reduce Calpine's vulnerability to an unsolicited acquisition
proposal. The provisions also are intended to discourage certain tactics that
may be used in proxy fights. However, such provisions could have the effect of
discouraging others from making tender offers for Calpine's shares and, as a
consequence, they also may inhibit fluctuations in the market price of Calpine's
shares that could result from actual or rumored takeover attempts. Such
provisions also may have the effect of preventing changes in Calpine's
management.


     Rights Plan. On June 5, 1997, Calpine adopted a stockholders' rights plan
to strengthen Calpine's ability to protect Calpine's stockholders. The rights
plan 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 $.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
                                        19
<PAGE>   24

with any interested stockholder for a period of three years following the date
that such stockholder became an interested stockholder, unless: (1) prior to
such date, the board of directors of the corporation approved either the
business combination or the transaction that resulted in the stockholder
becoming an interested stockholder; (2) upon consummation of the transaction
that resulted in the stockholder becoming an interested stockholder, the
interested stockholder owned at least 85% of the voting stock of the corporation
outstanding at the time the transaction commenced, excluding for purposes of
determining the number of shares outstanding those shares owned (x) by persons
who are directors and also officers and (y) by employee stock plans in which
employee participants do not have the right to determine confidentially whether
shares held subject to the plan will be tendered in a tender or exchange offer;
or (3) on or subsequent to such date, the business combination is approved by
the board of directors and authorized at an annual or special meeting of
stockholders, and not by written consent, by the affirmative vote of at least
66 2/3% of the outstanding voting stock that is not owned by the interested
stockholder.


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


                                        20
<PAGE>   25

                       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; Energy Finance may issue from time to time one or more
series of debt securities under one or more indentures between Energy Finance
and Wilmington Trust Company, as trustee; and Energy Finance II may issue from
time to time one or more series of debt securities under one or more indentures
between Energy Finance II and Wilmington Trust Company, as trustee.

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

     The debt securities will be direct, unsecured obligations of the issuer.
The senior debt securities will rank equally with all other senior debt of the
issuer. The indentures will not limit the amount of debt securities 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, and on the debt securities of Energy Finance and Energy Finance II
under the guarantees, if the guarantees are enforced. The non-recourse project
financing agreements of certain of Calpine's subsidiaries and other affiliates
generally restrict their ability to pay dividends, make distributions or
otherwise transfer funds to Calpine prior to the payment of other obligations,
including operating expenses, debt service and reserves. Each of Energy Finance
and Energy Finance II is a special purpose financing subsidiary formed solely as
a financing vehicle for Calpine and its subsidiaries. Therefore, the ability of
Energy Finance and Energy Finance II to pay their obligations under the debt
securities is dependent upon the receipt by them of payments from Calpine and
its subsidiaries to which they have made loans or otherwise under agreements
with them in connection with their respective financing activities. In addition,
under Canadian law, the respective direct parent companies of Energy Finance and
Energy Finance II will be liable for their subsidiary's indebtedness, including
any debt securities issued by such subsidiary, upon a winding-up of that
subsidiary. While each of Energy Finance and Energy Finance II believes that
payments made to it in connection with its financing activities will be
sufficient to pay the principal of, and interest on, any debt securities it
issues, if the responsible parties were not able to make such payments for any
reason, the holders of such debt securities would have to rely on the
enforcement of Calpine's guarantee described below.

     Calpine's subsidiaries and other affiliates are separate and distinct legal
entities and will have no obligation to pay any amounts due on the debt
securities issued by Calpine hereunder, and will not guarantee the payment of
interest on or principal of the debt securities issued by Calpine hereunder.
Calpine's subsidiaries and other affiliates (other than Energy Finance (in the
case of debt securities issued by Energy Finance) and Energy Finance II (in the
case of debt securities issued by Energy Finance II) and their direct parent
companies, respectively, in the case of the winding-up of its subsidiary) will
not have any obligation to pay any amounts due on the debt securities issued by
Energy Finance or Energy Finance II hereunder and none of Calpine's subsidiaries
or other affiliates will guarantee the payment of
                                        21
<PAGE>   26


interest on or principal of the debt securities issued by Energy Finance or
Energy Finance II hereunder. The right of Calpine's debt security holders to
receive any assets of any of Calpine's subsidiaries or other affiliates upon
Calpine's liquidation or reorganization will be subordinated to the claims of
any subsidiaries' or other affiliates' creditors (including trade creditors and
holders of debt issued by Calpine's subsidiaries or affiliates, including Energy
Finance and Energy Finance II). Similarly, the right of holders of Energy
Finance's or Energy Finance II's debt securities to receive any assets of any of
Calpine's subsidiaries or other affiliates upon Calpine's liquidation or
reorganization will be subordinated to the claims of any subsidiaries' or other
affiliates' creditors (including trade creditors and holders of debt issued by
Calpine's subsidiaries or affiliates). As of June 30, 2001, Calpine's
subsidiaries had approximately $1.8 billion of project financing. Calpine
intends to utilize project financing when appropriate in the future, and this
financing will be effectively senior to the debt securities and the guarantees.


     The following description of the debt securities is subject to the detailed
provisions of each indenture, a copy of each of which is filed as an exhibit to
the Registration Statement of which this prospectus is a part and is available
upon request made to us. Whenever particular provisions of any indenture or
terms defined therein are referred to, those provisions or definitions are
incorporated by reference herein and such descriptions are qualified in their
entirety by such reference. We urge you to read the forms of indentures because
they, and not this description, describe every detail of the terms of the debt
securities. The summary below of the general terms of the debt securities will
be supplemented by the more specific terms in a prospectus supplement. Unless
otherwise stated herein or in an applicable prospectus supplement, the following
indenture description will apply to both senior and subordinated debt
securities.

TERMS APPLICABLE TO DEBT SECURITIES

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

     - the 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, and, in the case of debt securities issued by
       Energy Finance or Energy Finance II, Canadian, federal income tax
       consequences;

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

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

     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.

                                        22
<PAGE>   27


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


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

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

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

REOPENING OF ISSUE


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


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 (a) the Bridge Credit Agreement, dated as of August
15, 2001, among Calpine, as borrower, the various financial institutions party
thereto as lenders, Credit Suisse First Boston, as co-arranger and documentation
agent, Bayerische Landesbank Girozentrale, as lead arranger and syndication
agent, and The Bank of Nova Scotia, as lead arranger and administrative agent,
and (b) the Amended and Restated Credit Agreement, dated as of May 23, 2000, as
amended, among Calpine, the Bank of Nova Scotia, as Lead Arranger and
Administrative Agent, Bayerische Landesbank Girozentrale, as Co-Arranger and
Syndication Agent, and the various commercial lending institutions named therein
as lenders (as it may be further amended, refinanced, replaced, renewed or
extended from time to time), (c) 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 10 1/2% Senior Notes Due 2006, Calpine's 8 1/4%
Senior Notes Due 2005, Calpine's 8 5/8% Senior Notes Due 2010, Calpine's 8 1/2%
Senior Notes Due 2011 and Calpine's Zero-Coupon Convertible Debentures Due 2021,
and (d) indebtedness of its subsidiaries guaranteed by Calpine, including the
8 1/2% Senior Notes Due 2008 issued by Energy Finance, the Bridge Credit
Agreement, dated as of August 20, 2001, among Energy Finance, Credit Suisse
First Boston, as co-arranger and syndication agent, Bayerische Landesbank
Girozentrale, as lead arranger and documentation agent, Bank of Nova Scotia, as
lead arranger and administrative agent, and the various commercial lending
institutions named therein as lenders and the Bridge Credit Agreement, dated as
of August 22, 2001, among Energy Finance II, Credit Suisse First Boston, as
co-arranger and syndication agent, Bayerische Landesbank Girozentrale, as lead
arranger and documentation agent, Bank of Nova Scotia, as lead arranger and
administrative agent, and the various commercial lending institutions named
therein as lenders. At June 30, 2001, Calpine had approximately $5.1 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 Energy Finance or Energy Finance II will
be:

     - senior unsecured obligations of Energy Finance or Energy Finance II, as
       applicable, and will rank equally and ratably with all of its other
       unsecured and unsubordinated indebtedness, and

     - guaranteed on a senior unsecured basis by Calpine, which guarantee will
       rank equally and ratably with all other unsecured and unsubordinated
       indebtedness of Calpine, including Calpine's indebtedness described above
       including the other indebtedness of its subsidiaries guaranteed by
       Calpine.

                                        23
<PAGE>   28

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

GUARANTEES

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

     Under its guarantee agreement, Calpine will:

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

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

COVENANTS

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

PAYMENT OF SECURITIES

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

MAINTENANCE OF OFFICE OR AGENCY

     The issuer will maintain in the Borough of Manhattan, the City of New York,
and such other locations as may be required or specified in any supplement, an
office or agency where the debt securities may be paid and notices and demands
to or upon the issuer in respect of the debt securities and the indentures may
be served and an office or agency where debt securities may be surrendered for
registration of transfer or exchange. The issuer will give prompt written notice
to the trustee of the location, and any change in the location, of any such
office or agency. If at any time the issuer shall fail to maintain any 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.

                                        24
<PAGE>   29

LIMITATION ON SALE/LEASEBACK TRANSACTIONS

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

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

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

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

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

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

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

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

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

     "Capitalized Lease Obligations" of a person means the rental obligations
under any lease of any property (whether real, personal or mixed) of which the
discounted present value of the rental obligations 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.

                                        25
<PAGE>   30

     "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

          (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.

                                        26
<PAGE>   31

     "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.

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
                                        27
<PAGE>   32

     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
     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

                                        28
<PAGE>   33

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

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

MERGER, CONSOLIDATION, SALE OR LEASE

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


SEC REPORTS


     Calpine is subject to the informational reporting requirements of Sections
13 and 15(d) under the Securities Exchange Act and, in accordance with those
requirements, files certain reports and other information with the SEC. See
"Where You Can Find More Information; Documents Incorporated by Reference." 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;

          (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
                                        29
<PAGE>   34

     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.

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
                                        30
<PAGE>   35

that no amendment or supplement may, without the consent of each affected
registered holder of that series:

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

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

     - change the currency of payment,

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

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

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

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

ACTIONS BY HOLDERS

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

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

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

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

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

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

DEFEASANCE, DISCHARGE AND TERMINATION

DEFEASANCE AND DISCHARGE

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

          a. the issuer has delivered to the trustee either:

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

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

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

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

DEFEASANCE OF COVENANTS AND CERTAIN EVENTS OF DEFAULT

     In addition, unless otherwise provided in the applicable indenture and
described in the applicable prospectus supplement, with respect to a series of
debt securities issued under an indenture, the provisions of that indenture
described under "-- Covenants -- Limitation on Liens" and
"-- Covenants -- Limitation on Sale/Leaseback Transactions" will no longer be in
effect, clauses (c) (with respect to such covenants) 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

     Unless otherwise provided in the applicable indenture and described in the
applicable prospectus supplement, the issuer may discharge the issuer and the
guarantor, if any, from any and all obligations in respect of a series of debt
securities and the provisions of the related indenture will no longer be in
effect with respect to that series of debt securities (except to the extent
provided under "-- Defeasance and Discharge") if that series of debt securities
mature within one year and the issuer deposits with the trustee, in trust, money
or U.S. Government Obligations that, through the payment of interest and
principal in respect thereof in accordance with their terms, will provide money
in an amount sufficient to pay the principal of, premium, if any, and accrued
interest on that series of debt securities when due in

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<PAGE>   37

accordance with the terms of that indenture and the debt securities. Such a
trust may only be established if, among other things,

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

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

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

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

UNCLAIMED MONEY

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

CONCERNING THE TRUSTEE AND PAYING AGENT

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


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



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


     - an indenture with Energy Finance, dated as of April 25, 2001.

     A number of Calpine's series of debt securities are presently outstanding
under the first two indentures above and additional securities of those series
and additional series may be issued under the second indenture above. A series
of Energy Finance's debt securities, guaranteed by Calpine, is currently
outstanding under the third indenture above and additional debt securities of
that series and other series, each guaranteed by Calpine, may be offered under
that indenture. We may have in the future other relationships with Wilmington
Trust Company.

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

     The holders of a majority in principal amount of the outstanding senior
notes will have the right to direct the time, method and place of conducting any
proceeding for exercising any remedy available to the trustee, subject to
certain exceptions. If an event of default occurs (and is not cured), the
trustee will be required, in the exercise of its power, to use the degree of
care of a prudent man in the conduct of his own affairs. Subject to such
provisions, the trustee will be under no obligation to exercise any of its
rights or powers under the indenture at the request of any holder of senior
notes, unless such holder shall have offered to the trustee security and
indemnity satisfactory to the trustee against any loss, liability or expense and
then only to the extent required by the terms of the indenture.
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<PAGE>   38

     The registered office of the trustee is Rodney Square North, 1100 North
Market Street, Wilmington, Delaware.

GOVERNING LAW

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

BOOK-ENTRY SYSTEM

     Unless otherwise specified in the prospectus supplement, each series of
debt securities will be represented by one or more global notes registered in
the name of a nominee of The Depository Trust Company ("DTC"), as depositary.
Upon the issuance of the global notes, DTC or its custodian will credit, on its
internal system, the respective principal amount of the individual beneficial
interests represented by the global notes to the accounts of persons who have
accounts with DTC. Each account initially will be designated by or on behalf of
the underwriters, dealer or agents. Ownership of beneficial interests in a
global note will be limited to persons who have accounts with DTC
("participants") or persons who hold interests through participants. Ownership
of beneficial interests in the global notes will be shown on, and transfers of
their ownership may be effected only through, records maintained by DTC or its
nominee (with respect to interests of participants) and the records of
participants (with respect to interests of persons other than participants). DTC
currently limits the maximum denomination of any single global note to
$400,000,000.

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

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

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

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<PAGE>   39

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

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

CERTIFICATED NOTES

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

SAME-DAY SETTLEMENT IN RESPECT OF GLOBAL NOTES

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

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             CERTAIN UNITED STATES FEDERAL INCOME TAX CONSEQUENCES


     The following is a summary of the material United States federal income tax
consequences of the ownership and disposition of the securities. Unless
otherwise stated, this summary deals only with 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, (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. In addition,
certain trusts in existence on August 20, 1996 and treated as a U.S. holder
prior to such date may also be treated as U.S. holders. As used herein,
"non-U.S. holders" are beneficial owners of the securities, other than
partnerships, that are not U.S. holders for United States federal income tax
purposes. If a partnership (including for this purpose any entity treated as a
partnership for United States federal tax purposes) is a beneficial owner of 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.
Partnerships and partners in such partnerships should consult their tax advisors
about the United States federal income tax consequences of owning 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, U.S. holders who are resident or who carry
on a trade or business in Canada, 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 ownership and disposition of the securities.

TAXATION OF COMMON STOCK OF CALPINE

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

U.S. HOLDERS OF COMMON STOCK

Dividends

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


     In general, a dividend distribution to a corporate holder will qualify for
the 70% dividends-received deduction. The dividends-received deduction is
subject to certain holding period, taxable income, and other limitations (see
"Taxation of Preferred Stock -- U.S. Holders of Preferred Stock -- Dividends to
Corporate Holders" below).


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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 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, preferential tax rates may apply to
such gain if the holder's holding period for the common stock exceeds one year.
A holder's basis in the common stock is generally equal to its initial purchase
price.

Information Reporting and Backup Withholding Tax

     In general, information reporting requirements will apply to payments of
dividends on common stock and payments of the proceeds of the sale of common
stock, and a backup withholding tax (currently 30.5%) 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 non-U.S.
holder of common stock are complex and no attempt will be made herein to provide
more than a summary of such rules. Non-U.S. holders should consult with their
own tax advisors to determine the effect of federal, state, local and foreign
income tax laws, as well as treaties, with regard to an investment in the common
stock, including any reporting requirements.

Dividends

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


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


Sale or Exchange of Common Stock

     A non-U.S. holder generally will not be subject to United States federal
income tax or withholding tax on the sale or exchange of common stock unless (1)
the gain is effectively connected with a United States trade or business of the
non-U.S. holder, (2) in the case of a non-U.S. holder who is an individual, such
holder is present in the United States for a period or periods aggregating 183
days or more during the taxable year of the disposition, and either (A) such
holder has a "tax home" in the United States or (B) the disposition is
attributable to an office or other fixed place of business maintained by such
holder in the United States, (3) the non-U.S. holder is subject to tax pursuant
to the provisions of the Internal
                                        37
<PAGE>   42

Revenue Code applicable to certain United States expatriates or (4) in the event
that Calpine is characterized as a United States real property holding
corporation and the non-U.S. holder does not qualify for certain exemptions (see
discussion below under "Foreign Investment in Real Property Tax Act").


     If an individual non-U.S. holder falls under clause (1) above, such
individual generally will be taxed on the net gain derived from a sale in the
same manner as a U.S. holder. If an individual non-U.S. holder falls under
clause (2) above, such individual generally will be subject to a flat 30% tax on
the gain derived from a sale, which may be offset by certain United States
capital losses (notwithstanding the fact that such individual is not considered
a resident of the United States). Individual non-U.S. holders who have spent (or
expect to spend) 183 days or more in the United States in the taxable year in
which they contemplate a sale of common stock are urged to consult their tax
advisors as to the tax consequences of such sale. If a non-U.S. holder that is a
foreign corporation falls under clause (1), it generally will be taxed on the
net gain derived from a sale in the same manner as a U.S. holder and, in
addition, may be subject to the branch profits tax on such effectively connected
income at a 30% rate (or such lower rate as may be specified by an applicable
income tax treaty).


Information Reporting and Backup Withholding Tax

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

Foreign Investment in Real Property Tax Act


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


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

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

TAXATION OF PREFERRED STOCK OF CALPINE

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

U.S. HOLDERS OF PREFERRED STOCK

Dividends

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

Dividends to Corporate Holders


     A dividend distribution to a corporate holder will generally qualify for
the 70% dividends-received deduction. In determining entitlement to the
dividends-received deduction, corporate holders should also consider the
provisions of Sections 246(c), 246A and 1059 of the Internal Revenue Code, as
well as Treasury regulations and Internal Revenue Service rulings and
administrative pronouncements relating to such provisions. Under current law,
Section 246(c) of the Internal Revenue Code disallows the dividends-received
deduction in its entirety if the holder does not satisfy the applicable holding
period requirement for the dividend-paying stock for a period beginning before
and ending after such holder becomes entitled to receive each dividend on the
stock. Section 246(c)(4) of the Internal Revenue Code provides that a holder may
not count toward this minimum holding period any period in which the holder (1)
has an option to sell, is under a contractual obligation to sell, or has made
(and not closed) a short sale of, substantially identical stock or securities,
or (2) has diminished its risk of loss by holding one or more positions with
respect to substantially similar or related property. Under certain
circumstances, Section 1059 of the Internal Revenue Code (A) reduces the tax
basis of stock by a portion of any "extraordinary dividends" that are eligible
for the dividends-received deduction and (B) to the extent that the basis
reduction would otherwise reduce the tax basis of the stock below zero, requires
immediate recognition of gain, which is treated as gain from the sale or
exchange of the stock. An "extraordinary dividend" includes any amount treated
as a dividend with respect to a redemption that is not pro rata to all
stockholders (or meets certain other requirements), without regard to either the
relative amount of the dividend or the holder's holding period for the stock.
Section 246A of the Internal Revenue Code contains the "debt-financed" portfolio
stock rules, under which the dividends-received deduction could be reduced to
the extent that a holder incurs indebtedness directly attributable to its
investment in the stock.


Receipt of Common Stock Upon Conversion of the Preferred Stock

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

                                        39
<PAGE>   44

redemptions will generally be taxable on the cash received in lieu of a
fractional share as a distribution described in "Dividends" above.

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

Adjustments of Conversion Price in Respect of Preferred Stock


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


Excessive Redemption Price of Preferred Stock


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


Accrued Dividends on the Preferred Stock

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

Sale, Exchange or Redemption of Preferred Stock

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


     Gain or loss recognized by a holder on a redemption of the preferred stock
will be treated as a sale or exchange and therefore qualify for the treatment
described above if certain requirements are satisfied. Generally, these
requirements are satisfied if either (1) the holder's interest in the stock of
Calpine is completely terminated as a result of such redemption, (2) such
holder's percentage ownership of Calpine's voting stock immediately after the
redemption is less than 80% of such holder's percentage ownership immediately
before the redemption or (3) the redemption is "not essentially equivalent to a
dividend." 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 of stock
that a holder could acquire through exercise of an option. For this purpose, an
option would include any conversion right under the preferred stock. Whether a
redemption is "not essentially equivalent to a

                                        40
<PAGE>   45


dividend" depends on each holder's facts and circumstances, but in any event
requires a "meaningful reduction" in such holder's equity interest in Calpine. A
holder of the preferred stock who sells some or all of the stock of Calpine
owned by it may be able to take such sales into account to satisfy one of the
foregoing conditions. Conversely, a holder who purchases additional shares of
stock of Calpine may be required to take such shares into account in determining
whether any of the foregoing conditions are satisfied.



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


Other Preferred Stock

     Special tax rules may apply to certain types of preferred stock. The
applicable prospectus supplement will discuss any such special United States
federal income tax rules with respect to such preferred stock.

Information Reporting and Backup Withholding Tax

     In general, information reporting requirements will apply to payments of
dividends on the preferred stock and payments of the proceeds of the sale of the
preferred stock, and a backup withholding tax (currently 30.5%) 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 non-U.S.
holder of preferred stock are complex and no attempt will be made herein to
provide more than a summary of such rules. Non-U.S. holders should consult with
their own tax advisors to determine the effect of federal, state, local and
foreign income tax laws, as well as treaties, with regard to an investment in
the preferred stock, including any reporting requirements.

Dividends


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



     A non-U.S. holder who wishes to claim the benefit of an applicable income
tax treaty is required to satisfy certain certification and other requirements.
If you are eligible for a reduced rate of United States


                                        41
<PAGE>   46

withholding tax pursuant to an income tax treaty, you may obtain a refund of any
excess amounts withheld by filing an appropriate claim for refund with the
Internal Revenue Service.

Receipt of Common Stock Upon Conversion of the Preferred Stock

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

Sale, Exchange or Redemption of Preferred Stock

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


     If an individual non-U.S. holder falls under clause (1) above, such
individual generally will be taxed on the net gain derived from a sale in the
same manner as a U.S. holder. If an individual non-U.S. holder falls under
clause (2) above, such individual generally will be subject to a flat 30% tax on
the gain derived from a sale, which may be offset by certain United States
capital losses (notwithstanding the fact that such individual is not considered
a resident of the United States). Individual non-U.S. holders who have spent (or
expect to spend) 183 days or more in the United States in the taxable year in
which they contemplate a sale of preferred stock are urged to consult their tax
advisors as to the tax consequences of such sale. If a non-U.S. holder that is a
foreign corporation falls under clause (1) above, it generally will be taxed on
the net gain derived from a sale in the same manner as a U.S. holder and, in
addition, may be subject to the branch profits tax on such effectively connected
income at a 30% rate (or such lower rate as may be specified by an applicable
income tax treaty).



     Gain or loss realized by a non-U.S. holder on a redemption of the preferred
stock will be treated as a sale or exchange and qualify for the treatment
described in this section if certain requirements are satisfied. For a
description of these requirements, see "U.S. Holders -- Sale, Exchange or
Redemption of Preferred Stock" above.


Information Reporting and Backup Withholding Tax

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

                                        42
<PAGE>   47

holder will be subject to information reporting and may be subject to backup
withholding requirements unless certain certification requirements are
satisfied.

Foreign Investment in Real Property Tax Act


     Under the Foreign Investment in Real Property Tax Act, any person who
acquires a "United States real property interest" (as described below) from a
foreign person must deduct and withhold a tax equal to 10% of the amount
realized by the foreign transferor. In addition, a foreign person who disposes
of a United States real property interest generally is required to recognize
gain or loss that is subject to United States federal income tax. A "United
States real property interest" generally includes any interest (other than an
interest solely as a creditor) in a United States corporation unless it is
established under specified procedures that the corporation is not (and was not
for the prior five-year period) a "United States real property holding
corporation." We believe it is likely that we are a United States real property
holding corporation and we can give no assurance that we will not continue to be
a United States real property holding corporation in the future. However, so
long as the preferred stock is regularly traded on an established securities
market, an exemption applies with respect to any non-U.S. holder whose
beneficial and/or constructive ownership of preferred stock is 5% or less of the
total fair market value of the preferred stock. In addition, if the preferred
stock is not regularly traded on an established securities market, but our
common stock continues to be so regularly traded, an exemption will apply if the
fair market value of the non-U.S. holder's interest in the preferred stock is 5%
or less of the total fair market value of the common stock.


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

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

TAXATION OF DEBT SECURITIES OF CALPINE AND ENERGY FINANCE


     This subsection describes the material United States federal income tax
consequences of owning and disposing of the debt securities offered by Calpine
or Energy Finance, as the case may be. It deals only with debt securities that
are due to mature 30 years or less from the date on which they are issued. The
United States federal income tax consequences of owning and disposing of debt
securities that are due to mature more than 30 years from the date of issue will
be discussed in an applicable prospectus supplement. The discussion regarding
United States federal income tax laws assumes that any debt securities will be
issued, and transfers thereof and payments thereon will be made, in accordance
with the applicable indenture and deposit agreement.


U.S. HOLDERS OF DEBT SECURITIES

Interest Income

     Subject to the original issue discount rules described below, payments of
interest on the debt securities (including, in the case of debt securities
issued by Energy Finance, the amount of Canadian tax withheld, if any) generally
will be taxable to a U.S. holder as ordinary interest income at the time such
payments are accrued or received (in accordance with the holder's regular method
of tax accounting).

     A debt security will be treated as issued with original issue discount
("OID") if its stated redemption price at maturity exceeds its issue price by
more than a de minimis amount. Generally, the issue price will

                                        43
<PAGE>   48

be the first price at which a substantial amount of the debt securities is sold
to persons other than bond houses, brokers or similar persons or organizations
acting in the capacity of underwriters, placement agents or wholesalers. A debt
security's stated redemption price at maturity is the total of all payments on
the debt security that are not payments of qualified stated interest. An
interest payment is qualified stated interest if it is one of a series of stated
interest payments that are unconditionally payable at least annually at a single
fixed rate.

     A debt security is not treated as issued with OID if the OID, i.e., if the
excess of the stated redemption price at maturity of a debt security over its
issue price, is de minimis. For this purpose the amount of OID is de minimis if
it does not exceed the product of 0.25 percent of the stated redemption price at
maturity multiplied by the number of complete years to maturity. If the debt
security has de minimis OID, a holder must generally include the de minimis
amount in income (as capital gain) when stated principal payments are made.


     If the debt security is treated as issued with OID, a U.S. holder will be
required to include the amount of the OID in income periodically over the term
of the debt security before receipt of the cash or other payment attributable to
such income and irrespective of such holder's general method of tax accounting.
In particular, a U.S. holder of a debt security must include in gross income, as
interest for United States federal income tax purposes, the sum of the daily
portions of OID with respect to the debt security for each day during the
taxable year or portion of a taxable year in which such holder holds the debt
security ("accrued OID"). The daily portion is determined by allocating to each
day of an accrual period a pro rata portion of an amount equal to the adjusted
issue price of the debt security at the beginning of the accrual period
multiplied by the yield to maturity of the debt security and subtracting from
this product the amount of qualified stated interest allocable to the accrual
period. The adjusted issue price of the debt security at the start of any
accrual period is the issue price of the debt security increased by the accrued
OID for each prior accrual period and decreased by the amount of any payments
previously made with respect to the debt security (other than qualified stated
interest).


Source of Income and Foreign Tax Credits With Respect to Debt Securities of
Energy Finance


     If Canadian withholding taxes are imposed on payments on the debt
securities issued by Energy Finance, the eligibility of a U.S. holder for a
United States foreign tax credit with respect to such taxes may be limited
because, for United States foreign tax credit purposes, such payments would
constitute income from sources within the United States. Interest on the debt
securities will generally constitute "passive income" for United States foreign
tax credit purposes. Moreover, if such Canadian withholding taxes are imposed on
interest payments at a rate that equals or exceeds 5%, such interest income
would constitute "high withholding tax interest" for United States foreign tax
credit purposes. A U.S. holder that does not claim a foreign tax credit may be
entitled to a deduction for United States federal income tax purposes with
respect to any such Canadian withholding taxes. The calculation of foreign tax
credits or deductions involves the application of complex rules that depend on a
holder's particular circumstances. Accordingly, U.S. holders are urged to
consult their tax advisors regarding the creditability or deductibility of such
taxes. For a discussion of the Canadian income tax considerations, see "Certain
Canadian Federal Income Tax Considerations."


Debt Securities Purchased at a Market Discount


     A holder will be considered to have purchased a debt security at a "market
discount" if the holder's adjusted basis in the debt security is less than its
stated redemption price at maturity, or in the case of a debt security issued at
a discount, its revised issue price (which has the same meaning as "adjusted
issue price" as defined above), unless such market discount is a de minimis
amount (generally up to 1/4 of 1 percent of the stated redemption price or
revised issue price, as the case may be, on the purchase date multiplied by the
number of complete years to maturity remaining as of such date). In general, any
partial payment of principal on, or gain recognized on the maturity or
disposition of, the debt security will be treated as ordinary income to the
extent that such gain does not exceed the accrued market discount on the
underlying debenture. Alternatively, a holder of a debt security may elect to
include market discount in

                                        44
<PAGE>   49

income currently over the life of the debt security. Such an election applies to
all debt instruments with market discount acquired by the electing holder on or
after the first day of the first taxable year to which the election applies and
may not be revoked without the consent of the Internal Revenue Service.

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

Debt Securities Purchased at a Premium


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


Sale or Exchange of Debt Securities

     A holder will generally recognize taxable gain or loss equal to the
difference between the amount realized on the sale, exchange or other
disposition of the debt security and the holder's adjusted tax basis in such
debt security (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 therefore, increased
by any OID or market discount previously included in income with respect to the
debt security and reduced by any amortizable bond premium. In the case of a
holder other than a corporation, preferential tax rates may apply to gain
recognized on the sale of a debt security if such holder's holding period for
such debt security exceeds one year.

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

Other Debt Securities

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

Information Reporting and Backup Withholding Tax

     In general, information reporting requirements will apply to payments of
principal, premium, if any, and interest on the debt securities and payments of
the proceeds of the sale of the debt securities, and a backup withholding tax
(currently 30.5%) 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.

                                        45
<PAGE>   50

NON-U.S. HOLDERS OF DEBT SECURITIES

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

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

Interest Income


     Generally, interest income of a non-U.S. holder that is not effectively
connected with a United States trade or business will be subject to a
withholding tax at a 30% rate (or, if applicable, a lower tax rate specified by
a treaty). However, interest income earned on a debt security by a non-U.S.
holder will qualify for the "portfolio interest" exemption and therefore will
not be subject to United States federal income tax or withholding tax, provided
that such interest income is not effectively connected with a United States
trade or business of the non-U.S. holder and provided that (1) the non-U.S.
holder does not actually or constructively own 10% of more of the total combined
voting power of all classes of Calpine stock entitled to vote; (2) the non-U.S.
holder is not a controlled foreign corporation that is related to the issuer or
Calpine through stock ownership; (3) the non-U.S. holder is not a bank which
acquired the debt security in consideration for an extension of credit made
pursuant to a loan agreement entered into in the ordinary course of business;
and (4) either (A) the non-U.S. holder certifies to the 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 the issuer or the issuer's agent with a copy
thereof. The applicable United States Treasury regulations also provide
alternative methods for satisfying the certification requirements of clause (4),
above. 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 income tax treaty otherwise
provides, a non-U.S. holder generally will be taxed with respect to interest in
the same manner as a U.S. holder if the interest is effectively connected with a
United States trade or business of the non-U.S. holder. Effectively connected
interest income received or accrued by a corporate non-U.S. holder may also,
under certain circumstances, be subject to an additional "branch profits" tax at
a 30% rate (or, if applicable, at a lower tax rate specified by an applicable
income tax treaty). Even though such effectively connected income is subject to
income tax, and may be subject to the branch profits tax, it is not subject to
withholding tax if the non-U.S. holder delivers a properly executed Internal
Revenue Service Form W-8ECI (or successor form) to the payor.


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

                                        46
<PAGE>   51

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


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

TAXATION OF DEBT SECURITIES OF ENERGY FINANCE II


     This subsection describes the material United States federal income tax
consequences of owning and disposing of the debt securities offered by Energy
Finance II. It deals only with debt securities that are due to mature 30 years
or less from the date on which they are issued. The United States federal income
tax consequences of owning and disposing of debt securities that are due to
mature more than 30 years from the date of issue will be discussed in an
applicable prospectus supplement. The discussion regarding United States federal
income tax laws, including the statements regarding the U.S.-Canada double
taxation convention relating to income and capital gains (the "Tax Treaty"),
assumes that any debt securities will be issued, and transfers thereof and
payments thereon will be made, in accordance with the applicable indenture and
deposit agreement.


U.S. HOLDERS OF DEBT SECURITIES

Interest Income

     Subject to the original issue discount rules described below, payments of
interest on the debt securities (including the amount of Canadian tax withheld,
if any) generally will be taxable to a U.S. holder as ordinary interest income
at the time such payments are accrued or received (in accordance with the
holder's regular method of tax accounting).

     A debt security will be treated as issued with original issue discount
("OID") if its stated redemption price at maturity exceeds its issue price by
more than a de minimis amount. Generally, the issue price will be the first
price at which a substantial amount of the debt securities is sold to persons
other than bond

                                        47
<PAGE>   52

houses, brokers or similar persons or organizations acting in the capacity of
underwriters, placement agents or wholesalers. A debt security's stated
redemption price at maturity is the total of all payments on the debt security
that are not payments of qualified stated interest. An interest payment is
qualified stated interest if it is one of a series of stated interest payments
that are unconditionally payable at least annually at a single fixed rate.

     A debt security is not treated as issued with OID if the OID, i.e., if the
excess of the stated redemption price at maturity of a debt security over its
issue price, is de minimis. For this purpose the amount of OID is de minimis if
it does not exceed the product of 0.25 percent of the stated redemption price at
maturity multiplied by the number of complete years to maturity. If the debt
security has de minimis OID, a holder must generally include the de minimis
amount in income (as capital gain) when stated principal payments are made.


     If the debt security is treated as issued with OID, a U.S. holder will be
required to include the amount of the OID in income periodically over the term
of the debt security before receipt of the cash or other payment attributable to
such income and irrespective of such holder's general method of tax accounting.
In particular, a U.S. holder of a debt security must include in gross income, as
interest for United States federal income tax purposes, the sum of the daily
portions of OID with respect to the debt security for each day during the
taxable year or portion of a taxable year in which such holder holds the debt
security ("accrued OID"). The daily portion is determined by allocating to each
day of an accrual period a pro rata portion of an amount equal to the adjusted
issue price of the debt security at the beginning of the accrual period
multiplied by the yield to maturity of the debt security and subtracting from
this product the amount of qualified stated interest allocable to the accrual
period. The adjusted issue price of the debt security at the start of any
accrual period is the issue price of the debt security increased by the accrued
OID for each prior accrual period and decreased by the amount of any payments
previously made with respect to the debt security (other than qualified stated
interest).


Source of Income and Foreign Tax Credits With Respect to Debt Securities of
Energy Finance II


     If Canadian withholding taxes are imposed on payments on the debt
securities issued by Energy Finance II, a U.S. holder may be eligible for a
United States foreign tax credit with respect to such taxes. The interest
payments will be foreign source income and will generally constitute "passive
income" for foreign tax credit purposes. Moreover, if Canadian withholding taxes
are imposed on the interest payments at a rate that equals or exceeds 5%, such
interest income would constitute "high withholding tax interest" for United
States foreign tax credit purposes. A U.S. holder who is entitled under the Tax
Treaty to a refund of Canadian tax, if any, withheld on interest on the debt
securities will not be entitled to claim a foreign tax credit with respect to
such withheld tax. A U.S. holder that does not claim a foreign tax credit may be
entitled to a deduction for United States federal income tax purposes with
respect to any such Canadian withholding taxes. The calculation of foreign tax
credits or deductions involves the application of complex rules that depend on a
holder's particular circumstances. Accordingly, U.S. holders are urged to
consult their tax advisors regarding the creditability or deductibility of such
taxes. For a discussion of the Canadian income tax considerations, see "Certain
Canadian Federal Income Tax Considerations."


Debt Securities Purchased at a Market Discount


     A holder will be considered to have purchased a debt security at a "market
discount" if the holder's adjusted basis in the debt security is less than its
stated redemption price at maturity, or in the case of a debt security issued at
a discount, its revised issue price (which has the same meaning as "adjusted
issue price" as defined above), unless such market discount is a de minimis
amount (generally up to 1/4 of 1 percent of the stated redemption price or
revised issue price, as the case may be, on the purchase date multiplied by the
number of complete years to maturity remaining as of such date). In general, any
partial payment of principal on, or gain recognized on the maturity or
disposition of, the debt security will be treated as ordinary income to the
extent that such gain does not exceed the accrued market discount on the
underlying debenture. Alternatively, a holder of a debt security may elect to
include market discount in income currently over the life of the debt security.
Such an election applies to all debt instruments with

                                        48
<PAGE>   53

market discount acquired by the electing holder on or after the first day of the
first taxable year to which the election applies and may not be revoked without
the consent of the Internal Revenue Service.

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

Debt Securities Purchased at a Premium


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


Sale or Exchange of Debt Securities

     A holder will generally recognize taxable gain or loss equal to the
difference between the amount realized on the sale, exchange or other
disposition of the debt security and the holder's adjusted tax basis in such
debt security (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 therefore, increased
by any OID or market discount previously included in income with respect to the
debt security and reduced by any amortizable bond premium. In the case of a
holder other than a corporation, preferential tax rates may apply to gain
recognized on the sale of a debt security if such holder's holding period for
such debt security exceeds one year.

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

Other Debt Securities

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

Information Reporting and Backup Withholding Tax


     In general, information reporting requirements and backup withholding will
not apply to payments of principal, premium, if any, and interest on the debt
securities and payments of the proceeds of the sale of the debt securities if
all actions necessary to effect such payments are completed outside the United
States. If any such actions are effected within the United States or if payments
are made by transfer to an account maintained by the payee in the United States
or by mail to a United States address, information reporting and a backup
withholding tax (currently 30.5%) 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.


                                        49
<PAGE>   54

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

                                        50
<PAGE>   55

               CERTAIN CANADIAN FEDERAL INCOME TAX CONSIDERATIONS


     THE DISCUSSION BELOW IS INTENDED TO BE A GENERAL DESCRIPTION ONLY OF
CERTAIN CANADIAN FEDERAL INCOME TAX CONSIDERATIONS APPLICABLE TO THE OWNERSHIP
AND DISPOSITION OF DEBT SECURITIES OF ENERGY FINANCE OR ENERGY FINANCE II
ACQUIRED PURSUANT TO THIS OFFERING, AND IS NOT INTENDED TO BE, NOR SHOULD IT BE
CONSTRUED TO BE, LEGAL OR TAX ADVICE TO ANY PARTICULAR PURCHASER (AS DEFINED
BELOW). ACCORDINGLY, PROSPECTIVE INVESTORS ARE URGED TO CONSULT THEIR OWN TAX
ADVISORS WITH RESPECT TO THE CANADIAN FEDERAL AND PROVINCIAL TAX CONSEQUENCES OF
AN INVESTMENT IN THE DEBT SECURITIES.



     In the opinion of McCarthy Tetrault LLP, Canadian tax counsel to Energy
Finance and Energy Finance II, the following is a summary of the principal
Canadian federal income tax considerations generally applicable under the Income
Tax Act (Canada) (the "Tax Act") to a person (a "Purchaser") who acquires
beneficial ownership of debt securities of Energy Finance or Energy Finance II
pursuant to this offering and who for purposes of the Tax Act, and at all
relevant times, is not resident or deemed to be resident in Canada, deals at
arm's length with the issuer of the debt securities, and does not use or hold,
and is not deemed to use or hold, the debt securities in carrying on business in
Canada. For purposes of the Tax Act, related persons (as defined therein) are
deemed not to deal at arm's length, and it is a question of fact whether persons
not related to each other deal at arm's length.



     This summary is based on the current provisions of the Tax Act and the
Regulations thereunder (the "Regulations") in force on the date hereof, specific
proposals (the "Tax Proposals") to amend the Tax Act or the Regulations publicly
announced by the Minister of Finance prior to the date hereof, and counsel's
understanding of the current published administrative and assessing practices of
the Canada Customs and Revenue Agency (the "CCRA"). This summary is not
exhaustive of all possible Canadian income tax consequences and, except for the
Tax Proposals, does not take into account or anticipate any changes in law or
changes in the administrative and assessing practices of the CCRA, whether by
legislative, governmental or judicial action, nor does it take into account
income tax laws or considerations of any province or territory of Canada or any
jurisdiction other than Canada. No assurance can be given that the Tax Proposals
will become law in their present form or at all.



     The payment of interest, premium, if any, and principal by Energy Finance
or Energy Finance II on the debt securities of a particular series to such a
Purchaser will be exempt from Canadian non-resident withholding tax under the
Tax Act, provided that the terms of the debt securities of that particular
series do not require the issuer thereof to repay more than 25% of the principal
amount payable thereunder before the fifth anniversary of the date of issue of
that particular series of debt securities. If the terms of the debt securities
of a particular series do require the issuer to repay more than 25% of the
principal amount thereof before the fifth anniversary of the date of issue
thereof, or if a Purchaser thereof does not deal at arm's length with the
issuer, the payment of interest thereon will be subject to Canadian non-
resident withholding tax under the Tax Act at a rate of 25% thereof (or, if
applicable, such lower rate as is specified by a tax treaty between Canada and
the Purchaser's country of residence).



     No other tax on income (including capital gains) will be payable under the
Tax Act in respect of the holding, repayment, redemption or disposition of the
debt securities, or the receipt of interest, premium, if any, or principal
thereon by a Purchaser, except that in certain circumstances, a Purchaser who
has made an election to have the debt securities treated as taxable Canadian
property, or that is a non-resident insurer carrying on business in Canada and
elsewhere in respect of which the debt securities are designated insurance
property for purposes of the Tax Act, may be subject to such taxes.


                                 LEGAL MATTERS


     The validity of the debt and equity securities of Calpine offered hereby
and the guarantees of Calpine will be passed upon for us by Covington & Burling,
New York, New York. The validity of the debt securities of Energy Finance and
Energy Finance II offered hereby will be passed upon for us by Covington &
Burling, New York, New York and by Stewart McKelvey Stirling Scales, Halifax,
Nova


                                        51
<PAGE>   56


Scotia, Canada. Any underwriters will be represented by Skadden, Arps, Slate,
Meagher & Flom LLP, New York, New York.


                                    EXPERTS


     Our audited financial statements incorporated by reference in this
prospectus and elsewhere in the registration statement have been audited by
Arthur Andersen LLP, independent public accountants, as indicated in their
reports with respect thereto, and are included herein in reliance upon the
authority of said firm as experts in giving said reports. The report of Ernst
and Young LLP, independent public accountants, with respect to the audited
financial statements of Encal Energy Ltd., which is incorporated in this
prospectus by reference to our Current Report on Form 8-K, dated September 10,
2001, is included herein in reliance upon the authority of said firm as experts
in giving said report.


                                        52
<PAGE>   57

                                 [CALPINE LOGO]
<PAGE>   58

                                    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.......................  $  375,000*
Legal fees and expenses.....................................     300,000
Accounting fees and expenses................................      75,000
Trustee's fees and expenses (including counsel fees)........     120,000
Printing fees...............................................     360,000
Transfer agent fees.........................................      12,000
Miscellaneous...............................................      13,000
                                                              ----------
  Total.....................................................  $1,255,000
                                                              ==========
</Table>


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

 * Previously paid.



ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.


CALPINE CORPORATION

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

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

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

     Calpine has entered into indemnification agreements with its directors and
officers. These agreements provide substantially broader indemnity rights than
those provided under the Delaware Law and the

                                       II-1
<PAGE>   59

Calpine's bylaws. The indemnification agreements are not intended to deny or
otherwise limit third-party or derivative suits against Calpine or its directors
or officers, but if a director or officer were entitled to indemnity or
contribution under the indemnification agreement, the financial burden of a
third-party suit would be borne by Calpine, and Calpine would not benefit from
derivative recoveries against the director or officer. Such recoveries would
accrue to the benefit of Calpine but would be offset by Calpine's obligations to
the director or officer under the indemnification agreement. In addition, the
directors of Calpine are insured under officers and directors liability
insurance policies.

CALPINE CANADA ENERGY FINANCE ULC

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

CALPINE CANADA ENERGY FINANCE II ULC

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

ITEM 16. EXHIBITS.


<Table>
<Caption>
    EXHIBIT
    NUMBER                            DESCRIPTION
    -------                           -----------
    <C>       <S>
      1.1     Form of Underwriting Agreement with respect to Common Stock,
              Preferred Stock and Debt Securities of Calpine
              Corporation(b)
      1.2     Form of Underwriting Agreement with respect to Debt
              Securities of Calpine Canada Energy Finance ULC(f)
     +1.3     Form of Underwriting Agreement with respect to Debt
              Securities of Calpine Canada Energy Finance II ULC
      3.1     Amended and Restated Certificate of Incorporation of Calpine
              Corporation(b)
      3.2     Certificate of Correction of Calpine Corporation(a)
      3.3     Certificate of Amendment of Amended and Restated Certificate
              of Incorporation of Calpine Corporation (i)
      3.4     Certificate of Designation of Series A Participating
              Preferred Stock of Calpine Corporation(a)
      3.5     Amended Certificate of Designation of Series A Participating
              Preferred Stock of Calpine Corporation(a)
      3.6     Amended Certificate of Designation of Series A Participating
              Preferred Stock of Calpine Corporation(i)
      3.7     Certificate of Designation of Special Voting Preferred Stock
              of Calpine Corporation(g)
     *3.8     Amended and Restated By-laws of Calpine Corporation
</Table>


                                       II-2
<PAGE>   60


<Table>
<Caption>
    EXHIBIT
    NUMBER                            DESCRIPTION
    -------                           -----------
    <C>       <S>
      3.9     Memorandum of Association of Calpine Canada Energy Finance
              ULC(h)
      3.10    Articles of Association of Calpine Canada Energy Finance
              ULC(h)
     +3.11    Memorandum of Association of Calpine Canada Energy Finance
              II ULC
     +3.12    Articles of Association of Calpine Canada Energy Finance II
              ULC
      4.1     Form of Indenture between Calpine Corporation and Wilmington
              Trust Company, including form of Note(d)
      4.2     Rights Agreement, dated as of June 5, 1997, between Calpine
              Corporation and First Chicago Trust Company of New York, as
              Rights Agent(e)
      4.3     Form of Indenture between Calpine Canada Energy Finance ULC
              and Wilmington Trust Company, including form of Note (the
              "Energy Finance Indenture")(f)
      4.4     Form of Guarantee Agreement of Calpine Corporation with
              respect to Senior Debt Securities of Calpine Canada Energy
              Finance ULC (the "Calpine/Energy Finance Guarantee")(f)
     *4.5     Form of Indenture between Calpine Canada Energy Finance II
              ULC and Wilmington Trust Company, including form of Note
              (the "Energy Finance II Indenture")
     +4.6     Form of Guarantee Agreement of Calpine Corporation with
              respect to Senior Debt Securities of Calpine Canada Energy
              Finance II ULC (the "Calpine/Energy Finance II Guarantee")
     *5.1     Opinion of Covington & Burling
     *5.2     Opinion of Stewart McKelvey Stirling Scales
     *8.1     Opinion of Covington & Burling as to certain U.S. Federal
              tax matters
     *8.2     Opinion of McCarthy Tetrault LLP as to certain Canadian
              Federal tax matters
    *12.1     Statement Regarding Computation of Ratios
    *23.1     Consent of Arthur Andersen LLP, independent public
              accountants
    *23.2     Consents of Covington & Burling (included in Exhibits 5.1
              and 8.1)
    *23.3     Consent of Stewart McKelvey Stirling Scales (included in
              Exhibit 5.2)
    *23.4     Consent of McCarthy Tetrault LLP (included in Exhibit 8.2)
    *23.5     Consent of Ernst and Young LLP, independent public
              accountants
    *24.1     Power of Attorney of Officers and Directors of Calpine (see
              pages II-6 and II-7)
    *24.2     Power of Attorney of Officers and Directors of Calpine
              Canada Energy Finance ULC (see pages II-8 and II-9)
    *24.2     Power of Attorney of Officers and Directors of Calpine
              Canada Energy Finance II ULC (see pages II-10 and II-11)
     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(d)
     25.2     Form T-1 Statements of Eligibility under the Trust Indenture
              Act of 1939, as amended, of Wilmington Trust Company, as
              Trustee under each of (i) the Energy Finance Indenture, and
              (ii) the Calpine/Energy Finance Guarantee(f)
    +25.3     Form T-1 Statements of Eligibility under the Trust Indenture
              Act of 1939, as amended, of Wilmington Trust Company, as
              Trustee under each of (i) the Energy Finance II Indenture,
              and (ii) the Calpine/Energy Finance II Guarantee
</Table>


-------------------------
 *  Filed herewith.


 +  Previously filed.


 (a) Incorporated by reference to Calpine Corporation's Annual Report on Form
     10-K for the year ended December 31, 2000, filed with the SEC on March 15,
     2001.

(b) Incorporated by reference to Calpine Corporation's Registration Statement on
    Form S-3 (Registration No. 333-40652) filed with the SEC on June 30, 2000.


 (c) Incorporated by reference to Amendment No. 1 to Calpine Corporation's
     Registration Statement on Form S-1 (Registration No. 333-07497) filed with
     the SEC on August 22, 1996.


                                       II-3
<PAGE>   61

(d) Incorporated by reference to Amendment No. 1 to Calpine Corporation's
    Registration Statement on Form S-3 (Registration No. 333-40652) filed with
    the SEC on July 24, 2000.

 (e) Incorporated by reference to Calpine Corporation's Registration Statement
     on Form 8-A filed with the SEC on June 18, 1997 and amended by Calpine's
     Registration Statement on Form 8-A/A filed with the SEC on June 24, 1997
     (File No. 001-12079).

 (f) Incorporated by reference to Amendment No. 1 to the Registration Statement
     on Form S-3 of Calpine Corporation and Calpine Canada Energy Finance ULC
     (Registration No. 333-57338) filed with the SEC on April 19, 2001.

 (g) Incorporated by reference to Calpine Corporation's Quarterly Report on Form
     10-Q for the quarter ended March 31, 2001, filed with the SEC on May 15,
     2001.

(h) Incorporated by reference to the Registration Statement on Form S-3 of
    Calpine Corporation and Calpine Canada Energy Finance ULC (Registration No.
    333-57338) filed with the SEC on March 21, 2001.

 (i) Incorporated by reference to the Registration Statement on Form S-3 of
     Calpine Corporation (Registration Statement No. 333-66078) filed with the
     SEC on July 27, 2001.

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 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

                                       II-4
<PAGE>   62

     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-5
<PAGE>   63

                                   SIGNATURES

                              CALPINE CORPORATION


     Pursuant to the requirements of the Securities Act of 1933, Calpine
Corporation certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing this Amendment No. 1 to the Registration
Statement on Form S-3 (the "Registration Statement") and has duly caused this
Amendment No. 1 to the 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 17th day of September, 2001.


                                          CALPINE CORPORATION

                                          By        /s/ ANN B. CURTIS
                                            ------------------------------------
                                                       Ann B. Curtis
                                                Executive Vice President and
                                                  Chief Financial Officer

                               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. 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 the name.


     Pursuant to the requirements of the Securities Exchange Act of 1934, this
Amendment No. 1 to the Registration Statement 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, Chief   September 17, 2001
-----------------------------------------------------     Executive Officer and
                  Peter Cartwright                         Director (Principal
                                                           Executive Officer)

                  /s/ ANN B. CURTIS                     Executive Vice President,   September 17, 2001
-----------------------------------------------------  Chief Financial Officer and
                    Ann B. Curtis                          Director (Principal
                                                           Financial Officer)
</Table>


                                       II-6
<PAGE>   64


<Table>
<Caption>
                      SIGNATURE                                   TITLE                    DATE
                      ---------                                   -----                    ----
<C>                                                    <C>                          <S>
              /s/ CHARLES B. CLARK, JR.                 Senior Vice President and   September 17, 2001
-----------------------------------------------------     Corporate Controller
                Charles B. Clark, Jr.                     (Principal Accounting
                                                                Officer)

                          *                                     Director            September 17, 2001
-----------------------------------------------------
                   Kenneth T. Derr

                                                                Director            September   , 2001
-----------------------------------------------------
                  Jeffrey E. Garten

                          *                                     Director            September 17, 2001
-----------------------------------------------------
                  Gerald Greenwald

                          *                                     Director            September 17, 2001
-----------------------------------------------------
                   Susan C. Schwab

                          *                                     Director            September 17, 2001
-----------------------------------------------------
                 George J. Stathakis

                          *                                     Director            September 17, 2001
-----------------------------------------------------
                   John O. Wilson

              *By: /s/ PETER CARTWRIGHT
  -------------------------------------------------
                  Attorney-in-Fact
</Table>


                                       II-7
<PAGE>   65

                                   SIGNATURES

                       CALPINE CANADA ENERGY FINANCE ULC


     Pursuant to the requirements of the Securities Act of 1933, Calpine Canada
Energy Finance ULC certifies that it has reasonable grounds to believe that it
meets all of the requirements for filing this Amendment No. 1 to the
Registration Statement on Form S-3 (the "Registration Statement") and has duly
caused this Amendment No. 1 to the Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized in the City of Calgary,
Province of Alberta, on this 17th day of September, 2001.


                                      CALPINE CANADA ENERGY FINANCE ULC

                                      By        /s/ DAVID D. JOHNSON
                                        ----------------------------------------
                                                    David D. Johnson
                                                     Vice President

                               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, Ann B. Curtis and
David D. Johnson, 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. 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 the name.


     Pursuant to the requirements of the Securities Exchange Act of 1934, this
Amendment No. 1 to the Registration Statement 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/ STEVEN A. ALLAIRE                  Vice President and Director   September 17, 2001
-----------------------------------------------------
                  Steven A. Allaire
                  /s/ DANIEL ALLARD                              Director            September 17, 2001
-----------------------------------------------------
                    Daniel Allard
                /s/ PETER CARTWRIGHT                      President and Director     September 17, 2001
-----------------------------------------------------      (Principal Executive
                  Peter Cartwright                               Officer)
</Table>


                                       II-8
<PAGE>   66


<Table>
<Caption>
                      SIGNATURE                                   TITLE                     DATE
                      ---------                                   -----                     ----
<C>                                                    <C>                           <S>
                  /s/ ANN B. CURTIS                     Executive Vice President,    September 17, 2001
-----------------------------------------------------     Secretary and Director
                    Ann B. Curtis                        (Principal Financial and
                                                           Accounting Officer)

                /s/ DAVID D. JOHNSON                   Vice President and Director   September 17, 2001
-----------------------------------------------------
                  David D. Johnson

            Authorized Representative in                                             September 17, 2001
                  the United States
                  /s/ ANN B. CURTIS
-----------------------------------------------------
              Authorized Representative
</Table>


                                       II-9
<PAGE>   67

                                   SIGNATURES

                      CALPINE CANADA ENERGY FINANCE II ULC


     Pursuant to the requirements of the Securities Act of 1933, Calpine Canada
Energy Finance II ULC certifies that it has reasonable grounds to believe that
it meets all of the requirements for filing this Amendment No. 1 to the
Registration Statement on Form S-3 (the "Registration Statement") and has duly
caused this Amendment No. 1 to the Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized in the City of Calgary,
Province of Alberta, on this 17th day of September, 2001.


                                      CALPINE CANADA ENERGY FINANCE II ULC


                                      By        /s/ DAVID D. JOHNSON

                                        ----------------------------------------
                                                    David D. Johnson
                                                     Vice President

                               POWER OF ATTORNEY

KNOW ALL PERSONS BY THESE PRESENTS:


     That the undersigned officers and directors of Calpine Canada Energy
Finance II ULC do hereby constitute and appoint Peter Cartwright, Ann B. Curtis
and David D. Johnson, 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 II 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. 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 the name.


     Pursuant to the requirements of the Securities Exchange Act of 1934, this
Amendment No. 1 to the Registration Statement has been signed below by the
following persons on behalf of Calpine Canada Energy Finance II ULC and in the
capacities and on the dates indicated.



<Table>
<Caption>
                      SIGNATURE                                   TITLE                     DATE
                      ---------                                   -----                     ----
<C>                                                    <C>                           <S>
                /s/ STEVEN A. ALLAIRE                  Vice President and Director   September 17, 2001
-----------------------------------------------------
                  Steven A. Allaire

                  /s/ DANIEL ALLARD                              Director            September 17, 2001
-----------------------------------------------------
                    Daniel Allard

                /s/ PETER CARTWRIGHT                      President and Director     September 17, 2001
-----------------------------------------------------      (Principal Executive
                  Peter Cartwright                               Officer)
</Table>


                                      II-10
<PAGE>   68


<Table>
<Caption>
                      SIGNATURE                                   TITLE                     DATE
                      ---------                                   -----                     ----
<C>                                                    <C>                           <S>
                  /s/ ANN B. CURTIS                     Executive Vice President,    September 17, 2001
-----------------------------------------------------     Secretary and Director
                    Ann B. Curtis                        (Principal Financial and
                                                           Accounting Officer)

                /s/ DAVID D. JOHNSON                   Vice President and Director   September 17, 2001
-----------------------------------------------------
                  David D. Johnson
</Table>



<Table>
<Caption>
            Authorized Representative in                                             September 17, 2001
                  the United States
                  /s/ ANN B. CURTIS
-----------------------------------------------------
              Authorized Representative
<C>                                                    <C>                           <S>
</Table>


                                      II-11
<PAGE>   69

                               INDEX TO EXHIBITS


<Table>
<Caption>
    EXHIBIT
    NUMBER                            DESCRIPTION
    -------                           -----------
    <C>       <S>
      1.1     Form of Underwriting Agreement with respect to Common Stock,
              Preferred Stock and Debt Securities of Calpine
              Corporation(b)
      1.2     Form of Underwriting Agreement with respect to Debt
              Securities of Calpine Canada Energy Finance ULC(f)
     +1.3     Form of Underwriting Agreement with respect to Debt
              Securities of Calpine Canada Energy Finance II ULC
      3.1     Amended and Restated Certificate of Incorporation of Calpine
              Corporation(b)
      3.2     Certificate of Correction of Calpine Corporation(a)
      3.3     Certificate of Amendment of Amended and Restated Certificate
              of Incorporation of Calpine Corporation(i)
      3.4     Certificate of Designation of Series A Participating
              Preferred Stock of Calpine Corporation(a)
      3.5     Amended Certificate of Designation of Series A Participating
              Preferred Stock of Calpine Corporation(a)
      3.6     Amended Certificate of Designation of Series A Participating
              Preferred Stock of Calpine Corporation(i)
      3.7     Certificate of Designation of Special Voting Preferred Stock
              of Calpine Corporation(g)
     *3.8     Amended and Restated By-laws of Calpine Corporation
      3.9     Memorandum of Association of Calpine Canada Energy Finance
              ULC(h)
      3.10    Articles of Association of Calpine Canada Energy Finance
              ULC(h)
     +3.11    Memorandum of Association of Calpine Canada Energy Finance
              II ULC
     +3.12    Articles of Association of Calpine Canada Energy Finance II
              ULC
      4.1     Form of Indenture between Calpine Corporation and Wilmington
              Trust Company, including form of Note(d)
      4.2     Rights Agreement, dated as of June 5, 1997, between Calpine
              Corporation and First Chicago Trust Company of New York, as
              Rights Agent(e)
      4.3     Form of Indenture between Calpine Canada Energy Finance ULC
              and Wilmington Trust Company, including form of Note (the
              "Energy Finance Indenture")(f)
      4.4     Form of Guarantee Agreement of Calpine Corporation with
              respect to Senior Debt Securities of Calpine Canada Energy
              Finance ULC (the "Calpine/Energy Finance Guarantee")(f)
     *4.5     Form of Indenture between Calpine Canada Energy Finance II
              ULC and Wilmington Trust Company, including form of Note
              (the "Energy Finance II Indenture")
     +4.6     Form of Guarantee Agreement of Calpine Corporation with
              respect to Senior Debt Securities of Calpine Canada Energy
              Finance II ULC (the "Calpine/Energy Finance II Guarantee")
     *5.1     Opinion of Covington & Burling
     *5.2     Opinion of Stewart McKelvey Stirling Scales
     *8.1     Opinion of Covington & Burling as to certain U.S. Federal
              tax matters
     *8.2     Opinion of McCarthy Tetrault LLP as to certain Canadian
              Federal tax matters
    *12.1     Statement Regarding Computation of Ratios
    *23.1     Consent of Arthur Andersen LLP, independent public
              accountants
    *23.2     Consents of Covington & Burling (included in Exhibits 5.1
              and 8.1)
    *23.3     Consent of Stewart McKelvey Stirling Scales (included in
              Exhibit 5.2)
    *23.4     Consent of McCarthy Tetrault LLP (included in Exhibit 8.2)
    *23.5     Consent of Ernst and Young LLP, independent public
              accountants
    *24.1     Power of Attorney of Officers and Directors of Calpine (see
              pages II-6 and II-7)
    *24.2     Power of Attorney of Officers and Directors of Calpine
              Canada Energy Finance ULC (see pages II-8 and II-9)
</Table>

<PAGE>   70


<Table>
<Caption>
    EXHIBIT
    NUMBER                            DESCRIPTION
    -------                           -----------
    <C>       <S>
    *24.2     Power of Attorney of Officers and Directors of Calpine
              Canada Energy Finance II ULC (see pages II-10 and II-11)
     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(d)
     25.2     Form T-1 Statements of Eligibility under the Trust Indenture
              Act of 1939, as amended, of Wilmington Trust Company, as
              Trustee under each of (i) the Energy Finance Indenture, and
              (ii) the Calpine/Energy Finance Guarantee (f)
    +25.3     Form T-1 Statements of Eligibility under the Trust Indenture
              Act of 1939, as amended, of Wilmington Trust Company, as
              Trustee under each of (i) the Energy Finance II Indenture,
              and (ii) the Calpine/Energy Finance II Guarantee
</Table>


-------------------------
 *  Filed herewith.


 +  Previously filed.


 (a) Incorporated by reference to Calpine Corporation's Annual Report on Form
     10-K for the year ended December 31, 2000, filed with the SEC on March 15,
     2001.

(b) Incorporated by reference to Calpine Corporation's Registration Statement on
    Form S-3 (Registration No. 333-40652) filed with the SEC on June 30, 2000.


 (c) Incorporated by reference to Amendment No. 1 to Calpine Corporation's
     Registration Statement on Form S-1 (Registration No. 333-07497) filed with
     the SEC on August 22, 1996.


(d) Incorporated by reference to Amendment No. 1 to Calpine Corporation's
    Registration Statement on Form S-3 (Registration No. 333-40652) filed with
    the SEC on July 24, 2000.

 (e) Incorporated by reference to Calpine Corporation's Registration Statement
     on Form 8-A filed with the SEC on June 18, 1997 and amended by Calpine's
     Registration Statement on Form 8-A/A filed with the SEC on June 24, 1997
     (File No. 001-12079).

 (f) Incorporated by reference to Amendment No. 1 to the Registration Statement
     on Form S-3 of Calpine Corporation and Calpine Canada Energy Finance ULC
     (Registration No. 333-57338) filed with the SEC on April 19, 2001.

 (g) Incorporated by reference to Calpine Corporation's Quarterly Report on Form
     10-Q for the quarter ended March 31, 2001, filed with the SEC on May 15,
     2001.

(h) Incorporated by reference to the Registration Statement on Form S-3 of
    Calpine Corporation and Calpine Canada Energy Finance ULC (Registration No.
    333-57338) filed with the SEC on March 21, 2001.

 (i) Incorporated by reference to the Registration Statement on Form S-3 of
     Calpine Corporation (Registration Statement No. 333-66078) filed with the
     SEC on July 27, 2001.

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-3.8
<SEQUENCE>3
<FILENAME>f74776a1ex3-8.txt
<DESCRIPTION>EXHIBIT 3.8
<TEXT>
<PAGE>   1
                                                                     EXHIBIT 3.8











                                     BYLAWS

                                       OF

                               CALPINE CORPORATION


                            (A Delaware Corporation)


<PAGE>   2

                                Table of Contents


<TABLE>
<CAPTION>
                                                                            Page
<S>                                                                         <C>
ARTICLE I - OFFICES                                                           1
        Section 1.    Registered Office                                       1
        Section 2.    Other Offices                                           1

ARTICLE II - CORPORATE SEAL                                                   1
        Section 3.    Corporate Seal                                          1

ARTICLE III - MEETINGS OF STOCKHOLDERS AND VOTING RIGHTS                      1
        Section 4.    Place of Meetings                                       1
        Section 5.    Annual Meeting                                          1
        Section 6.    Postponement of Annual Meeting                          2
        Section 7.    Special Meetings                                        2
        Section 8.    Notice of Meetings                                      2
        Section 9.    Manner of Giving Notice                                 2
        Section 10.   Quorum and Transaction of Business                      3
        Section 11.   Adjournment and Notice of Adjourned Meetings            4
        Section 12.   Waiver of Notice                                        5
        Section 13.   Action by Written Consent Without a Meeting             5
        Section 14.   Voting                                                  5
        Section 15.   Persons Entitled to Vote                                6
        Section 16.   Proxies                                                 6
        Section 17.   Inspectors of Election                                  6

ARTICLE IV - BOARD OF DIRECTORS                                               7
        Section 18.   Powers                                                  7
        Section 19.   Number of Directors                                     7
        Section 20.   Election Of Directors, Term, Qualifications             7
        Section 21.   Resignations                                            8
        Section 22.   Removal                                                 8
        Section 23.   Vacancies                                               8
        Section 24.   Regular Meetings                                        8
        Section 25.   Participation by Telephone or Other Communications
                      Equipment                                               8
        Section 26.   Special Meetings                                        8
        Section 27.   Notice of Meetings                                      9
        Section 28.   Place of Meetings                                       9
        Section 29.   Action by Consent Without a Meeting                     9
        Section 30.   Quorum and Transaction of Business                      9
        Section 31.   Adjournment                                             9
        Section 32.   Organization                                           10
        Section 33.   Compensation                                           10
        Section 34.   Committees                                             10

ARTICLE V - OFFICERS                                                         11
        Section 35.   Officers                                               11
        Section 36.   Appointment                                            11
</TABLE>


<PAGE>   3
<TABLE>
<CAPTION>
                                                                            Page
<S>                                                                         <C>
        Section 37.   Inability to Act                                       11
        Section 38.   Resignation                                            11
        Section 39.   Removal                                                11
        Section 40.   Vacancies                                              11
        Section 41.   Chairman of the Board                                  11
        Section 42.   President                                              12
        Section 43.   Vice Presidents                                        12
        Section 44.   Secretary and Assistant Secretary                      12
        Section 45.   Chief Financial Officer                                13
        Section 46.   Compensation                                           13

ARTICLE VI - CONTRACTS, LOANS, BANK ACCOUNTS, CHECKS AND DRAFTS              14
        Section 47.   Execution of Contracts and Other Instruments           14
        Section 48.   Loans                                                  14
        Section 49.   Bank Accounts                                          14
        Section 50.   Checks, Drafts, Etc                                    14

ARTICLE VII - CERTIFICATES FOR STOCK AND THEIR TRANSFER                      15
        Section 51.   Certificate for Stock                                  15
        Section 52.   Transfer on the Books                                  15
        Section 53.   Lost, Destroyed and Stolen Certificates                15
        Section 54.   Issuance, Transfer and Registration of Shares          16

ARTICLE VIII - INSPECTION OF CORPORATE RECORDS                               16
        Section 55.   Inspection by Directors                                16
        Section 56.   Inspection by Stockholders                             16
        Section 57.   Written Form                                           17

ARTICLE IX - MISCELLANEOUS                                                   17
        Section 58.   Fiscal Year                                            17
        Section 59.   Annual Report                                          17
        Section 60.   Record Date                                            17
        Section 61.   Bylaw Amendments                                       18
        Section 62.   Construction and Definition                            18
        Section 63.   Registered Stockholders                                18
        Section 64.   Dividends                                              18

ARTICLE X - INDEMNIFICATION                                                  18
        Section 65.   Indemnification of Directors, Officers, Employees
                      And Other Agents                                       18

ARTICLE XI - LOANS OF OFFICERS AND OTHERS                                    20
        Section 66.   Certain Corporate Loans and Guaranties                 20
</TABLE>


<PAGE>   4

                                     BYLAWS

                                       OF

                               CALPINE CORPORATION
                            (A Delaware Corporation)


                                    ARTICLE I
                                     OFFICES

        SECTION 1. REGISTERED OFFICE. The registered office of the corporation
shall be in the City of Wilmington, County of New Castle, State of Delaware.

        SECTION 2. OTHER OFFICES. Additional offices of the corporation shall be
located at such place or places, within or outside the State of Delaware, as the
Board of Directors may from time to time authorize or the business of the
corporation may require.

                                   ARTICLE II
                                 CORPORATE SEAL

        SECTION 3. CORPORATE SEAL. The Board of Directors may adopt a corporate
seal having inscribed thereon the name of the corporation, the year of its
organization and the words "Corporate Seal, Delaware." If and when a seal is
adopted by the Board of Directors, such seal may be used by causing it or a
facsimile thereof to be engraved, lithographed, printed, stamped, impressed upon
or affixed to any contract, conveyance, certificate for stock or other
instrument executed by the corporation.

                                   ARTICLE III
                   MEETINGS OF STOCKHOLDERS AND VOTING RIGHTS

        SECTION 4. PLACE OF MEETINGS. All meetings of the stockholders for the
election of directors shall be held at such place as may be fixed from time to
time by the Board of Directors, or at such other place either within or without
the State of Delaware as shall be designated from time to time by the Board of
Directors and stated in the notice of the meeting, or if authorized by the Board
of Directors may be held by means of remote communication in accordance with
applicable law. Meetings of stockholders for any other purpose shall be held at
such time and place, within or without the State of Delaware, as shall be stated
in the notice of the meeting or in a duly executed waiver of notice thereof, or
if authorized by the Board of Directors may be held by means of remote
communication in accordance with applicable law.

        SECTION 5. ANNUAL MEETING. Annual meetings of stockholders shall be held
at such date and time as shall be designated from time to time by the Board of
Directors and stated in the notice of the meeting. At such annual meeting,
directors shall be elected and any other business may be transacted which may
properly come before the meeting.


<PAGE>   5

        SECTION 6. POSTPONEMENT OF ANNUAL MEETING. The Board of Directors shall
have the authority to postpone to a later date and/or time the annual meeting of
stockholders.

        SECTION 7. SPECIAL MEETINGS. Special meetings of the stockholders, for
any purpose or purposes, may be called as provided in Article Sixth of the
Certificate of Incorporation.

        SECTION 8. NOTICE OF MEETINGS. Written notice of each meeting of
stockholders shall be given to each stockholder entitled to vote at that meeting
(see Section 15 below) by the Secretary not less than 10 days nor more than 60
days before such meeting.

        Notice of any meeting of stockholders shall state the place, if any,
date and hour of the meeting, the means of remote communications, if any, by
which stockholders and proxy holders may be deemed to be present in person and
vote at such meeting, and,

                (a) in the case of a special meeting, the general nature of the
business to be transacted;

                (b) in the case of an annual meeting, the general nature of
matters which the Board of Directors, at the time the notice is given, intends
to present for action by the stockholders; and

                (c) in the case of any meeting at which directors are to be
elected, the names of the nominees intended at the time of the notice to be
presented by management for election.

        At a special meeting, notice of which has been given in accordance with
this Section, action may not be taken with respect to business, the general
nature of which has not been stated in such notice. At an annual meeting, action
may be taken with respect to business stated in the notice of such meeting and
any other business as may properly come before the meeting.

        SECTION 9. MANNER OF GIVING NOTICE. Notice of any meeting of
stockholders shall be given either personally, by first-class mail, by other
written communication, by facsimile transmission if directed to a number at
which the stockholder has consented to receive notice, or by a form of
electronic transmission consented to by the stockholder to whom notice is given,
in each case addressed to the stockholder at the address of that stockholder
appearing on the books of the corporation or given by the stockholder to the
corporation for the purpose of notice. If no such address appears on the
corporation's books or is given, notice shall be deemed to have been given if
sent to that stockholder by first-class mail or other written communication to
the corporation's principal executive office, or if published at least once in a
newspaper of general circulation in the county where that office is located.
Notice shall be deemed to have been given at the time when delivered personally
or deposited in the mail or sent by other means of written communication, and if
given by facsimile transmission, when directed to a number at which the
stockholder has consented to receive notice, and if given by electronic
transmission as provided in Section 232 of the Delaware General Corporation Law.


                                       2
<PAGE>   6

        An affidavit of executed by the Secretary, Assistant Secretary or any
transfer agent, or other agent of the corporation that notice has been given in
a form permitted by this Section 9 shall be prima facie evidence of the giving
of the notice.

        SECTION 10. QUORUM AND TRANSACTION OF BUSINESS.

        (a) At any annual meeting of the stockholders, a majority of the shares
entitled to vote, represented in person or by proxy, shall constitute a quorum.
If a quorum is present, the affirmative vote of the majority of shares
represented at the meeting and entitled to vote on any matter shall be the act
of the stockholders, unless the vote of a greater number or voting by classes is
required by law or by the Certificate of Incorporation, and except as provided
in subsection (c) below.

        (b) At any meeting of the stockholders, only such business shall be
conducted as shall have been brought before the meeting (1) pursuant to the
corporation's notice of meeting, (2) by or at the direction of the Board of
Directors or (3) by any stockholder of the corporation who is a stockholder of
record at the time of giving of the notice provided for in this Bylaw, who shall
be entitled to vote at such meeting and who complies with the notice procedures
set forth in this Bylaw.

        For business to be properly brought before any meeting by a stockholder
pursuant to clause (3) of this Section 10(b), the stockholder must have given
timely notice thereof in writing to the Secretary of the corporation. To be
timely, a stockholder's notice must be delivered to or mailed and received at
the principal executive offices of the corporation not less than 90 days nor
more than 120 days prior to the date of the meeting; provided, however, that in
the event that less than 105 days' advance notice or prior public disclosure of
the date of the meeting is given or made to stockholders, notice by the
stockholder to be timely must be so received not later than the close of
business on the 15th date following the day on which such notice of the date of
the annual meeting was mailed or such public disclosure was made, whichever
occurs later.

        A stockholder's notice to the Secretary shall set forth as to each
matter the stockholder proposes to bring before the meeting: (a) a brief
description of the business desired to be brought before the meeting and the
reasons for conducting such business at the meeting; (b) the name and address,
as they appear on the corporation's books, of the stockholder proposing such
business and the name and address of the beneficial owner, if any, on whose
behalf the proposal is made; (c) the class and number of shares of the
corporation which are owned beneficially and of record by such stockholder of
record and by the beneficial owner, if any, on whose behalf the proposal is
made; and (d) any material interest of such stockholder of record and the
beneficial owner, if any, on whose behalf the proposal is made in such business.

        Notwithstanding anything in these Bylaws to the contrary, no business
shall be conducted at a meeting except in accordance with the procedures set
forth in this Section 10(b). The presiding officer of the meeting shall, if the
facts warrant, determine and declare to the meeting that business was not
properly brought before the meeting and in accordance with the


                                       3
<PAGE>   7

procedures prescribed by this Section 10(b), and any such business not properly
brought before the meeting shall not be transacted. Notwithstanding the
foregoing provisions of this Section 10(b), a stockholder shall also comply with
all applicable requirements of the Securities Exchange Act of 1934, as amended,
and the rules and regulations thereunder with respect to the matters set forth
in this Section 10(b).

        (c) The stockholders present at a duly called or held meeting of the
stockholders at which a quorum is present may continue to do business until
adjournment, notwithstanding the withdrawal of enough stockholders to leave less
than a quorum; provided that any action taken (other than adjournment) is
approved by at least a majority of the shares required to constitute a quorum.

        (d) In the absence of a quorum, no business other than adjournment may
be transacted, except as described in subsection (c) above.

        (e) If authorized by the Board of Directors, and subject to such
guidelines and procedures as the Board of Directors may adopt, stockholders and
proxyholders not physically present at a meeting of stockholders, by means of
remote communications:

                (1) may participate in a meeting of stockholders; and

                (2) shall be deemed present in person and may vote at a meeting
of stockholders;

provided that (i) reasonable procedures have been implemented to verify that
each person deemed present and permitted to vote at the meeting by means of
remote communications is a stockholder or proxyholder, (ii) reasonable
procedures are implemented to provide stockholders and proxyholders
participating in the meeting by means of remote communications with a reasonable
opportunity to participate in the meeting and to vote on matters submitted to
stockholders, including an opportunity to read or hear the proceedings of the
meeting substantially concurrently with the proceedings, and (iii) if any
stockholder or proxyholder votes or takes other action at the meeting by means
of remote communications, a record of such vote or other action shall be
maintained by the corporation.

        SECTION 11. ADJOURNMENT AND NOTICE OF ADJOURNED MEETINGS. Any meeting of
stockholders may be adjourned from time to time, whether or not a quorum is
present, by the affirmative vote of a majority of shares represented at such
meeting, either in person or by proxy, and entitled to vote at such meeting.

        In the event a meeting is adjourned, it shall not be necessary to give
notice of such adjourned meeting; provided that if any of the following three
events occur, such notice must be given:

                (1) announcement of the adjourned meeting's time, place, if any,
thereof, and the means of remote communications, if any, by which stockholders
and proxy


                                       4
<PAGE>   8

holders may be deemed to be present in person and vote at such adjourned
meetings are not made at the original meeting at which adjournment is taken;

                (2) such meeting is adjourned for more than 30 days from the
date set for the original meeting; or

                (3) after the adjournment a new record date is fixed for the
adjourned meeting.

        At the adjourned meeting, the corporation may transact any business
which might have been transacted at the original meeting.

        SECTION 12. WAIVER OF NOTICE.

                (a) The transactions of any meeting of stockholders, however
called and noticed, and wherever held, shall be as valid as though made at a
meeting duly held after regular call and notice, if a quorum is present either
in person or by proxy, and if, either before or after the meeting, each of the
persons entitled to notice, but not present in person or by proxy, signs a
written waiver of notice or provides a waiver of notice by electronic
transmission.

                (b) A waiver of notice need not specify the business to be
transacted nor the purpose of the meeting.

                (c) All waivers shall be filed with the corporate records or
made a part of the minutes of the meeting.

                (d) A person's attendance at a meeting shall constitute waiver
of notice of and presence at such meeting, except when such person objects at
the beginning of the meeting to transaction of any business because the meeting
is not lawfully called or convened and except that attendance at a meeting is
not a waiver of any right to object to the consideration of matters which are
required by law or these bylaws to be in such notice, but are not so included,
if such person expressly objects to consideration of such matter or matters at
any time during the meeting.

        SECTION 13. ACTION BY WRITTEN CONSENT WITHOUT A MEETING. As provided in
the Certificate of Incorporation, any action required or permitted to be taken
by the stockholders must be effected at an annual or special meeting of
stockholders and may not be effected by any consent in writing of such
stockholders.

        SECTION 14. VOTING. The stockholders entitled to vote at any meeting of
stockholders shall be determined in accordance with the provisions of Section 15
of these bylaws.

        Unless otherwise provided in the Certificate of Incorporation, each
stockholder shall at every meeting of the stockholders be entitled to one vote
in person or by proxy for each share of the capital stock having voting power
held by such stockholder.


                                       5
<PAGE>   9

        Any stockholder may vote part of such stockholder's shares in favor of a
proposal and refrain from voting the remaining shares or vote them against the
proposal, other than elections to office, but, if the stockholder fails to
specify the number of shares such stockholder is voting affirmatively, it will
be conclusively presumed that the stockholder's approving vote is with respect
to all shares such stockholder is entitled to vote.

        SECTION 15. PERSONS ENTITLED TO VOTE. The officer who has charge of the
stock ledger of the corporation shall prepare and make, at least 10 days before
every meeting of stockholders, a complete list of the stockholders entitled to
vote at the meeting, arranged in alphabetical order, and showing the address of
each stockholder and the number of shares registered in the name of each
stockholder. Such list shall be open to the examination of any stockholder, for
any purpose germane to the meeting, for a period of at least 10 days prior to
the meeting, (i) on a reasonably accessible electronic network, provided that
the information required to gain access to such list is provided with the notice
of the meeting, or (ii) during ordinary business hours, at the principal place
of business of the corporation. The list shall also be produced and kept at the
time and place of the meeting during the whole time thereof and may be inspected
by any stockholder who is present. If the meeting is to be held solely by means
of remote communication, then the list shall also be open to the examination of
any stockholder during the whole time of the meeting in a reasonably accessible
electronic network, and the information required to access such list shall be
provided with the notice of the meeting.

        SECTION 16. PROXIES. Every stockholder entitled to vote or to express
consent or dissent to corporate action may authorize another person or persons
to act for such stockholder by proxy by any valid means permitted by the
Delaware General Corporation Law; provided that no such proxy shall be voted or
acted upon after the expiration of three years from its date, unless the proxy
provides for a longer period.

        SECTION 17. INSPECTORS OF ELECTION. The Board of Directors shall, in
advance of any meeting of stockholders, appoint one or more persons, other than
nominees for office, to act as inspectors at the meeting and make a written
report thereof. If no inspector is able to act at a meeting of stockholders, the
chairman of the meeting shall appoint one or more inspectors to act at the
meeting. Each inspector, before entering upon the discharge of duties of
inspector, shall take and sign an oath faithfully to execute the duties of
inspector with strict impartiality and according to the best of such inspector's
ability.

        These inspectors shall: (a) ascertain the number of shares outstanding
and the voting power of each; (b) determine the shares represented at a meeting
and the validity of proxies and ballots; (c) count all votes and ballots; (d)
determine and retain for a reasonable period a record of disposition of any
challenges made to any determination by the inspectors; and (e) certify their
determination of the number of shares represented at the meeting and their count
of all votes and ballots. The inspectors may appoint or retain other persons or
entities to assist the inspectors in the performance of the duties of the
inspectors.


                                       6
<PAGE>   10

                                   ARTICLE IV
                               BOARD OF DIRECTORS

        SECTION 18. POWERS. The business of the corporation shall be managed by
or under the direction of its Board of Directors which may exercise all such
powers of the corporation and do all such lawful acts and things as are not by
statute or by the Certificate of Incorporation or by these bylaws directed or
required to be exercised or done by the stockholders.

        SECTION 19. NUMBER OF DIRECTORS. The Board of Directors shall consist of
one or more members, the number thereof to be determined from time to time by
resolution of the Board of Directors as provided in Article Fifth of the
Certificate of Incorporation. No reduction in the number of directors shall
remove any director prior to the expiration of such director's term of office.

        SECTION 20. ELECTION OF DIRECTORS, TERM, QUALIFICATIONS. Directors shall
be elected at each annual meeting of stockholders in accordance with the
Certificate of Incorporation to hold office until the next annual meeting. Each
director elected shall hold office until his or her successor is elected and
qualified, or until his death, resignation or removal.

        Nominations for election to the Board of Directors must be made by the
Board of Directors or by any stockholder of any outstanding class of capital
stock of the corporation entitled to vote for the election of directors.
Nominations, other than those made by the Board of Directors of the corporation,
must be preceded by notification in writing received by the Secretary of the
corporation not less than 90 days nor more than 120 days prior to the date of
the meeting; provided, however, that in the event that less than 105 days'
advance notice or prior public disclosure of the date of the meeting is given or
made to stockholders, notice by the stockholder to be timely must be so received
not later than the close of business on the 15th date following the day on which
such notice of the date of the annual meeting was mailed or such public
disclosure was made, whichever occurs later. Such notification shall contain the
written consent of each proposed nominee to serve as a director if so elected
and the following information as to each proposed nominee and as to each person,
acting alone or in conjunction with one or more other persons as a partnership,
limited partnership, syndicate or other group, who participates or is expected
to participate in making such nomination or in organizing, directing or
financing such nomination or solicitation of proxies to vote for the nominee:

                (a) the name, age, residence address, and business address of
each proposed nominee and of each such person;

                (b) the principal occupation or employment of each proposed
nominee and of each such person and the name, type of business and address of
the corporation or other organization in which such employment is carried on of
each proposed nominee and of each such person;

                (c) the amount of stock of the corporation owned beneficially,
either directly or indirectly, by each proposed nominee and each such person;
and


                                       7
<PAGE>   11

                (d) a description of any arrangement or understanding of each
proposed nominee and of each such person with each other or any other person
regarding future employment or any future transaction to which the corporation
will or may be a party.

        The presiding officer of the meeting shall have the authority to
determine and declare to the meeting that a nomination not preceded by
notification made in accordance with the foregoing procedure shall be
disregarded.

        SECTION 21. RESIGNATIONS. Any director of the corporation may resign as
a director or as a member of any committee of the Board of Directors effective
upon giving written notice to the Chairman of the Board, the President, the
Secretary or the Board of Directors of the corporation, unless the notice
specifies a later time for the effectiveness of such resignation. If the
resignation specifies effectiveness at a future time, a successor may be elected
pursuant to Section 23 of these bylaws to take office on the date that the
resignation becomes effective.

        SECTION 22. REMOVAL. The entire Board of Directors or any individual
director may be removed from office, with or without cause, by the affirmative
vote of the holders of at least 66-2/3% of the combined voting power of all
shares of the Corporation entitled to vote generally in the election of
directors, voting together as a single class.

        Any individual director may be removed from a committee of the Board of
Directors, with or without cause, by the affirmative vote of the holders of at
least a majority of the combined voting power of all shares of the Corporation
entitled to vote generally in the election of directors, voting together as a
single class.

        SECTION 23. VACANCIES. A vacancy or vacancies on the Board of Directors
shall be deemed to exist in case of the death, resignation or removal of any
director or upon increase in the authorized number of directors. Such vacancy or
vacancies may be filled by a majority of the remaining directors, though less
than a quorum, or by a sole remaining director, and the directors so chosen
shall hold office until the next election of the class in which the vacancy
existed and until their successors are duly elected and qualified or until his
earlier resignation or removal. If there are no directors in office, then an
election of directors may be held in the manner provided by statute.

        SECTION 24. REGULAR MEETINGS. Regular meetings of the Board of Directors
shall be held at such times, places and dates as determined by the Board of
Directors.

        SECTION 25. PARTICIPATION BY TELEPHONE OR OTHER COMMUNICATIONS
EQUIPMENT. Members of the Board of Directors, or a committee thereof, may
participate in a meeting through use of conference telephone or other
communications equipment, so long as all members participating in such meeting
can hear one another. Such participation constitutes presence in person at such
meeting.

        SECTION 26. SPECIAL MEETINGS. Special meetings of the Board of Directors
for any purpose may be called by the Chairman of the Board or the President or
any Vice President or the Secretary or any two directors. Special meetings of
any committee of the Board of Directors may be called by the Chairman of the
Board or the President or the chairman of the committee.


                                       8
<PAGE>   12

        SECTION 27. NOTICE OF MEETINGS. Notice of the date, time and place of
all meetings of the Board of Directors, or a committee thereof, shall be
delivered personally, orally or in writing, or by telephone, facsimile
telecommunication, or electronic transmission to each director, at least 48
hours before the meeting, or sent in writing to each director by first-class
mail, charges prepaid, at least four days before the meeting. Such notice may be
given by the Secretary of the corporation or by the person or persons who called
such meeting. Notice of any meeting of the Board of Directors, or a committee
thereof, need not be given to any director who signs a waiver of notice of such
meeting, either before or after the meeting, or who attends the meeting without
protesting prior thereto or at its commencement such director's lack of notice.
All such waivers shall be filed with the corporate records or made a part of the
minutes of the meeting.

        SECTION 28. PLACE OF MEETINGS. Meetings of the Board of Directors, or a
committee thereof, may be held at any place within or outside the State of
Delaware which has been designated in the notice of the meeting or, if not
stated in the notice or there is no notice, designated by resolution of the
Board of Directors or the committee, as the case may be.

        SECTION 29. ACTION BY CONSENT WITHOUT A MEETING. Any action required or
permitted to be taken by the Board of Directors, or a committee thereof, may be
taken without a meeting, if all members of the Board of Directors or the
committee, as the case may be, consent in writing or by electronic transmission
to such action. Such writing or writings or electronic transmission or
transmissions shall be filed with the minutes of the proceedings of the Board of
Directors or the committee, as the case may be. Such filing shall be in paper
form if the minutes are maintained in paper form and shall be in electronic form
if the minutes are maintained in electronic form. Such action by written consent
shall have the same force and effect as a unanimous vote of such directors.

        SECTION 30. QUORUM AND TRANSACTION OF BUSINESS. A majority of the
authorized number of directors shall constitute a quorum for the transaction of
business (except for the filling of vacancies, which shall be governed by the
provisions of Section 23) at a meeting of the Board of Directors. Every act or
decision done or made by a majority of the authorized number of directors
present at a meeting duly held at which a quorum is present shall be the act of
the Board of Directors, unless the law, the Certificate of Incorporation or
these bylaws specifically require a greater number. A meeting at which a quorum
is initially present may continue to transact business, notwithstanding
withdrawal of directors, if any action taken is approved by at least a majority
of the number of directors constituting a quorum for such meeting. In the
absence of a quorum at any meeting of the Board of Directors, a majority of the
directors present may adjourn the meeting, as provided in Section 31 of these
bylaws.

        SECTION 31. ADJOURNMENT. Any meeting of the Board of Directors, or a
committee thereof, whether or not a quorum is present, may be adjourned to
another time and place by the affirmative vote of a majority of the directors
present. If the meeting is adjourned for more than 24 hours, notice of such
adjournment to another time or place shall be given prior to the time of the
adjourned meeting to the directors who were not present at the time of the
adjournment.


                                       9
<PAGE>   13

        SECTION 32. ORGANIZATION. The Chairman of the Board, if present, shall
preside at every meeting of the Board of Directors. If there is no Chairman of
the Board or if the Chairman is not present, a director chosen by a majority of
the directors present shall act as chairman. The Secretary of the corporation
or, in the absence of the Secretary, any person appointed by the Chairman shall
act as secretary of the meeting.

        SECTION 33. COMPENSATION. Unless otherwise restricted by the Certificate
of Incorporation or these bylaws, the Board of Directors shall have the
authority to fix the compensation of directors. The directors may be paid their
expenses, if any, of attendance at each meeting of the Board of Directors, or a
committee thereof, and may be paid a fixed sum for attendance at each meeting of
the Board of Directors, or a committee thereof, or a stated salary for service
as director or committee member. No such payment shall preclude any director
from serving the corporation in any other capacity and receiving compensation
therefor.

        SECTION 34. COMMITTEES. The Board of Directors may, by resolution passed
by a majority of the whole board, designate one or more committees, each
committee to consist of one or more of the directors of the corporation. A
quorum for the termination of business by a committee (other than the
appointment of members as set forth below) shall require the presence of a
majority of the directors composing the committee.

        In the absence or disqualification of a member of a committee, the
member or members thereof present at any meeting and not disqualified from
voting, whether or not he or they constitute a quorum, may unanimously appoint
another member of the Board of Directors to act at the meeting in the place of
any such absent or disqualified member.

        The chairman of the committee, if present, shall preside at every
meeting of the committee. If there is no chairman of the committee or if the
chairman is not present, a member of the committee chosen by a majority of the
members of the committee present shall act as chairman. The Secretary of the
corporation or, in the absence of the Secretary, any person appointed by the
chairman of the committee shall act as secretary of the meeting.

        Any such committee, to the extent provided in the resolution of the
Board of Directors, shall have and may exercise all the powers and authority of
the Board of Directors in the management of the business and affairs of the
corporation and may authorize the seal of the corporation to be affixed to all
papers that may require it; but no such committee shall have the power or
authority in reference to amending the Certificate of Incorporation, adopting an
agreement of merger or consolidation, recommending to the stockholders the sale,
lease or exchange of all or substantially all of the corporation's property and
assets, recommending to the stockholders a dissolution of the corporation or a
revocation of a dissolution, or amending the bylaws of the corporation; and,
unless the resolution or the Certificate of Incorporation expressly so provide,
no such committee shall have the power or authority to declare a dividend or to
authorize the issuance of stock. Such committee or committees shall have such
name or names as may be determined from time to time by resolution adopted by
the Board of Directors.

        Each committee shall keep regular minutes of its meetings and report the
same to the Board of Directors when required.


                                       10
<PAGE>   14

                                    ARTICLE V
                                    OFFICERS

        SECTION 35. OFFICERS. The officers of the corporation shall be a
President, Treasurer and a Secretary. The Board of Directors may elect from
among its members a Chairman of the Board and a Vice Chairman of the Board. The
Board of Directors may also choose one or more Vice Presidents, Assistant
Secretaries and Assistant Treasurers. Any number of offices may be held by the
same person, unless the Certificate of Incorporation or these bylaws otherwise
provide.

        SECTION 36. APPOINTMENT. All officers shall be chosen and appointed by
the Board of Directors. The Board of Directors at its first meeting after each
annual meeting of stockholders shall choose a President, a Treasurer and a
Secretary and may choose one or more Vice Presidents. The Board of Directors may
appoint such other officers and agents as it shall deem necessary who shall hold
their offices for such terms and shall exercise such powers and perform such
duties as shall be determined from time to time by the board.

        SECTION 37. INABILITY TO ACT. In the case of absence or inability to act
of any officer of the corporation or of any person authorized by these bylaws to
act in such officer's place, the Board of Directors may from time to time
delegate the powers or duties of such officer to any other officer, or any
director or other person whom it may select, for such period of time as the
Board of Directors deems necessary.

        SECTION 38. RESIGNATION. Any officer may resign at any time upon written
notice to the corporation, without prejudice to the rights, if any, of the
corporation under any contract to which such officer is a party. Such
resignation shall be effective upon its receipt by the Chairman of the Board,
the President, the Secretary or the Board of Directors, unless a different time
is specified in the notice for effectiveness of such resignation. The acceptance
of any such resignation shall not be necessary to make it effective unless
otherwise specified in such notice.

        SECTION 39. REMOVAL. Any officer may be removed from office at any time,
with or without cause, but subject to the rights, if any, of such officer under
any contract of employment, by the Board of Directors or by any committee to
whom such power of removal has been duly delegated, or, with regard to any
officer who has been appointed by the chief executive officer pursuant to
Section 36 above, by the chief executive officer or any other officer upon whom
such power of removal may be conferred by the Board of Directors.

        SECTION 40. VACANCIES. A vacancy occurring in any office for any cause
may be filled by the Board of Directors, in the manner prescribed by this
Article of the bylaws for initial appointment to such office.

        SECTION 41. CHAIRMAN OF THE BOARD. The Chairman of the Board shall
preside at all meetings of the Board of Directors and of the stockholders at
which he shall be present. The Chairman of the Board shall have and may exercise
such powers as are, from time to time, assigned by the Board and as may be
provided by law. In the absence of the Chairman of the Board, the Vice Chairman
of the Board, if any, shall preside at all meetings of the Board of


                                       11
<PAGE>   15

Directors and of the stockholders at which he shall be present. The Chairman of
the Board shall have and may exercise such powers as are, from time to time,
assigned by the Board and as may be provided by law.

        SECTION 42. PRESIDENT. Subject to such powers, if any, as may be given
by the Board of Directors to the Chairman of the Board, if there be such an
officer, the President shall be the general manager and chief executive officer
of the corporation and shall have general supervision, direction and control
over the business and affairs of the corporation, subject to the control of the
Board of Directors. The President may sign and execute, in the name of the
corporation, any instrument authorized by the Board of Directors, except when
the signing and execution thereof shall have been expressly delegated by the
Board of Directors to some other officer or agent of the corporation. The
President shall have all the general powers and duties of management usually
vested in the president of a corporation and shall have such other powers and
duties as may be prescribed from time to time by the Board of Directors or these
bylaws. The President shall have discretion to prescribe the duties of other
officers and employees of the corporation in a manner not inconsistent with the
provisions of these bylaws and the directions of the Board of Directors.

        SECTION 43. VICE PRESIDENTS. In the absence or disability of the
President, in the event of a vacancy in the office of President, or in the event
such officer refuses to act, the Vice President shall perform all the duties of
the President and, when so acting, shall have all the powers of, and be subject
to all the restrictions on, the President. If at any such time the corporation
has more than one vice president, the duties and powers of the President shall
pass to each vice president in order of such vice president's rank as fixed by
the Board of Directors or, if the vice presidents are not so ranked, to the vice
president designated by the Board of Directors. The vice presidents shall have
such other powers and perform such other duties as may be prescribed for them
from time to time by the Board of Directors or pursuant to Sections 35 and 36 of
these bylaws or otherwise pursuant to these bylaws.

        SECTION 44. SECRETARY AND ASSISTANT SECRETARY. The Secretary shall:

        (a) Keep, or cause to be kept, minutes of all meetings of the
corporation's stockholders, Board of Directors and committees of the Board of
Directors, if any. Such minutes shall be kept in written form.

        (b) Keep, or cause to be kept, at the principal executive office of the
corporation, or at the office of its transfer agent or registrar, if any, a
record of the corporation's stockholders, showing the names and addresses of all
stockholders and the number and classes of shares held by each. Such records
shall be kept in written form or any other form capable of being converted into
written form.

        (c) Keep, or cause to be kept, at the principal executive office of the
corporation a copy of these bylaws.

        (d) Give, or cause to be given, notice of all meetings of stockholders,
directors and committees of the Board of Directors, as required by law or by
these bylaws.

        (e) Keep the seal of the corporation, if any, in safe custody.


                                       12
<PAGE>   16

        (f) Exercise such powers and perform such duties as are usually vested
in the office of secretary of a corporation and exercise such other powers and
perform such other duties as may be prescribed from time to time by the Board of
Directors or these bylaws.

        If any assistant secretaries are appointed, the assistant secretary, or
one of the assistant secretaries in the order of their rank as fixed by the
Board of Directors or, if they are not so ranked, the assistant secretary
designated by the Board of Directors, in the absence or disability of the
Secretary or in the event of such officer's refusal to act or if a vacancy
exists in the office of Secretary, shall perform the duties and exercise the
powers of the Secretary and discharge such duties as may be assigned from time
to time pursuant to these bylaws or by the Board of Directors.

        SECTION 45. CHIEF FINANCIAL OFFICER. The Chief Financial Officer shall:

        (a) Be responsible for all functions and duties of the treasurer of the
corporation.

        (b) Keep and maintain, or cause to be kept and maintained, adequate and
correct books and records of account for the corporation.

        (c) Receive or be responsible for receipt of all monies due and payable
to the corporation from any source whatsoever; have charge and custody of, and
be responsible for, all monies and other valuables of the corporation and be
responsible for deposit of all such monies in the name and to the credit of the
corporation with such depositaries as may be designated by the Board of
Directors or a duly appointed and authorized committee of the Board of
Directors.

        (d) Disburse or be responsible for the disbursement of the funds of the
corporation as may be ordered by the Board of Directors or a duly appointed and
authorized committee of the Board of Directors.

        (e) Render to the President and the Board of Directors a statement of
the financial condition of the corporation if called upon to do so.

        (f) Exercise such powers and perform such duties as are usually vested
in the office of chief financial officer of a corporation and exercise such
other powers and perform such other duties as may be prescribed by the Board of
Directors or these bylaws.

        If any assistant financial officer is appointed, the assistant financial
officer, or one of the assistant financial officers, if there are more than one,
in the order of their rank as fixed by the Board of Directors or, if they are
not so ranked, the assistant financial officer designated by the Board of
Directors, shall, in the absence or disability of the Chief Financial Officer or
in the event of such officer's refusal to act, perform the duties and exercise
the powers of the Chief Financial Officer, and shall have such powers and
discharge such duties as may be assigned from time to time pursuant to these
bylaws or by the Board of Directors.

        SECTION 46. COMPENSATION. The compensation of the officers shall be
fixed from time to time by the Board of Directors, and no officer shall be
prevented from receiving such compensation by reason of the fact that such
officer is also a director of the corporation.


                                       13
<PAGE>   17

                                   ARTICLE VI
               CONTRACTS, LOANS, BANK ACCOUNTS, CHECKS AND DRAFTS

        SECTION 47. EXECUTION OF CONTRACTS AND OTHER INSTRUMENTS. Except as
these bylaws may otherwise provide, the Board of Directors or its duly appointed
and authorized committee may authorize any officer or officers, agent or agents,
to enter into any contract or execute and deliver any instrument in the name of
and on behalf of the corporation, and such authorization may be general or
confined to specific instances. Except as so authorized or otherwise expressly
provided in these bylaws, no officer, agent, or employee shall have any power or
authority to bind the corporation by any contract or engagement or to pledge its
credit or to render it liable for any purpose or in any amount.

        SECTION 48. LOANS. No loans shall be contracted on behalf of the
corporation and no negotiable paper shall be issued in its name, unless and
except as authorized by the Board of Directors or its duly appointed and
authorized committee. When so authorized by the Board of Directors or such
committee, any officer or agent of the corporation may effect loans and advances
at any time for the corporation from any bank, trust company, or other
institution, or from any firms, corporation or individual, and for such loans
and advances may make, execute and deliver promissory notes, bonds or other
evidences of indebtedness of the corporation and, when authorized as aforesaid,
may mortgage, pledge, hypothecate or transfer any and all stocks, securities and
other property, real or personal, at any time held by the corporation, and to
that end endorse, assign and deliver the same as security for the payment of any
and all loans, advances, indebtedness and liabilities of the corporation. Such
authorization may be general or confined to specific instances.

        SECTION 49. BANK ACCOUNTS. The Board of Directors or its duly appointed
and authorized committee from time to time may authorize the opening and keeping
of general and/or special bank accounts with such banks, trust companies or
other depositaries as may be selected by the Board of Directors or its duly
appointed and authorized committee or by any officer or officers or agent or
agents of the corporation to whom such power may be delegated from time to time
by the Board of Directors. The Board of Directors or its duly appointed and
authorized committee may make such rules and regulations with respect to said
bank accounts, not inconsistent with the provisions of these bylaws, as are
deemed advisable.

        SECTION 50. CHECKS, DRAFTS, ETC. All checks, drafts or other orders for
the payment of money, notes, acceptances or other evidences of indebtedness
issued in the name of the corporation shall be signed by such officer or
officers or agent or agents of the corporation, and in such manner, as shall be
determined from time to time by resolution of the Board of Directors or its duly
appointed and authorized committee. Endorsements for deposit to the credit of
the corporation in any of its duly authorized depositaries may be made, without
counter-signature, by the President or any vice president or the Chief Financial
Officer or any assistant financial officer or by any other officer or agent of
the corporation to whom the Board of Directors or its duly appointed and
authorized committee, by resolution, shall have delegated such power or by
hand-stamped impression in the name of the corporation.


                                       14
<PAGE>   18

                                   ARTICLE VII
                    CERTIFICATES FOR STOCK AND THEIR TRANSFER

        SECTION 51. CERTIFICATE FOR STOCK. Every holder of shares in the
corporation shall be entitled to have a certificate signed in the name of the
corporation by the Chairman or Vice Chairman of the Board or the President or a
vice president and by the Chief Financial Officer or an assistant financial
officer or by the Secretary or an assistant secretary, certifying the number of
shares and the class or series of shares owned by the stockholder. Any or all of
the signatures on the certificate may be facsimile. In case any officer,
transfer agent or registrar who has signed or whose facsimile signature has been
placed upon a certificate shall have ceased to be such officer, transfer agent
or registrar before such certificate is issued, the certificate may be issued by
the corporation with the same effect as if such person were an officer, transfer
agent or registrar at the date of issue.

        In the event that the corporation shall issue any shares as only partly
paid, the certificate issued to represent such partly paid shares shall have
stated thereon the total consideration to be paid for such shares and the amount
paid thereon.

        If the corporation shall be authorized to issue more than one class of
stock or more than one series of any class, the powers, designations,
preferences and relative, participating, optional or other special rights of
each class of stock or series thereof and the qualification, limitations or
restrictions of such preferences and/or rights shall be set forth in full or
summarized on the face or back of the certificate that the corporation shall
issue to represent such class or series of stock; provided that, except as
otherwise provided in Section 202 of the General Corporation Law of Delaware, in
lieu of the foregoing requirements, there may be set forth on the face or back
of the certificate, that the corporation shall issue to represent such class or
series of stock, a statement that the corporation will furnish without charge to
each stockholder who so requests the powers, designations, preferences and
relative, participating, optional or other special rights of each class of stock
or series thereof and the qualifications, limitations or restrictions of such
preferences and/or rights.

        SECTION 52. TRANSFER ON THE BOOKS. Upon surrender to the Secretary or
transfer agent (if any) of the corporation of a certificate for shares of the
corporation duly endorsed, with reasonable assurance that the endorsement is
genuine and effective, or accompanied by proper evidence of succession,
assignment or authority to transfer and upon compliance with applicable federal
and state securities laws and if the corporation has no statutory duty to
inquire into adverse claims or has discharged any such duty and if any
applicable law relating to the collection of taxes has been complied with, it
shall be the duty of the corporation, by its Secretary or transfer agent, to
cancel the old certificate, to issue a new certificate to the person entitled
thereto, and to record the transaction on the books of the corporation.

        SECTION 53. LOST, DESTROYED AND STOLEN CERTIFICATES. The holder of any
certificate for shares of the corporation alleged to have been lost, destroyed
or stolen shall notify the corporation by making a written affidavit or
affirmation of such fact. Upon receipt of said affidavit or affirmation the
Board of Directors, or its duly appointed and authorized committee or any
officer or officers authorized by the Board to do so, may order the issuance of
a new


                                       15
<PAGE>   19

certificate for shares in the place of any certificate previously issued by the
corporation and which is alleged to have been lost, destroyed or stolen.
However, the Board of Directors or such authorized committee or officer or
officers may require the owner of the allegedly lost, destroyed or stolen
certificate, or such owner's legal representative, to give the corporation a
bond or other adequate security sufficient to indemnify the corporation and its
transfer agent and/or registrar, if any, against any claim that may be made
against it or them on account of such allegedly lost, destroyed or stolen
certificate or the replacement thereof. Said bond or other security shall be in
such amount, on such terms and conditions and, in the case of a bond, with such
surety or sureties as may be acceptable to the Board of Directors or to its duly
appointed and authorized committee or any officer or officers authorized by the
Board of Directors to determine the sufficiency thereof. The requirement of a
bond or other security may be waived in particular cases at the discretion of
the Board of Directors or its duly appointed and authorized committee or any
officer or officers authorized by the Board of Directors so to do.

        SECTION 54. ISSUANCE, TRANSFER AND REGISTRATION OF SHARES. The Board of
Directors may make such rules and regulations, not inconsistent with law or with
these bylaws, as it may deem advisable concerning the issuance, transfer and
registration of certificates for shares of the capital stock of the corporation.
The Board of Directors may appoint a transfer agent or registrar of transfers,
or both, and may require all certificates for shares of the corporation to bear
the signature of either or both.

                                  ARTICLE VIII
                         INSPECTION OF CORPORATE RECORDS

        SECTION 55. INSPECTION BY DIRECTORS. Every director shall have the
absolute right at any reasonable time to inspect and copy all books, records and
documents of every kind of the corporation and any of its subsidiaries and to
inspect the physical properties of the corporation and any of its subsidiaries
for any purpose reasonably related to the director's position as a director.
Such inspection may be made by the director in person or by agent or attorney,
and the right of inspection includes the right to copy and make extracts.

        SECTION 56. INSPECTION BY STOCKHOLDERS.

        (a) INSPECTION OF CORPORATE RECORDS. Any stockholder, in person or by
attorney or other agent, shall, upon written demand under oath stating the
purpose thereof, have the right during the usual hours for business to inspect
for any proper purpose the corporation's stock ledger, a list of its
stockholders, and its other books and records, and to make copies or extracts
therefrom. A proper purpose shall mean a purpose reasonably related to such
person's interest as a stockholder. In every instance where an attorney or other
agent shall be the person who seeks the right to inspection, the demand under
oath shall be accompanied by a power of attorney or such other writing which
authorizes the attorney or other agent to so act on behalf of the stockholder.
The demand under oath shall be directed to the corporation at its registered
office in the State of Delaware or at its principal place of business.

        (b) INSPECTION OF BYLAWS. The original or a copy of these bylaws shall
be kept as provided in Section 44 of these bylaws and shall be open to
inspection by the


                                       16
<PAGE>   20

stockholders at all reasonable times during office hours. A current copy of
these bylaws shall be furnished to any stockholder upon written request.

        SECTION 57. WRITTEN FORM. If any record subject to inspection pursuant
to Section 56 above is not maintained in written form, a request for inspection
is not complied with unless and until the corporation at its expense makes such
record available in written form.

                                   ARTICLE IX
                                  MISCELLANEOUS

        SECTION 58. FISCAL YEAR. Unless otherwise freed by resolution of the
Board of Directors, the fiscal year of the corporation shall end on the 31st day
of December in each calendar year.

        SECTION 59. ANNUAL REPORT.

        (a) Subject to the provisions of Section 59(b) below, the Board of
Directors shall cause an annual report to be sent to each stockholder of the
corporation in the manner provided in Section 9 of these bylaws not later than
120 days after the close of the corporation's fiscal year. Such report shall
include a balance sheet as of the end of such fiscal year and an income
statement and statement of changes in financial position for such fiscal year,
accompanied by any report thereon of independent accountants or, if there is no
such report, the certificate of an authorized officer of the corporation that
such statements were prepared without audit from the books and records of the
corporation. Such report shall be sent to stockholders at least 15 (or, if sent
by third-class mail, 35) days prior to the next annual meeting of stockholders
after the end of the fiscal year to which it relates.

        (b) If and so long as there are fewer than 100 holders of record of the
corporation's shares, the requirement of sending of an annual report to the
stockholders of the corporation is hereby expressly waived.

        SECTION 60. RECORD DATE. The Board of Directors may fix a time in the
future as a record date for the determination of the stockholders entitled to
notice of or to vote at any meeting or entitled to receive payment of any
dividend or other distribution or allotment of any rights or entitled to
exercise any rights in respect of any change, conversion or exchange of shares
or entitled to exercise any rights in respect of any other lawful action. The
record date so fixed shall not be more than 60 days nor less than 10 days prior
to the date of the meeting nor more than 60 days prior to any other action or
event for the purpose of which it is fixed. In no event may the record date for
any purpose precede the date upon which the resolution fixing the record date is
adopted.

        Only stockholders of record at the close of business on the record date
shall be entitled to notice and to vote or to receive the dividend, distribution
or allotment of rights or to exercise the rights, as the case may be,
notwithstanding any transfer of any shares on the books of the corporation after
the record date, except as otherwise provided in the Certificate of
Incorporation, by agreement or by law.


                                       17
<PAGE>   21

        SECTION 61. BYLAW AMENDMENTS. These bylaws may be altered, amended or
repealed, and new bylaws made, by the Board of Directors or the stockholders as
provided in Article Fifth of the Certificate of Incorporation.

        SECTION 62. CONSTRUCTION AND DEFINITION. Unless the context requires
otherwise, the general provisions, rules of construction, and definitions
contained in the Delaware General Corporation Law shall govern the construction
of these bylaws. Without limiting the foregoing, "shall" is mandatory and "may"
is permissive.

        SECTION 63. REGISTERED STOCKHOLDERS. The corporation shall be entitled
to recognize the exclusive right of a person registered on its books as the
owner of shares to receive dividends, and to vote as such owner, and to hold
liable for calls and assessments a person registered on its books as the owner
of shares and shall not be bound to recognize any equitable or other claim to or
interest in such share or shares on the part of any other person, whether or not
it shall have express or other notice thereof, except as otherwise provided by
the laws of Delaware.

        SECTION 64. DIVIDENDS. Dividends upon the capital stock of the
corporation, subject to the provisions of the Certificate of Incorporation, if
any, may be declared by the Board of Directors at any regular or special
meeting, pursuant to law. Dividends may be paid in cash, in property, or in
shares of the capital stock, subject to the provisions of the Certificate of
Incorporation.

        Before payment of any dividend, there may be set aside out of any funds
of the corporation available for dividends such sum or sums as the directors
from time to time, in their absolute discretion, think proper as a reserve or
reserves to meet contingencies, or for equalizing dividends, or for repairing or
maintaining any property of the corporation, or for such other purposes as the
directors shall think conducive to the interest of the corporation, and the
directors may modify or abolish any such reserve in the manner in which it was
created.

                                    ARTICLE X
                                 INDEMNIFICATION

        SECTION 65. INDEMNIFICATION OF DIRECTORS, OFFICERS, EMPLOYEES AND OTHER
AGENTS. The corporation shall, to the fullest extent authorized under the laws
of the State of Delaware, as those laws may be amended and supplemented from
time to time, indemnify any director who was or is a party, or is threatened to
be made a party, to any threatened, pending or completed action, suit or
proceeding, whether criminal, civil, administrative or investigative, by reason
of being a director of the corporation or a predecessor corporation or, at the
corporation's request, a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise; provided,
however, that the corporation shall indemnify any such director in connection
with an action, suit or proceeding initiated by such director only if such
action, suit or proceeding was authorized by the Board of Directors. The
indemnification and advancement of expenses provided for in this Section 65
shall: (i) not be deemed exclusive of any other rights to which those
indemnified may be entitled under any bylaw, agreement or vote of stockholders
or disinterested directors or otherwise, both as to action in their official
capacities and as to action in another capacity while holding such office, (ii)
continue as to a


                                       18
<PAGE>   22

person who has ceased to be a director, and (iii) inure to the benefit of the
heirs, executors and administrators of such a person. The corporation's
obligation to provide indemnification under this Section 65 shall be offset to
the extent of any other source of indemnification or any otherwise applicable
insurance coverage under a policy maintained by the corporation or any other
person.

        Expenses incurred by a director of the corporation in defending any
action, suit or proceeding shall be paid by the corporation in advance of the
final disposition of such action, suit or proceeding upon receipt of an
undertaking by or on behalf of such director to repay such amount if it shall
ultimately be determined that he is not entitled to be indemnified by the
corporation as authorized by relevant sections of the Delaware General
Corporation Law. Notwithstanding the foregoing, the corporation shall not be
required to advance such expenses to director who is a party to an action, suit
or proceeding brought by the corporation and approved by a majority of the Board
of Directors which alleges willful misappropriation of corporate assets by the
director, disclosure of confidential information in violation of the director's
fiduciary or contractual obligations to the corporation or any other willful and
deliberate breach in bad faith of the director's duty to the corporation or its
stockholders.

        The foregoing provisions of this Section 65 shall be deemed to be a
contract between the corporation and each director who serves in such capacity
at any time while this bylaw is in effect, and any repeal or modification
thereof shall not affect any rights or obligations then existing with respect to
any state of facts then or theretofore existing or any action, suit or
proceeding theretofore or thereafter brought based in whole or in part upon any
such state of facts.

        The corporation shall indemnify any officer of the corporation who has
been successful on the merits or otherwise in the defense of any action, suit or
proceeding, whether civil, criminal, administrative or investigative, to which
the officer was or is a party, or is threatened to be made a party, by reason of
being an officer of the corporation or a predecessor corporation or, at the
corporation's request, a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, or in the
defense of any claim, issue or matter therein, against expenses (including
attorney's fees) actually and reasonably incurred by such officer in connection
therewith. The Board of Directors, in its discretion, shall have power on behalf
of the corporation otherwise to indemnify any person, other than a director,
made a party to any action, suit or proceeding by reason of the fact that he,
his testator or intestate, is or was an officer, employee or agent of the
corporation.

        To assure indemnification under this Section 65 of all directors,
officers, employees and agents who are determined by the corporation or
otherwise to be or to have been "fiduciaries" of any employee benefit plan of
the corporation which may exist from time to time, including without limitation,
any plan of the corporation which is governed by the Act of Congress entitled
"Employee Retirement Income Security Act of 1974," as amended from time to time,
this Section 65 shall be interpreted as follows: (i) an "other enterprise" shall
be deemed to include such an employee benefit plan; (ii) the corporation shall
be deemed to have requested a person to serve an employee benefit plan where the
performance by such person of his duties to the corporation also imposes duties
on, or otherwise involves services by, such person to the plan


                                       19
<PAGE>   23

or participants or beneficiaries of the plan; (iii) "fines" shall be deemed to
include any excise taxes assessed on a person with respect to an employee
benefit plan.

                                   ARTICLE XI
                          LOANS OF OFFICERS AND OTHERS

        SECTION 66. CERTAIN CORPORATE LOANS AND GUARANTIES. If the corporation
has outstanding shares held of record by 100 or more persons on the date of
approval by the Board of Directors, the corporation may make loans of money or
property to, or guarantee the obligations of any officer of the corporation or
its parent or any subsidiary, whether or not a director of the corporation or
its parent or any subsidiary, or adopt an employee benefit plan or plans
authorizing such loans or guaranties, upon the approval of the Board of
Directors alone, by a vote sufficient without counting the vote of any
interested director or directors, if the Board of Directors determines that such
a loan or guaranty or plan may reasonably be expected to benefit the
corporation. Notwithstanding the foregoing, the corporation shall have the power
to make loans permitted by the Delaware General Corporation Law.


                                       20

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-4.5
<SEQUENCE>4
<FILENAME>f74776a1ex4-5.txt
<DESCRIPTION>EXHIBIT 4.5
<TEXT>
<PAGE>   1
                                                                     EXHIBIT 4.5



                      CALPINE CANADA ENERGY FINANCE II ULC


                                       and


                        WILMINGTON TRUST COMPANY, Trustee




                                    Indenture

                          Dated as of October __, 2001






                                 Debt Securities

                      Fully and Unconditionally Guaranteed
                             by Calpine Corporation



<PAGE>   2

                                TABLE OF CONTENTS


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

<S>                 <C>                                                                                    <C>
SECTION 1.1         Definitions...........................................................................   1
SECTION 1.2         Other Definitions.....................................................................   7
SECTION 1.3         Incorporation by Reference of TIA.....................................................   7
SECTION 1.4         Rules of Construction.................................................................   7

                                                    ARTICLE II
                                                  THE SECURITIES

SECTION 2.1         Securities Issuable in Series............................................................8
SECTION 2.2         Form and Dating.........................................................................10
SECTION 2.3         Execution and Authentication............................................................11
SECTION 2.4         Registrar and Paying Agent..............................................................12
SECTION 2.5         Paying Agent To Hold Money in Trust.....................................................12
SECTION 2.6         Securityholder Lists....................................................................12
SECTION 2.7         Transfer and Exchange...................................................................13
SECTION 2.8         Replacement Securities..................................................................16
SECTION 2.9         Outstanding Securities..................................................................16
SECTION 2.10        Determination of Holders' Action........................................................17
SECTION 2.11        Temporary Securities....................................................................17
SECTION 2.12        Cancellation............................................................................17
SECTION 2.13        Defaulted Interest......................................................................17
SECTION 2.14        Interest Act (Canada)...................................................................18
SECTION 2.15        Securities Act Legend...................................................................18

                                                    ARTICLE III
                                                     COVENANTS

SECTION 3.1         Payment of Securities...................................................................19
SECTION 3.2         Maintenance of Office or Agency.........................................................19
SECTION 3.3         Limitation on Sale/Leaseback Transactions...............................................19
SECTION 3.4         Limitation on Liens.....................................................................19
SECTION 3.5         Compliance Certificate..................................................................21
SECTION 3.6         Further Instruments and Acts............................................................21
SECTION 3.7         Waiver of Certain Covenants.............................................................21
SECTION 3.8         Additional Amounts......................................................................21

                                                    ARTICLE IV
                                       CONSOLIDATION, MERGER, SALE AND LEASE

SECTION 4.1         Merger and Consolidation of Company.....................................................22
SECTION 4.2         Successor Substituted...................................................................22
SECTION 4.3         Assignment by the Company to the Guarantor
                      or its Significant Subsidiaries.......................................................23

                                                     ARTICLE V
                                               DEFAULTS AND REMEDIES

SECTION 5.1         Events of Default.......................................................................23
SECTION 5.2         Acceleration............................................................................25
SECTION 5.3         Other Remedies..........................................................................25
SECTION 5.4         Waiver of Past Defaults.................................................................25
SECTION 5.5         Control by Majority.....................................................................25
SECTION 5.6         Limitation on Suits.....................................................................26
SECTION 5.7         Rights of Holders To Receive Payment....................................................26
</TABLE>

<PAGE>   3

<TABLE>
<S>                 <C>                                                                                    <C>
SECTION 5.8         Collection Suit by Trustee..............................................................26
SECTION 5.9         Trustee May File Proofs of Claim........................................................26
SECTION 5.10        Priorities..............................................................................27
SECTION 5.11        Undertaking for Costs...................................................................27
SECTION 5.12        Waiver of Stay or Extension Laws........................................................27

                                                    ARTICLE VI
                                                      TRUSTEE

SECTION 6.1         Duties of Trustee.......................................................................27
SECTION 6.2         Rights of Trustee.......................................................................28
SECTION 6.3         Individual Rights of Trustee............................................................29
SECTION 6.4         Trustee's Disclaimer....................................................................29
SECTION 6.5         Notice of Defaults......................................................................29
SECTION 6.6         Reports by Trustee to Holders...........................................................29
SECTION 6.7         Compensation and Indemnity..............................................................29
SECTION 6.8         Replacement of Trustee..................................................................30
SECTION 6.9         Successor Trustee by Merger, etc........................................................31
SECTION 6.10        Eligibility; Disqualification; Conflicting Interests....................................32
SECTION 6.11        Preferential Collection of Claims Against Company.......................................32

                                                    ARTICLE VII
                                      SATISFACTION AND DISCHARGE OF INDENTURE

SECTION 7.1         Discharge of Liability on Securities....................................................32
SECTION 7.2         Termination of Company's Obligations....................................................32
SECTION 7.3         Defeasance and Discharge of Indenture...................................................33
SECTION 7.4         Defeasance of Certain Obligations.......................................................34
SECTION 7.5         Application of Trust Money..............................................................35
SECTION 7.6         Repayment to Company....................................................................36
SECTION 7.7         Reinstatement...........................................................................36
SECTION 7.8         Deposited Money and U.S. Government Obligations to be Held in Trust:....................
                    Miscellaneous Provisions................................................................36

                                                   ARTICLE VIII
                                            AMENDMENTS AND SUPPLEMENTS

SECTION 8.1         Without Consent of Holders..............................................................36
SECTION 8.2         With Consent of Holders.................................................................37
SECTION 8.3         Compliance with Trust Indenture Act.....................................................38
SECTION 8.4         Revocation and Effect of Consents.......................................................38
SECTION 8.5         Notation on or Exchange of Securities...................................................38
SECTION 8.6         Trustee To Sign Amendments..............................................................38
SECTION 8.7         Fixing of Record Dates..................................................................38

                                                    ARTICLE IX
                                                    REDEMPTION

SECTION 9.1         Applicability of Article................................................................39
SECTION 9.2         Election to Redeem; Notice to Trustee...................................................39
SECTION 9.3         Selection by Trustee of Securities to be Redeemed.......................................39
SECTION 9.4         Notice of Redemption....................................................................39
SECTION 9.5         Deposit of Redemption Price.............................................................40
SECTION 9.6         Securities Redeemed in Part.............................................................40

                                                     ARTICLE X
                                                   MISCELLANEOUS

SECTION 10.1        Trust Indenture Act Controls............................................................40
</TABLE>

<PAGE>   4

<TABLE>
<S>                 <C>                                                                                    <C>
SECTION 10.2        Notices.................................................................................41
SECTION 10.3        Communication by Holders with Other Holders.............................................41
SECTION 10.4        Certificate and Opinion as to Conditions Precedent......................................41
SECTION 10.5        Statements Required in Certificate or Opinion...........................................41
SECTION 10.6        Rules by Trustee and Agents.............................................................42
SECTION 10.7        Legal Holidays..........................................................................42
SECTION 10.8        Successors; No Recourse Against Others..................................................42
SECTION 10.9        Duplicate Originals.....................................................................42
SECTION 10.10       Other Provisions........................................................................42
SECTION 10.11       Governing Law...........................................................................42
SECTION 10.12       Jurisdiction............................................................................42
SECTION 10.13       Judgment Currency.......................................................................43

SIGNATURES

EXHIBIT A -- Form of Security..............................................................................A-1
EXHIBIT B -- Forms of Certificate of Beneficial Ownership..................................................B-1
EXHIBIT C -- Forms of Certificate to be Delivered in Connection with
                  Transfers Pursuant to Regulation S.......................................................C-1
EXHIBIT D -- Form of Guarantee Agreement...................................................................D-1
</TABLE>

<PAGE>   5

      INDENTURE, dated as of October __, 2001, between Calpine Canada Energy II
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.

      "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 lease 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 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).

<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.

      "Consolidated Current Liabilities," as of the date of determination, means
the aggregate amount of consolidated liabilities of the Company 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 Company 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,
as applied to the Company, 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 Company 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 held by Persons other than the
Company or a Restricted Subsidiary; (iii) excess of cost over fair value of
assets of businesses acquired, as determined in good faith by the Board of
Directors; (iv) any revaluation or other write-up in value of assets subsequent
to December 31, 1993 as a result of a change in the method of valuation in
accordance with GAAP; (v) unamortized debt discount and expenses and other
unamortized deferred charges, goodwill, patents, trademarks, service marks,
trade names, copyrights, licenses, organization or developmental expenses and
other intangible items; (vi) treasury stock; and (vii) any cash set apart and
held in a sinking or other analogous fund established for the purpose of
redemption or other retirement of Capital Stock to the extent such obligation is
not reflected in Consolidated Current Liabilities.

      "Consolidation" means, with respect to any Person, the consolidation of
accounts of such Person and each of its subsidiaries if and to the extent the
accounts of such Person and such subsidiaries are consolidated in accordance
with GAAP. The term "Consolidated" shall have a correlative meaning.

      "Clearstream" means Clearstream Banking, S.A., formerly Cedelbank.

      "Common Depository" means a common depositary of Securities, and its
successors and assigns, on behalf of Euroclear and Clearsteam, each in its
capacity as a Depository, and shall initially be Kredietbank S.A.
Luxembourgeoise.

      "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, as to Securities denominated in United States dollars,
The Depository Trust Company, its nominees, and their respective successors; and
as to Securities denominated other than in United States dollars, Euroclear and
Clearstream, their respective nominees, and the respective successors of each of
the foregoing, in each case until a successor Depository or Depositories 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.

                                       2
<PAGE>   7

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

      "Euroclear" means Euroclear Bank S.A./N.V., as operator of the Euroclear
System.

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

      "Exchange Securities" means the Securities to be issued pursuant to this
Indenture in connection with a Registered Exchange Offer pursuant to a
Registration Rights Agreement with respect to a specified Series of Initial
Securities.

      "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 made by the Guarantor
and accepted and agreed to by the Trustee, in substantially the form annexed
hereto as Exhibit D, as the same may be amended or supplemented from time to
time in accordance with the applicable provisions thereof.

      "Guarantor" means Calpine Corporation, a Delaware corporation until a
successor replaces it pursuant to the terms and conditions of the Guarantee
Agreement and thereafter means the successor.

      "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
"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 Restricted 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

                                       3
<PAGE>   8

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.

      "Initial Securities" means a Series of Securities issued under this
Indenture pursuant to Rule 144A and/or Regulation S.

      "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).

      "Non-U.S. Person" means a person that is not a U.S. person, as defined in
Regulation S.

      "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 or the Guarantor, as the case may be.

      "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, the Guarantor 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, limited liability
company, 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.

      "QIB" means a "qualified institutional buyer" as defined in Rule 144A.

      "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

                                       4
<PAGE>   9

have a correlative meaning) any Indebtedness of the Company 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 Restricted Subsidiary that refinances
Indebtedness of an Unrestricted Subsidiary.

      "Registered Exchange Offer" means an offer by the Company, pursuant to a
Registration Rights Agreement, to certain Holders of specified Initial
Securities, to issue and deliver to such Holders, in exchange for such Initial
Securities, a like aggregate principal amount of Exchange Securities registered
under the Securities Act.

      "Registration Rights Agreement" means an agreement by the Company and the
Guarantor for the benefit of Holders of specified series of Initial Securities
relating to a Registered Exchange Offer and, under certain circumstances, a
Shelf Registration Statement.

      "Regulation S" means Regulation S under the Securities Act (or any
successor provision), as it may be amended from time to time.

      "Restricted Subsidiary" means any Subsidiary of the Company that is not
designated an Unrestricted Subsidiary by the Board of Directors.

      "Rule 144A" means Rule 144A under the Securities Act (or any successor
provision), as it may be amended from time to time.

      "Sale/Leaseback Transaction" means an arrangement relating to property now
owned or hereafter acquired whereby the Company 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 Company and a Wholly Owned
Subsidiary or between Wholly Owned Subsidiaries.

      "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, including, without limitation, Initial Securities and Exchange
Securities.

      "Securities Act" means the Securities Act of 1933, as amended.

      "Securities Custodian" means the custodian with respect to a Global
Security (as appointed by a Depository), or any successor person thereto and
shall initially be the Trustee, where the Depository is The Depository Trust
Company, and shall initially be the Common Depository, where the Depositories
are Euroclear and Clearstream.

      "Shelf Registration Statement" means a registration statement issued by
the Company, in connection with the offer and sale of specified Initial
Securities, pursuant to a Registration Rights Agreement.

      "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.

                                       5
<PAGE>   10

      "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.

      "Transfer Restricted Securities" means Securities that bear or are
required to bear the legend set forth in Section 2.15 hereof.

      "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.

      "Unrestricted Subsidiary" means (i) any Subsidiary that at the time of
determination shall be designated an Unrestricted Subsidiary by the Board of
Directors in the manner provided below and (ii) any Subsidiary of an
Unrestricted Subsidiary. The Board of Directors may designate any Subsidiary
(including any newly acquired or newly formed Subsidiary) to be an Unrestricted
Subsidiary unless such Subsidiary owns any Capital Stock of, or owns or holds
any Lien on any property of, the Company 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 Company 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 Company; 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.

      "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.

      "U.S. Person" has the meaning ascribed to such term in Regulation S.

      "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).

                                       6
<PAGE>   11

      "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>
                                                                    DEFINED IN
      TERM                                                            SECTION
      ----                                                         -----------
<S>                                                                <C>
      "144A Certificated Security"...............................        2.2
      "144A Global Security".....................................        2.2
      "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
      "Regulation S Certificated Security".......................        2.2
      "Regulation S Global Security".............................        2.2
      "Regulation S Permanent Global Security"...................        2.2
      "Regulation S Temporary Global Security"...................        2.2
      "Securities Act Legend"....................................        2.15
      "Series"...................................................        2.1
      "Successor Corporation"....................................        4.1(i)
      "Transfer Agent"...........................................        2.4
</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

      "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;

                                       7
<PAGE>   12

            (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, the Securities
of 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. Initial
Securities of a Series shall be treated as a single class and series with
Exchange Securities issued in exchange for such Initial Securities.

      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:

            (1) the title, including CUSIP number and, if applicable, ISIN and
      Common Code numbers, 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

                                       8
<PAGE>   13

      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, including the office or agency appointed
      by the Company pursuant to Sections 2.4 and 3.2 and any Paying Agent or
      Transfer Agent appointed pursuant to the requirements of such stock
      exchange;

            (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;

            (15) whether Securities of the Series are the subject of a
      Registration Rights Agreement;

            (16) whether the Securities of the Series are subject to defeasance
      or covenant defeasance under Section 7.3 or 7.4, including any
      modification of the provisions of Sections 7.3, 7.4, 7.5, 7.6, 7.7 or 7.8
      pursuant to Section 7.9, or such other means of satisfaction and discharge
      as may be specified for a Series in addition to or in lieu of the
      provisions of Section 7.1 or 7.2;

            (17) 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, its nominees
      or their respective 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;

            (18) procedures for the transfer of beneficial interests in the
      Securities of that Series that are different from, or in addition to, the
      procedures set forth herein;

            (19) the circumstances, if any, and the terms and conditions, if
      any, upon which additional amounts may be owed pursuant to Section 3.8;
      and

            (20) 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, except as provided in the first paragraph of this Section
2.1 and except as may otherwise be provided in or pursuant to such Directors'
Certificate.

                                       9
<PAGE>   14

      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 and shall
have endorsed thereon the guarantee of the Guarantor substantially in the form
set forth in Exhibit A, executed by the Guarantor in accordance with the
Guarantee Agreement.

      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 Securities Custodian,
as custodian for the Depository, duly executed by the Company and authenticated
by the Trustee as hereinafter provided. Each Global Security shall bear the
global securities legend set forth in Exhibit A hereto and such legend or
legends as may be required or reasonably requested by the Depository. In the
case of Initial Securities, each Global Security shall also bear the restricted
securities legend set forth in Exhibit A hereto.

      Unless otherwise provided as contemplated by Section 2.1, the following
paragraph shall be applicable to Initial Securities issued and sold to QIBs in
reliance on Rule 144A or sold in offshore transactions in reliance on Regulation
S. Initial Securities issued and sold to QIBs in reliance on Rule 144A shall be
represented by one or more Global Securities (the "144A Global Securities," and
definitive registered Securities issued in exchange therefor pursuant to Section
2.7, the "144A Certificated Securities"). Initial Securities sold in offshore
transactions in reliance on Regulation S shall be issued initially in the form
of one or more temporary Global Securities (a "Regulation S Temporary Global
Security"), which shall bear the temporary Regulation S legend set forth in
Exhibit A hereto. At any time on or after the 40th day following the latest of
the commencement of the offering of the Initial Securities sold in offshore
transactions in reliance on Regulation S and the issue date of such Initial
Securities (the identity of such 40th day to be certified to the Trustee by an
Officers' Certificate), upon receipt by Euroclear, Clearstream and the Trustee
of the applicable certificates, each substantially in the form of Exhibit B
hereto, one or more permanent Global Securities (each a "Regulation S Permanent
Global Security" and together with the Regulation S Temporary Global Securities,
the "Regulation S Global Securities") duly executed by the Company and
authenticated by the Trustee shall be deposited with the Securities Custodian,
as custodian for the Depositary, in exchange for the principal amount of the
beneficial interest in the Regulation S Temporary Global Securities to be
exchanged, and the Registrar shall reflect on its books and records the date and
a decrease in the principal amount of the Regulation S Temporary Global
Securities in an amount equal to the principal amount of the beneficial interest
in the Regulation S Temporary Global Securities so exchanged. Prior to such 40th
day, beneficial interests in a Regulation S Temporary Global Security may be
held only through Euroclear or Clearstream. The Permanent Regulation S Global
Security and any Regulation S Certificated Security issued in exchange therefor
shall not bear the temporary Regulation S legend. One or more definitive
registered Securities sold in offshore transactions in reliance on Regulation S
(each, a "Regulation S Certificated Security") may be issued in exchange for an
interest in a Regulation S Permanent Global Security in accordance with the
terms of this Indenture and only in the circumstances set forth in the sixth,
seventh or eighth paragraphs of Section 2.7. Interests in a Regulation S
Temporary Global Security may not be exchanged for Regulation S Certificated
Securities.

                                       10
<PAGE>   15

      The aggregate principal amount of the Global Securities may from time to
time be increased or decreased by adjustments made on the records of the
Securities Custodian and the Depository or its nominee at any time prior to
cancellation, if, in accordance with this Indenture and the Securities
(including any applicable restrictions on transfer) any beneficial interest in a
Global Security is (a) exchanged for definitive registered Securities, (b)
redeemed, (c) repurchased, (d) cancelled, or (e) exchanged for a beneficial
interest in another Global Security, in which case the principal amount of
Securities represented by such Global Security shall be reduced or increased, as
applicable, and an adjustment shall be made on the books and records of the
Securities Custodian with respect to such Global Security to reflect such
adjustment.

      The definitive registered 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 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; provided that the Trustee shall authenticate,
upon a written order of the Company signed by two Officers, Exchange Securities
for issue only in a Registered Exchange Offer pursuant to a Registration Rights
Agreement, for a like principal amount of Initial Securities. 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, and the guarantee of the
      Guarantor endorsed thereon will constitute valid and legally binding
      obligations of the Company or the Guarantor, as the case may be,
      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.

                                       11
<PAGE>   16

      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.

      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 (the "Transfer Agent" and
"Registrar") and an office or agency where Securities and the guarantee of the
Guarantor endorsed thereon 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, one or more
co-transfer agents and one or more additional paying agents. The term "Paying
Agent" includes any additional paying agent, the term "Registrar" includes any
co-registrar and the term "Transfer Agent" includes any co-transfer agent,
provided that there shall only be one register for each Series of Securities. So
long as a Series of Securities is listed on a stock exchange, the Company shall
maintain a co-transfer agent and a co-paying agent in such locations as such
stock exchange shall require.

      The Company shall enter into an appropriate agency agreement with any
Registrar, Transfer Agent, Paying Agent or co-registrar or co-transfer agent 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, Transfer Agent 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, Transfer Agent
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 a 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

                                       12
<PAGE>   17

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).

SECTION 2.7 Transfer and Exchange.

      The Securities shall be transferable only upon the surrender of a Security
to the Registrar or a Transfer Agent for registration of transfer. When a
Security is presented to the Registrar (including by a Transfer Agent) 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
Transfer Agent with a request to exchange them for an equal principal amount of
Securities of the same Series and of other authorized denominations, the
Registrar or Transfer Agent, as applicable, 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 request.

      The Depository shall, by acceptance of a Global Security, agree that
transfers of beneficial interests in such Global Security may be effected only
(a) in accordance with this Indenture and the Securities represented by such
Global Security (including any applicable restrictions on transfer set forth
herein or therein and, as to Initial Securities, including any certification
requirements set forth on the reverse of the Initial Securities intended to
ensure that such transfers comply with Rule 144A or Regulation S, as the case
may be) and (b) through a book-entry system maintained by the Depository (or its
agent) or, where a Global Security is registered in the name of a Common
Depository, otherwise in accordance with such Depository's procedures for
book-entry transfers among the Depositories as to which such Common Depository
is acting as Common Depository, and, in each case, that ownership of a
beneficial interest in such Global Security shall be required to be reflected in
a book entry system.

      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 Guarantor, 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 Guarantor,
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 or a Common Depository to a nominee of such Depository or Common
Depository, or by a nominee of such Depository or Common Depository to such
Depository or Common Depository or another nominee of such Depository or Common
Depository, or by such Depository or Common Depository or any such nominee to a
successor Depository or Common Depository or a nominee of such successor
Depository or Common Depository, except that book-entry interests in a Global
Security registered in the name of the Common Depository may be transferred
among the Depositories as to which such Common Depository is acting as Common
Depository in accordance with the procedures of such Depositories for such
transfers.

      If a 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
a Depository of a Global Security held in the United States shall no longer be
eligible under the next sentence of this paragraph, the Company shall appoint a
successor Depository with respect to such Securities. In the case of a Global
Security held in the United States, each Depository appointed pursuant to

                                       13
<PAGE>   18

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 without coupons in any authorized denominations
representing Securities of a Series in exchange for the Global Security or
Securities of such Series (i) if 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 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, (ii) if an Event of Default with respect
to the Securities of such Series has occurred and is continuing or (iii) as
provided in the penultimate paragraph of Section 2.15.

      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 without
coupons 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 pursuant to either of the two preceding
paragraphs, 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 and shall contain such legends, if any, as are
required by Section 2.15. 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, or the Common Depository, as
applicable, may be treated by the Company, the Guarantor, the Trustee, and any
agent of the Company, the Guarantor, or the Trustee as the owner of such Global
Security for all purposes whatsoever. None of the Company, the Guarantor, the
Trustee or any agent of the Company, the Guarantor, 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 Guarantor, the Trustee or any agent of the Company, the
Guarantor, 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.

      Unless otherwise provided as contemplated by Section 2.1, the following
paragraph shall be applicable to Initial Securities issued and sold to QIBs in
reliance on Rule 144A or sold in offshore transactions in reliance on Regulation
S. Unless and until an Initial Security is exchanged for an Exchange Security in
connection with an effective Registered Exchange Offer pursuant to a
Registration Rights Agreement or sold pursuant to a Shelf Registration Statement
pursuant to a Registration Rights Agreement, the following additional provisions
shall apply to transfers of interests in Initial Securities:

                                       14
<PAGE>   19

      (a)   Transfers of 144A Securities to QIBs. The following provisions shall
            apply with respect to the registration of any proposed transfer of a
            144A Certificated Security or an interest in a 144A Global Security
            to a QIB:

                  (i) If the Initial Security to be transferred consists of (x)
            144A Certificated Securities, the Registrar shall register the
            transfer if such transfer is being made by a proposed transferor who
            has checked the box provided for on the form of Initial Security
            stating, or has otherwise advised the Company, the Guarantor and the
            Registrar in writing, that the sale has been made in compliance with
            the provisions of Rule 144A to a transferee who has signed the
            certification provided for on the form of Initial Security stating,
            or has otherwise advised the Company, the Guarantor and the
            Registrar, that it is purchasing the Initial Security for its own
            account or an account with respect to which it exercises sole
            investment discretion and that it and any such account is a QIB
            within the meaning of Rule 144A, and is aware that the sale to it is
            being made in reliance on Rule 144A and acknowledges that it has
            received such information regarding the Company and the Guarantor as
            it has requested pursuant to Rule 144A or has determined not to
            request such information and that it is aware that the transferor is
            relying upon its foregoing representation in order to claim the
            exemption from registration provided for by Rule 144A, (y) an
            interest in a 144A Global Security and such interest is to be
            transferred to a transferee who will receive an interest in a 144A
            Global Security, the transfer of such interest may be effected only
            through the book-entry system maintained by the Depositary, or (z)
            an interest in a 144A Global Security and such interest is to be
            transferred to a transferee who will receive one or more 144A
            Certificated Securities, the Registrar shall register the transfer
            if such transfer is being made by a proposed transferor who has
            advised the Company, the Guarantor and the Registrar in writing that
            the sale has been made in compliance with the provisions of Rule
            144A to a transferee who has advised the Company, the Guarantor and
            the Registrar that it is purchasing the Initial Security for its own
            account or an account with respect to which it exercises sole
            investment discretion and that it and any such account is a QIB
            within the meaning of Rule 144A, and is aware that the sale to it is
            being made in reliance on Rule 144A and acknowledges that it has
            received such information regarding the Company and the Guarantor as
            it has requested pursuant to Rule 144A or has determined not to
            request such information and that it is aware that the transferor is
            relying upon its foregoing representation in order to claim the
            exemption from registration provided for by Rule 144A.

                  (ii) If the proposed transferee is a member of, or participant
            in, the Depositary (an "Agent Member"), and the Initial Security to
            be transferred consists of 144A Certificated Securities, upon
            receipt by the Registrar of the documents referred to in clause (i)
            and instructions given in accordance with the Depositary's and the
            Registrar's procedures, the Registrar shall reflect on its books and
            records the date and an increase in the principal amount of the 144A
            Global Securities in an amount equal to the principal amount of the
            144A Certificated Securities to be transferred and the Trustee shall
            cancel the 144A Certificated Securities so transferred.

      (b)   Transfers of Interests in Regulation S Temporary Global Securities.
            The following provisions shall apply with respect to registration of
            any proposed transfer of interests in any Regulation S Temporary
            Global Security:

                  (i) (x) An interest in a Regulation S Temporary Global
            Security may be transferred to a Person who will receive an interest
            in such Regulation S Temporary Global Security if the proposed
            transferee is a Non-U.S. Person and the proposed transferor has
            delivered to Euroclear and/or Clearstream a certificate
            substantially in the form of Exhibit C hereto or (y) the Registrar
            shall register the transfer of any Regulation S Temporary Global
            Security if the proposed transferee is a QIB who will receive an
            interest in such Regulation S Temporary Global Security and the
            proposed transferor has advised the Company, the Guarantor and the
            Registrar in writing that the sale has been made in compliance with
            the provisions of Rule 144A to a transferee who has advised the
            Company, the Guarantor and the Registrar in writing, that it is
            purchasing the Initial Security for its own account or an account
            with respect to which it exercises sole investment discretion and
            that it and any such account is a QIB within the meaning of Rule
            144A, and is aware that the sale to it is being made in reliance on
            Rule 144A and acknowledges that it has received such information
            regarding the Company and the Guarantor as it has requested pursuant
            to Rule 144A or has determined not to request such information and
            that it is aware that the transferor is relying upon its foregoing
            representations in order to claim the exemption from registration
            provided by Rule 144A.

                                       15
<PAGE>   20

                  (ii) If the proposed transferee is an Agent Member, upon
            receipt by the Registrar of the documents referred to in clause
            (i)(y) above and instructions given in accordance with the
            Depositary's and the Registrar's procedures, the Registrar shall
            reflect on its books and records the date and an increase in the
            principal amount of the 144A Global Securities, in an amount equal
            to the principal amount of the Regulation S Temporary Global
            Securities to be transferred, and the Trustee shall decrease the
            amount of the Regulation S Temporary Global Securities.

      (c)   Transfers of Interests in Regulation S Permanent Global Securities
            or Regulation S Certificated Securities to U.S. Persons. The
            Registrar shall register the transfer of an interest in a Regulation
            S Permanent Global Security or a Regulation S Certificated Security
            to a U.S. Person without requiring any additional certification
            pursuant to Regulation S (provided,, however, that the Registrar
            shall continue to require such certifications and other
            documentation (including opinions), if any, as the Company and
            Guarantor shall direct the Registrar to obtain pursuant to the
            Securities Act Legend for so long as such Legend remains on such
            Security).

      (d)   Transfers of Interests in Regulation S Permanent Global Securities
            or Regulation S Certificated Securities to Non-U.S. Persons. The
            following provisions shall apply with respect to any transfer of
            interests in Regulation S Permanent Global Securities or Regulation
            S Certificated Securities to a Non-U.S. Person:

                  (i) an interest in any Regulation S Permanent Global Security
            may be transferred to a Non-U.S. Person who will receive an interest
            in such Regulation S Permanent Global Security if the proposed
            transferor has delivered to Euroclear and/or Clearstream a
            certificate substantially in the form of Exhibit C hereto; and

                  (ii) the Registrar shall register the transfer of an interest
            in any Regulation S Permanent Global Security to a transferee who
            will receive a Regulation S Certificated Security, or the transfer
            of any Regulation S Certificated Security to a transferee who will
            receive an interest in any Regulation S Permanent Global Security,
            if the proposed transferor has delivered to the Registrar a
            certificate substantially in the form of Exhibit C hereto.

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 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.

                                       16
<PAGE>   21
    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
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


                                       17
<PAGE>   22
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.

SECTION 2.15      Securities Act Legend.

    Except as permitted by this Section 2.15, each Global Security evidencing
Initial Securities (and all Securities issued in exchange therefor or in
substitution thereof (other than Exchange Securities as provided below)) shall
bear a legend (the "Securities Act Legend") in substantially the following form:

    THIS SECURITY (OR ITS PREDECESSOR) WAS ORIGINALLY ISSUED IN A TRANSACTION
    EXEMPT FROM REGISTRATION UNDER THE UNITED STATES SECURITIES ACT OF 1933 (THE
    "SECURITIES ACT"), AND THIS SECURITY MAY NOT BE OFFERED, SOLD OR OTHERWISE
    TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION
    THEREFROM. EACH PURCHASER OF THIS SECURITY IS HEREBY NOTIFIED THAT THE
    SELLER OF THIS SECURITY MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS
    OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER.

    THE HOLDER OF THIS SECURITY AGREES FOR THE BENEFIT OF THE ISSUER THAT (A)
    THIS SECURITY MAY BE OFFERED, RESOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY
    (i) INSIDE THE U.S. TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A
    "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE
    SECURITIES ACT) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (ii)
    OUTSIDE THE U.S. IN A TRANSACTION IN ACCORDANCE WITH RULE 904 UNDER THE
    SECURITIES ACT, (iii) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE
    SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER (IF AVAILABLE), (iv) PURSUANT
    TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, OR (v) TO
    THE ISSUER, IN EACH OF CASES (i) THROUGH (iv) IN ACCORDANCE WITH ANY
    APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES, AND (B) THE
    HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER
    OF THIS NOTE FROM IT OF THE RESALE RESTRICTIONS REFERRED TO IN (A) ABOVE.

    By its acceptance of any Security bearing the Securities Act Legend, each
Holder of such a Security acknowledges the restrictions on transfer of such
Security set forth in this Indenture and in the Securities Act Legend and agrees
that it will transfer such Security only as provided in this Indenture. The
Registrar shall not register a transfer of any Security unless such transfer
complies with the restrictions on transfer of such Security set forth in this
Indenture. In connection with any transfer of Securities bearing the Securities
Act Legend, each Holder agrees by its acceptance of the Securities to furnish
the Registrar or the Company such certifications, Opinions of Counsel or other
information as the Company may reasonably require to confirm that such transfer
is being made pursuant to an exemption from, or a transaction not subject to,
the registration requirements of the Securities Act; provided that the Registrar
shall not be required to determine (but may rely on a determination made by the
Company with respect to) the sufficiency of any such certifications, Opinions of
Counsel or other information.

    Upon the transfer, exchange or replacement of Securities not bearing the
Securities Act Legend, the Registrar shall deliver Securities that do not bear
the Securities Act Legend. Upon the transfer, exchange or replacement of
Securities bearing the Securities Act Legend, the Registrar shall deliver only
Securities that bear the Securities Act Legend unless there is delivered (i) to
the Registrar an Opinion of Counsel reasonably satisfactory to the Company to
the effect that neither such legend nor the related restrictions on transfer are
required in order to maintain compliance with the provisions of the Securities
Act and (ii) such other letters, notices, certifications and other written
communications required by Section 2.7, this Section 2.15 and otherwise pursuant
to this Indenture or the Securities.

      After a transfer of any Initial Securities pursuant to an effective Shelf
Registration Statement with respect to such Initial Securities, all requirements
pertaining to legends on such Initial Security will cease to apply, the
requirements requiring any such Initial Security issued to certain Holders be
issued in global form will cease to apply, and a


                                       18
<PAGE>   23

certificated Initial Security without legends will be available to the
transferee of the Holder of such Initial Securities upon exchange of such
transferring Holder's certificated Initial Security or directions to transfer
such Holder's interest in the Global Security, as applicable.

    Upon the consummation of a Registered Exchange Offer with respect to Initial
Securities pursuant to which Holders of such Initial Securities are offered
Exchange Securities in exchange for their Initial Securities, all requirements
pertaining to such Initial Securities that Initial Securities issued to certain
Holders be issued in global form will cease to apply and certificated Initial
Securities with the Securities Act Legend will be made available to Holders of
such Initial Securities that do not exchange their Initial Securities, and
Exchange Securities in certificated or global form without the Securities Act
Legend will be available to Holders that exchange such Initial Securities in
such Registered Exchange Offer.

    The Registrar shall retain copies of all letters, notices, certifications,
Opinions of Counsel, and other written communications received pursuant to
Section 2.7, this Section 2.15 or otherwise pursuant to this Indenture or the
Securities. The Company shall have the right to inspect and make copies of all
such letters, notices, certifications, Opinions of Counsel, or other written
communications at any reasonable time upon the giving of reasonable written
notice to the Registrar.

                                   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.

SECTION 3.2       Maintenance of Office or Agency.

    The Company shall maintain in the Borough of Manhattan, the City of New
York, and, in the case of Securities listed on a stock exchange, in such other
locations as shall be required by such stock exchange, an office or agency where
Securities may be surrendered for registration of transfer or exchange and where
Securities and the guarantee of the Guarantor endorsed thereon may be presented
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 and such guarantee 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       Limitation on Sale/Leaseback Transactions.

      The Company shall not, and shall not permit any Restricted Subsidiary to,
enter into any Sale/Leaseback Transaction unless (i) the Company or such
Restricted Subsidiary would be entitled to create a Lien on such


                                       19
<PAGE>   24

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 3.4 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 Company 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 Company or any Restricted Subsidiary; provided, however,
that in addition to the transactions permitted pursuant to the foregoing clauses
(i) and (ii), the Company 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 3.4 does not exceed 15% of Consolidated Net Tangible Assets as
determined based on the consolidated balance sheet of the Company 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 3.4       Limitation on Liens.

      The Company 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 Company or any Restricted Subsidiary, other than
(a)(1) Liens incurred by the Company or any Restricted Subsidiary securing
Indebtedness Incurred by the Company 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 Company or such Restricted Subsidiary, as the case may be, which Liens
may include Liens on the Capital Stock of such Restricted Subsidiary or (2)
Liens incurred by any Restricted Subsidiary that does not own, directly or
indirectly, at the time of such original incurrence of such Lien under this
clause (2) any operating properties or assets, securing Indebtedness Incurred to
finance the exploration, drilling, development, construction or purchase of or
by, or repairs, improvements or additions to, property or assets of any
Restricted Subsidiary that does not, directly or indirectly, own any operating
properties or assets at the time of such original incurrence of such Lien, which
Liens may include Liens on the Capital Stock of one or more Restricted
Subsidiaries that do not, directly or indirectly, own any operating properties
or assets at the time of such original incurrence of such Lien, provided,
however, that the Indebtedness secured by any such Lien may not be issued more
than 365 days after the later of the exploration, drilling, development,
completion of construction, purchase, repair, improvement, addition or
commencement of full commercial operation of the property or assets being so
financed; (b) Liens existing on the date of the issuance of such series of
Securities (other than Liens relating to Indebtedness or other obligations being
repaid or Liens that are otherwise extinguished with the proceeds of any
offering of Securities pursuant to this Indenture); (c) Liens on property,
assets or shares of stock of a Person at the time such Person becomes a
Subsidiary; provided, however, that any such Lien may not extend to any other
property or assets owned by the Company or any Restricted Subsidiary; (d) Liens
on property or assets at the time the Company or a Subsidiary acquires the
property or asset, including any acquisition by means of a merger or
consolidation with or into the Company 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 Company or any Restricted Subsidiary;
(e) Liens securing Indebtedness or other obligations of a Subsidiary owing to
the Company or a Restricted Subsidiary or of the Company owing to a Subsidiary;
(f) Liens incurred on assets that are the subject of a Capitalized Lease
Obligation to which the Company 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,


                                       20
<PAGE>   25

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 3.4; 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 Company 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 3.3 does not exceed 15% of Consolidated Net Tangible Assets
as determined based on the Consolidated balance sheet of the Company as of the
end of the most recent fiscal quarter for which financial statements are
available.

SECTION 3.5       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 3.6       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.

SECTION 3.7       Waiver of Certain Covenants.

    The Company may omit in any particular instance to comply with any covenant
or condition set forth in Sections 3.3 to 3.4, inclusive, with respect to any
Series of Securities or any covenant established with respect to such Series
pursuant to Section 2.1(9), if before or after the time for such compliance the
Holders of at least 50% in principal amount of the Securities of such Series at
the time outstanding, shall either waive such compliance in such instance or
generally waive compliance with such covenant or condition, but no such waiver
shall extend to or affect such covenant or condition except to the extent so
expressly waived, and, until such waiver shall become effective, the obligations
of the Company and the duties of the Trustee in respect of any such covenant or
condition shall remain in full force and effect.

SECTION 3.8       Additional Amounts.

      If the Securities of a Series provide for the payment of additional
amounts, at least 10 days prior to the first interest payment date with respect
to that Series of Securities and at least 10 days prior to each date of payment
of principal of, premium, if any, or interest on the Securities of that Series
if there has been a change with respect to the matters set forth in the
below-mentioned Officers' Certificate, the Company shall furnish to the Trustee
and the principal Paying Agent, if other than the Trustee, an Officers'
Certificate instructing the Trustee and such Paying Agent whether such payment
of principal of or interest on the Securities of that Series shall be made to
holders of the Securities of that Series without withholding or deduction for or
on account of any tax, assessment or other governmental charge described in the
Securities of that Series. If any such withholding or deduction shall be


                                       21
<PAGE>   26

required, then such Officers' Certificate shall specify by country the amount,
if any, required to be withheld or deducted on such payments to such holders and
shall certify the fact that additional amounts will be payable and the amounts
so payable to each holder, and the Company shall pay to the Trustee or such
Paying Agent the additional amounts required to be paid by this Section. The
Company covenants to indemnify the Trustee and any Paying Agent for, and to hold
them harmless against, any loss, liability or expense reasonably incurred
without negligence or bad faith on their part arising out of or in connection
with actions taken or omitted by any of them in reliance on any Officers'
Certificate furnished pursuant to this Section.

    Whenever in this Indenture there is mentioned, in any context, the payment
of the principal of or any premium, interest or any other amounts on, or in
respect of, any Security of any Series, such mention shall be deemed to include
mention of the payment of additional amounts provided by the terms of such
Series established hereby or pursuant hereto to the extent that, in such
context, additional amounts are, were or would be payable in respect thereof
pursuant to such terms, and express mention of the payment of additional amounts
(if applicable) in any provision hereof shall not be construed as excluding the
payment of additional amounts in those provisions hereof where such express
mention is not made.

                                   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
Person or sell, assign, convey, transfer or lease or otherwise dispose of all or
substantially all of its properties and assets to any Person or group of
affiliated Persons, unless:

        (i) either (A) the 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 amalgamated 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 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, amalgamation, 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.


                                       22
<PAGE>   27

    (b) In the case of any consolidation, merger, amalgamation 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 with respect to such Series; (ii) immediately after giving effect
    to such assignment and assumption, no Event of Default with respect to such
    Series and no event which, after notice or lapse of time or both, would
    become an Event of Default with respect to such Series, 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; and (iv) the Affiliate Assignee shall have delivered to the
    Trustee an Officers' Certificate and an Opinion of Counsel 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 respect to such Series 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 with respect to such Securities 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 with respect to such Securities 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 or of the
Guarantor in the Guarantee Agreement with respect to such Series and the default
continues for 30 days after the date on which written notice of such default is
given to the Company or the Guarantor, as the case may be, by the Trustee or to
the Company or the Guarantor, as the case may be, 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 either of the
Company or the Guarantor under any instrument or instruments under which there
is or may be secured or evidenced any Indebtedness of the Company or the
Guarantor, as applicable (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


                                       23
<PAGE>   28

been rescinded within 30 days or (ii) a default by either of the Company or the
Guarantor 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 or
the Guarantor, as applicable 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 hereof or of the Guarantee) or the Guarantor
denies or disaffirms in writing its obligations under the Guarantee with respect
to such Series.

       (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) 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 United States 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.


                                       24
<PAGE>   29

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 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
the Guarantee Agreement, 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.

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:


                                       25
<PAGE>   30

        (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 or the Guarantor 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 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


                                       26
<PAGE>   31

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 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


                                       27
<PAGE>   32

    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 Guarantor, the Securityholders or any
other Person for interest on any money received by it, including, but not
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.


                                       28
<PAGE>   33

    (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.

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 or the Guarantor's
covenants in Article Five of the Guarantee Agreement.

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


                                       29
<PAGE>   34

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.

    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(f) or (g) 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.


                                       30
<PAGE>   35

    If the Trustee for a particular Series of Securities fails to comply with
Section 6.10, any Securityholder who has been a bona fide 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.

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


                                       31
<PAGE>   36

or resign with respect to the Securities of that Series in the manner prescribed
in the TIA. The Trustee shall not be deemed to have a conflicting interest under
the TIA by virtue of being a trustee under the Indenture dated as of August 10,
2000 between the Guarantor and the Trustee, the Indenture dated as of April 25,
2001 between Calpine Canada Energy Finance ULC and the Trustee, the securities
under which are guaranteed by the Guarantor, and the Indenture dated as of April
30, 2001 between the Guarantor and the Trustee.

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:

    (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


                                       32
<PAGE>   37

    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.

    If so provided with respect to a Series of Securities in accordance with
Section 2.1, 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 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 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


                                       33
<PAGE>   38

    longer required, and (B) 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 123 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 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)(C)(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.

    If so provided with respect to a Series of Securities in accordance with
Section 2.1, the Company may omit to comply with any term, provision or
condition set forth in Sections 3.3 and 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 Sections 3.3 and 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


                                       34
<PAGE>   39

    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 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 are 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 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 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

                                       35
<PAGE>   40

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.

SECTION 7.9     Terms and Conditions of Defeasance Subject to Section 2.1.

        The terms and conditions of Sections 7.3, 7.4, 7.5, 7.6, 7.7 and 7.8 are
each subject to any modifications thereof effected pursuant to paragraph (16) of
the second paragraph of Section 2.1.

                                  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



                                       36
<PAGE>   41

                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 amount of Securities the Holders of which must
                consent to an amendment or supplement or waiver;

        (b)     reduce the rate of or change the time for payment of interest on
                any Security;

        (c)     reduce the principal of or change the Stated Maturity of any
                Security;

        (d)     modify any redemption or repurchase right to the detriment of a
                Holder;

        (e)     make any Security payable in currency or consideration other
                than that stated in the Security;

        (f)     modify the Guarantee to the detriment of a Holder.

        (g)     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.



                                       37
<PAGE>   42

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 or
supplement 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.

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.



                                       38
<PAGE>   43

                                   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.

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 and, if applicable, ISIN and Common Code 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



                                       39
<PAGE>   44

                (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.

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 II ULC
                                    Suite 800, Purdy's Wharf, Tower 1
                                    1959 Upper Water Street
                                    P.O. Box 997
                                    Halifax, Nova Scotia B3J 3N2



                                       40
<PAGE>   45

                                    with a copy to:

                                    Calpine Corporation
                                    50 West San Fernando Street
                                    San Jose, California 95113
                                    Attn: General Counsel

                                    if to the Trustee:

                                    Wilmington Trust Company
                                    Rodney Square North
                                    1100 North Market Street
                                    Wilmington, DE 19890-0001
                                    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 3.5 shall include:

                (a) a statement that the Person making such certificate or
        opinion has read such covenant or condition;



                                       41
<PAGE>   46

                (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, the State(s)
(if in the United States) or cities (if outside of the United States) in which
the offices of the Trustee or any Paying Agent are located, or, if the
Securities are listed on a stock exchange, the jurisdiction in which such stock
exchange is 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 3.5 shall be for the fiscal
year ending on December 31, 2001.

        The reporting date for Section 6.6 is April 15 of each year. The first
reporting date is April 15, 2002.

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.

SECTION 10.12.  Jurisdiction.

        The Company agrees that any suit, action or proceeding against the
Company brought by any Holder or the Trustee arising out of or based upon this
Indenture or the Securities may be instituted in a U.S. Federal or New York
state court located in New York City, and any appellate court from any thereof,
and irrevocably submits to the non-exclusive jurisdiction of such courts in any
suit, action or proceeding. The Company irrevocably waives, to the fullest
extent permitted by law, any objection to any suit, action or proceeding that
may be brought in connection with this Indenture or the Securities, including
such actions, suits or proceedings relating to securities laws of the United
States of America or any state thereof, in such courts whether on the grounds of
venue, residence or domicile



                                       42
<PAGE>   47

or on the ground that any such suit, action or proceeding has been brought in an
inconvenient forum. The Company agrees that final judgment in any such suit,
action or proceeding brought in such court shall be conclusive and binding upon
the Company and may be enforced in any court to the jurisdiction of which the
Company, is subject by a suit upon such judgment; provided that service of
process is effected upon the Company, in the manner provided by this Indenture.
The Company has irrevocably appointed CT Corporation Systems with offices on the
date hereof at 111 Eighth Avenue, New York, New York 10011, as its authorized
agent (the "Authorized Agent"), upon whom process may be served in any suit,
action, or proceeding arising out of or based upon this Indenture, the
Securities or the transactions contemplated herein which may be instituted in
any U.S. Federal or state court located in New York City by any Holder or the
Trustee and expressly accepts the non-exclusive jurisdiction of any such courts
in respect of any such suit, action or proceeding. The Company hereby represents
and warrants that the Authorized Agent has accepted such appointment and has
agreed to act as said agent for service of process, and the Company agrees to
take any and all action, including the filing of any and all documents that may
be necessary to continue such respective appointment in full force and effect as
aforesaid. Service of process upon the Authorized Agent shall be deemed, in
every respect, effective service of process upon the Company. Notwithstanding
the foregoing, any action involving the Company arising out of or based upon
this Indenture or the Securities may be instituted by any Holder or the Trustee
in any court of competent jurisdiction in Canada.

SECTION 10.13.  Judgment Currency.

        The Company agrees, to the fullest extent that it may effectively do so
under applicable law, that (a) if for the purpose of obtaining judgment in any
court it is necessary to convert the sum due in respect of the principal of or
interest on the Securities (the "Required Currency") into a currency other than
the currency in which the Securities are denominated, in which a judgment will
be rendered (the "Judgment Currency"), the rate of exchange used shall be the
rate at which in accordance with normal banking procedures the Trustee could
purchase in The City of New York the Required Currency with the Judgment
Currency on the day on which final unappealable judgment is entered, unless such
day is not a New York Banking Day, then, to the extent permitted by applicable
law, the rate of exchange used shall be the rate at which in accordance with
normal banking procedures the Trustee could purchase in The City of New York the
Required Currency with the Judgment Currency on the New York Banking Day
preceding the day on which final unappealable judgment is entered and (b) its
obligations under this Indenture to make payments in the Required Currency (i)
shall not be discharged or satisfied by any tender, or any recovery pursuant to
any judgment (whether or not entered in accordance with subsection (a)), in any
currency other than the Required Currency, except to the extent that such tender
or recovery shall result in the actual receipt, by the payee, of the full amount
of the Required Currency expressed to be payable in respect of such payments,
(ii) shall be enforceable as an alternative or additional cause of action for
the purpose of recovering in the Required Currency the amount, if any, by which
such actual receipt shall fall short of the full amount of the Required Currency
so expressed to be payable and (iii) shall not be affected by judgment being
obtained for any other sum due under this Indenture. For purposes of the
foregoing, "New York Banking Day" means any day except a Saturday, Sunday or a
legal holiday in The City of New York or a day on which banking institutions in
The City of New York are authorized or required by law or executive order to
close.



                                       43
<PAGE>   48

                                   SIGNATURES

                                       CALPINE CANADA ENERGY FINANCE II ULC


                                       By
                                          --------------------------------------
                                          Name: [Ann B. Curtis]
                                          Title:  [Executive Vice President]


                                       WILMINGTON TRUST COMPANY,
                                         as Trustee


                                       By
                                          --------------------------------------
                                          Name:
                                          Title:

Dated:  October __, 2001



                                       44
<PAGE>   49
                                                                       EXHIBIT A

                           (FORM OF FACE OF SECURITY)

                           [Global Securities Legend]

    [TO BE INSERTED ONLY IN UNITED STATES DOLLAR-DENOMINATED GLOBAL 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.


               [TO BE INSERTED ONLY IN GLOBAL SECURITY DENOMINATED
                 IN A CURRENCY OTHER THAN UNITED STATES DOLLARS]

    THIS SECURITY IS ISSUED IN GLOBAL FORM AND REGISTERED IN THE NAME OF A
COMMON DEPOSITORY FOR EUROCLEAR BANK S.A./N.V., AS OPERATOR OF THE EUROCLEAR
SYSTEM ("EUROCLEAR") AND CLEARSTREAM BANKING, S.A., FORMERLY CEDELBANK
("CLEARSTREAM") OR A NOMINEE THEREOF. UNLESS THIS SECURITY IS PRESENTED BY AN
AUTHORIZED REPRESENTATIVE OF EUROCLEAR OR CLEARSTREAM, 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 KREDIETBANK S.A.
LUXEMBOURGEOISE, OR SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF EUROCLEAR AND CLEARSTREAM (AND ANY PAYMENT IS MADE TO
KREDIETBANK S.A. LUXEMBOURGEOISE, OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF EUROCLEAR OR CLEARSTREAM), ANY TRANSFER, PLEDGE OR
OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH
AS THE REGISTERED OWNER HEREOF, KREDIETBANK S.A. LUXEMBOURGEOISE, 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 THE COMMON DEPOSITORY TO A NOMINEE OF THE COMMON DEPOSITORY OR BY A
NOMINEE OF THE COMMON DEPOSITORY TO THE COMMON DEPOSITORY OR ANOTHER NOMINEE OF
THE COMMON DEPOSITORY OR BY THE COMMON DEPOSITORY OR ANY SUCH NOMINEE TO A
SUCCESSOR COMMON DEPOSITORY OR A NOMINEE OF SUCH SUCCESSOR COMMON DEPOSITORY.

<PAGE>   50
                         [Restricted Securities Legend]

                    [TO BE INSERTED ONLY ON INITIAL SECURITY]

    THIS SECURITY (OR ITS PREDECESSOR) WAS ORIGINALLY ISSUED IN A TRANSACTION
EXEMPT FROM REGISTRATION UNDER THE UNITED STATES SECURITIES ACT OF 1933 (THE
"SECURITIES ACT"), AND THIS SECURITY MAY NOT BE OFFERED, SOLD OR OTHERWISE
TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION
THEREFROM. EACH PURCHASER OF THIS SECURITY IS HEREBY NOTIFIED THAT THE SELLER OF
THIS SECURITY MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5
OF THE SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER.

    THE HOLDER OF THIS SECURITY AGREES FOR THE BENEFIT OF THE ISSUER THAT (A)
THIS SECURITY MAY BE OFFERED, RESOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY (i)
INSIDE THE U.S. TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A "QUALIFIED
INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) IN A
TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (ii) OUTSIDE THE U.S. IN A
TRANSACTION IN ACCORDANCE WITH RULE 904 UNDER THE SECURITIES ACT, (iii) PURSUANT
TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144
THEREUNDER (IF AVAILABLE), (iv) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE SECURITIES ACT, OR (v) TO THE ISSUER, IN EACH OF CASES (i) THROUGH
(iv) IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE
UNITED STATES, AND (B) THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED
TO, NOTIFY ANY PURCHASER OF THIS NOTE FROM IT OF THE RESALE RESTRICTIONS
REFERRED TO IN (A) ABOVE.

                         [Temporary Regulation S Legend]

            [TO BE INSERTED ONLY ON TEMPORARY REGULATION S SECURITY]

    THIS SECURITY IS A TEMPORARY GLOBAL SECURITY. PRIOR TO THE EXPIRATION OF THE
40-DAY DISTRIBUTION COMPLIANCE PERIOD SET FORTH IN RULE 903(b)(2)(ii) UNDER THE
U.S. SECURITIES ACT APPLICABLE HERETO, BENEFICIAL INTERESTS HEREIN MAY NOT BE
HELD BY ANY PERSON OTHER THAN (1) A NON-U.S. PERSON OR (2) A U.S. PERSON WHO
PURCHASED SUCH INTEREST IN A TRANSACTION THAT DID NOT REQUIRE REGISTRATION UNDER
THE U.S. SECURITIES ACT. BENEFICIAL INTERESTS HEREIN ARE NOT EXCHANGEABLE FOR
DEFINITIVE SECURITIES. TERMS IN THIS LEGEND ARE USED AS USED IN REGULATION S
UNDER THE SECURITIES ACT.



                                      A-2
<PAGE>   51
                      CALPINE CANADA ENERGY FINANCE II ULC

                          _____% SENIOR NOTE DUE _____

No.____                                                         [$]_____________
                                                                CUSIP:
                                                                [ISIN: ]
                                                                [Common Code:]

    Calpine Canada Energy Finance II ULC, a public limited company organized
under the laws of Nova Scotia, Canada (the "Company"), promises to pay to [Cede
& Co.]* [Kredietbank S.A. Luxembourgeoise]**, or registered assigns, the
principal amount of ____________ [Dollars or Other Currency] [or such other
principal amount as is set forth in the Schedule of Increases and Decreases of
Global Security annexed hereto]***.

                     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 II 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 only in United States dollar-denominated Global Security.

**  Insert only in Global Security denominated in a currency other than United
    States dollars.

*** Insert only in Global Securities.



                                      A-3
<PAGE>   52
                          (Form of Reverse of Security)

                      CALPINE CANADA ENERGY FINANCE II ULC
                           ___% SENIOR NOTE DUE _____

    (1) Interest. (a) Calpine Canada Energy Finance II 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.

    [(b) The Holder of this Security is entitled to the benefits of a
Registration Rights Agreement, dated as of _________, __, _____, between the
Company and the Guarantor for the benefit of the Holders of Securities specified
therein (the "Registration Agreement"). Capitalized terms used in this paragraph
1(b), but not defined herein have the meanings assigned to them in the
Registration Agreement. In the event that (i) neither the Exchange Offer
Registration Statement nor the Shelf Registration Statement has been filed with
the Commission on or prior to the [ ] day after the Issue Date, (ii) the
Exchange Offer Registration Statement has not been declared effective by the
Commission on or prior to the [ ] day after the Issue Date, (iii) neither the
Exchange Offer has been consummated nor the Shelf Registration Statement has
been declared effective by the Commission on or prior to the [ ] day after the
Issue Date, or (iv) after either the Exchange Offer Registration Statement or
the Shelf Registration Statement has been declared effective, such Registration
Statement thereafter ceases to be effective or usable (subject to certain
exceptions contained in the Registration Agreement) in connection with resales
of the Securities at any time that the Company and the Guarantor is obligated to
maintain effectiveness thereof pursuant to the Registration Agreement (each such
event referred to in clauses (i) through (iv) above being referred to herein as
a "Registration Default"), interest (the "Special Interest") shall accrue (in
addition to stated interest on the Securities) from and including the date on
which the first such Registration Default shall occur to but excluding the date
on which all Registration Defaults have been cured, at a rate per annum (or a
pro rata portion thereof for periods shorter than one year) equal to ____% of
the principal amount of the Securities. The Special Interest will be payable in
cash semiannually in arrears each _____ __ an _____ __ in the same manner as
ordinary interest.

    Whenever in this Security there is mentioned, in any context, the payment of
principal, premium, if any, or interest or any other amount payable under or
with respect to any Security, such mention shall be deemed to include mention of
the payment of Special Interest to the extent that, in such context, Special
Interest is, was or would be payable in respect thereof.] [Modify to reflect
definitive Registration Agreement].

     (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. [Set forth any obligation to pay additional amounts in connection with
any tax gross up.]

     (3) Paying Agent, Registrar, Transfer. Initially, Wilmington Trust Company,
a Delaware banking corporation (the "Trustee"), will act as Paying Agent,
Transfer Agent and Registrar. [The initial Paying Agent and Transfer Agent in
_______________ is _____________________.](*) The Company may change any Paying
Agent, Transfer Agent or, Registrar or co-registrar without notice. The Company
may act as Paying Agent, Transfer Agent or Registrar. [Set forth in Initial
Security procedures for insuring compliance with the Securities Act in
connection


----------

(*)  Include only in Global Security denominated in a currency other than United
     States dollars.



                                      A-4
<PAGE>   53
with transfers and exchanges, including procedures for transfers of beneficial
interests between Rule 144 Global Securities and Regulation S Global
Securities.]

     (4) Indenture. The Company issued the Securities of this Series under an
Indenture dated as of October __, 2001 (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 October __, 2001 (the "Guarantee
Agreement"), made by Calpine Corporation, a Delaware corporation.

     [(6) Redemption. The Securities of this Series are redeemable, at the
option of the Company, at any time in whole or from time to time in part, on not
less than [ ] nor more than [ ] days' prior notice to the registered Holders of
Securities of this Series, on any date prior to its maturity (a "Redemption
Date") at a redemption price equal to: (i) 100% of the outstanding principal
amount of the Securities of this Series being redeemed; plus (ii) accrued and
unpaid interest on the Securities of this Series being redeemed to, but
excluding, the Redemption Date; plus (iii) a Make-Whole Premium. In no event
will the redemption price on the Securities of this Series be less than 100% of
the principal amount of the Securities of this Series being redeemed plus
accrued and unpaid interest thereon. "Make-Whole Premium" means an amount equal
to the Discounted Present Value calculated for any Security of this Series
subject to redemption less the unpaid principal amount of the Security of this
Series; provided, however, that no Make-Whole Premium shall be less than zero.
For purposes of the definition of "Make-Whole Premium," the "Discounted Present
Value" of any Securities of this Series subject to redemption shall be equal to
the discounted present value of all principal and interest payments scheduled to
become due in respect of the Securities of this Series after the Redemption
Date, calculated using a discount rate equal to the sum of (1) the yield to
maturity on the United States treasury security having a maturity date equal to
the maturity date of the Securities of this Series and trading in the secondary
market at the price closest to par and (2) [ ] basis points, provided, however,
that if there is no United States Treasury security having a maturity date equal
to the maturity date of the Securities of this Series, such discount rate shall
be calculated using a yield to maturity interpolated or extrapolated on a
straight-line basis (rounding to the nearest month, if necessary) from the
yields to maturity for the two United States treasury securities having maturity
dates most closely corresponding to the maturity date of the Securities of this
Series and trading in the secondary market at the price closest to par.
Notwithstanding Section 9.4 of the Indenture, the notice of redemption with
respect to the foregoing redemption need not set forth the redemption price but
only the manner of calculation thereof. The Company shall notify the Trustee of
the redemption price with respect to the foregoing redemption promptly after the
calculation thereof. The Trustee shall not be responsible for calculating said
redemption price.] [Must be modified or deleted as necessary pursuant to terms
of redemption, if any, of the Securities.]

     (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 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. [Must be modified or deleted as necessary pursuant to terms of
defeasance, if any, of the Securities.]



                                      A-5
<PAGE>   54
     (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, the Guarantee Agreement
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.

     (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).

[(16) Holders' Compliance with Registration Rights Agreement. Each Holder of a
Security, by acceptance hereof, acknowledges and agrees to the provisions of the
Registration Rights Agreement, including, without limitation, the obligations of
the Holders with respect to a registration of their Securities and the
indemnification of the Company to the extent provided therein.] [Insert only in
Initial Security].


     Pursuant to a recommendation promulgated by the Committee on Uniform
Security Identification Procedures the Company has caused a CUSIP number, and,
if applicable, ISIN and Common Code 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.




                                      A-6
<PAGE>   55
     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 of the
Indenture, the Guarantee Agreement or the Securities, the recovery of any
judgment against the Company, any action to enforce the same or any other
circumstance which might otherwise constitute a legal or equitable discharge or
defense of the Guarantor.

         The Guarantor hereby waives diligence, presentment, demand of payment,
filing of claims with a court in the event of insolvency or bankruptcy of the
Company, any right to require proceeding first against the Company, protest,
notice and all demands whatsoever and covenants that this Guarantee will not be
discharged except by complete performance of the obligations contained in the
Indenture and the Security upon which this Guarantee is endorsed. This is a
guarantee of payment and not of collection.

         If the Holder of such Security or the Trustee is required by any court
or otherwise to return to the Company or the Guarantor, or any custodian,
trustee, liquidator or other similar official acting in relation to the Company
or the Guarantor, any amount paid by the Company or the Guarantor to the Trustee
or such Holder, the Guarantee, to the extent theretofore discharged, shall be
reinstated in full force and effect.

         The Guarantor hereby agrees that any claim against the Company that
arises from the payment, performance or enforcement of the Guarantor's
obligations under the Guarantee or the Indenture, including, without limitation,
any right of subrogation, shall be subject and subordinate to, and no payment
with respect to any such claim of the Guarantor shall be made before, the
payment in full in cash of the Security upon which this Guarantee is endorsed in
accordance with the provisions provided therefor in the Indenture.

         All capitalized terms used without definition in this Guarantee shall
have the respective meanings assigned to such terms in the Guarantee Agreement.

         This Guarantee shall not be valid or obligatory for any purpose until
the certificate of authentication on the Security upon which this Guarantee is
endorsed shall have been executed by the Trustee under the Indenture by the
manual signature of one of its authorized officers.



                                       CALPINE CORPORATION


                                       By:
                                          --------------------------------------
                                          Name:
                                          Title:



                                      A-7
<PAGE>   56
          [TO BE ATTACHED TO SECURITIES OTHER THAN INITIAL SECURITIES]

                                 ASSIGNMENT FORM

To assign this Security, fill in the form below:

    I or we assign and transfer this Security to


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

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

--------------------------------------------------------------------------------
              (Print or type assignee's name, address and zip code)




--------------------------------------------------------------------------------
                  (Insert assignee's soc. sec or tax I.D. no.)

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-8
<PAGE>   57
                     [TO BE ATTACHED TO INITIAL SECURITIES]

                                 ASSIGNMENT FORM

To assign this Security, fill in the form below:

    I or we assign and transfer this Security to


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

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


-------------------------------------------------------------------------------
              (Print or type assignee's name, address and zip code)



-------------------------------------------------------------------------------
                  (Insert assignee's soc. sec or tax I.D. no.)

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)

In connection with any transfer of any of the Securities evidenced by this
certificate occurring prior to the expiration of the period referred to in Rule
144(k) under the Securities Act after the later of the date of original issuance
of such Securities and the last date, if any, on which such Securities were
owned by the Company or any Affiliate of the Company, the undersigned confirms
that such Securities are being transferred in accordance with their terms:

CHECK ONE BOX BELOW:

    (1)  [ ]  to the Company; or

    (2)  [ ]  pursuant to an effective registration statement under the
              Securities Act of 1933; or

    (3)  [ ]  inside the United States to a "qualified institutional buyer"
              (as defined in Rule 144A under the Securities Act of 1933) that
              purchases for its own account or for the account of another
              "qualified institutional buyer" to whom notice is given that such
              transfer is being made in reliance on Rule 144A, in each case
              pursuant to and in compliance with Rule 144A under the Securities
              Act of 1933; or

    (4)  [ ]  outside the United States in an offshore transaction within
              the meaning of Regulation S under the Securities Act of 1933 in
              compliance with Rule 904 under the Securities Act of 1933; or

    (5)  [ ]  pursuant to another available exemption from registration
              provided by Rule 144 under the Securities Act of 1933.

Unless one of the boxes is checked, the Trustee will refuse to register any of
the Securities evidenced by this certificate in the name of any person other
than the registered holder thereof; provided, however, that if box (4) or (5) is
checked, the Trustee may require, prior to registering any such transfer of the
Securities, such legal opinions, certifications and other information as the
Company has reasonably requested to confirm that such transfer is being made
pursuant to an exemption from, or in a transaction not subject to, the
registration requirements of the Securities Act of 1933, such as the exemption
provided by Rule 144 under such Act.



                                               ---------------------------------
                                               Signature




                                       i
<PAGE>   58
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.

              TO BE COMPLETED BY PURCHASER IF (3) ABOVE IS CHECKED:

    The undersigned represents and warrants that it is purchasing this Security
for its own account or an account with respect to which it exercises sole
investment discretion and that it and any such account is a "qualified
institutional buyer" within the meaning of Rule 144A under the Securities Act of
1933, and is aware that the sale to it is being made in reliance on Rule 144A
and acknowledges that it has received such information regarding the Company as
the undersigned has requested pursuant to Rule 144A or has determined not to
request such information and that it is aware that the transferor is relying
upon the undersigned's foregoing representations in order to claim the exemption
from registration provided by Rule 144A.


Dated:                                 Signed:
      -----------------------------           ----------------------------------
                                              NOTICE: To be executed by an
                                                      executive officer



                                       ii


<PAGE>   59
                      [TO BE ATTACHED TO GLOBAL SECURITIES]

              SCHEDULE OF INCREASES OR DECREASES IN GLOBAL SECURITY

  The following increases or decreases in this Global Security have been made:



<TABLE>
<CAPTION>
                Amount of decrease       Amount of increase       Principal amount of          Signature of
                 in Principal            in Principal             this Global Security         authorized officer
Date of         Amount of this           Amount of this           following such decrease      of Trustee or
Exchange        Global Security          Global Security          or increase                  Securities Custodian
--------        ---------------------    --------------------     ------------------------     --------------------
<S>             <C>                      <C>                      <C>                           <C>
</TABLE>




                                      iii

<PAGE>   60
                                                                       EXHIBIT B

                  Forms of Certificate of Beneficial Ownership

                   [Complete Form I or Form II as Applicable]

                                    [Form I]

Euroclear Bank SA./N.V.,
     as Operator of the Euroclear System
Clearstream Banking, S.A.


Re:      Calpine Canada Energy Finance II ULC (the "Company")
         [   ]% Initial Securities] (the "Securities") issued under the
         Indenture (the "Indenture") dated as of _____ __, 2001, between the
         Company and Wilmington Trust Company


Dear Sirs:

         We are the beneficial owners of ________ principal amount of Securities
issued under the Indenture and represented by Regulation S Temporary Global
Securities (as defined in the Indenture).

         We hereby certify as follows:

         [CHECK A OR B AS APPLICABLE.]

                A.  We are a non-U.S. person (within the meaning of Regulation S
                    under the Securities Act of 1933, as amended).

                B.  We are a U.S. person (within the meaning of Regulation S
                    under the Securities Act of 1933, as amended) who purchased
                    the Securities in a transaction that did not require
                    registration under the Securities Act of 1933, as amended.

         Accordingly, you are hereby requested to exchange our beneficial
interest in the Regulation S Temporary Global Securities for an equivalent
beneficial interest in Regulation S Permanent Global Securities.

         You and the Company are entitled to rely upon this Certificate and are
irrevocably authorized to produce this Certificate or a copy hereof to any
interested party in any administrative or legal proceeding or official inquiry
with respect to the matters covered hereby.




                                       Very truly yours,


                                       -----------------------------------------
                                       [NAME OF BENEFICIAL OWNER]



                                       By:
                                          -------------------------------------

                                       Name:
                                       Title:
                                       Address:


Date:________________



                                      B-1
<PAGE>   61
                                    [Form II]


Wilmington Trust Company
Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890-0001
Attention: Corporate Trust Administration

Re:      Calpine Canada Energy Finance II ULC (the "Company")
         [ ]% [Initial Securities] (the "Securities") issued under the Indenture
         (the "Indenture") dated as of _______ __, 2001, between the Company and
         Wilmington Trust Company


         This is to certify that based solely on certifications we have received
in writing, by tested telex or by electronic transmission from member
organizations ("Member Organizations") appearing in our records as persons being
entitled to a portion of the principal amount of Securities represented by
Regulation S Temporary Global Notes issued under the above-referenced Indenture,
that as of the date hereof, _________ principal amount of Securities represented
by the Regulation S Temporary Global Securities being submitted herewith for
exchange is beneficially owned by persons who are either (i) non-U.S. persons
(within the meaning of Regulation S under the Securities Act of 1933, as
amended) or (ii) U.S. persons who purchased the Securities in a transaction that
did not require registration under the Securities Act of 1933, as amended.

        We further certify that (i) we are not submitting herewith for exchange
any portion of such Regulation S Temporary Global Securities excepted in such
Member Organization certifications and (ii) as of the date hereof we have not
received any notification from any Member Organization to the effect that the
statements made by such Member Organization with respect to any portion of such
Regulation S Temporary Global Securities submitted herewith for exchange are no
longer true and cannot be relied upon as of the date hereof. Accordingly, you
are hereby requested to exchange such beneficial interest in the Regulation S
Temporary Global Securities for an equivalent beneficial interest in Regulation
S Permanent Global Securities.

         Capitalized terms used and not defined herein have the meanings given
such terms in the Indenture.

         You and the Company are entitled to rely upon this Certificate and are
irrevocably authorized to produce this Certificate or a copy hereof to any
interested party in any administrative or legal proceeding or official inquiry
with respect to the matters covered hereby.


                                       Yours faithfully,

[EUROCLEAR BANK S.A./N.V., as operator of the Euroclear System]

OR

[CLEARSTREAM BANKING, S.A.]


By:
   ----------------------------
   Name:
   Title:


Date:
     --------------------------




                                      B-2
<PAGE>   62
                                                                       EXHIBIT C

                      Forms of Certificate to be Delivered
                          in Connection with Transfers
                            Pursuant to Regulation S
                                    [Form I]


                                                       ________,_____

Euroclear Bank S.A./N.V.,
     as operator of the Euroclear System
Clearstream Banking, S.A.


Re:      Calpine Canada Energy Finance II ULC (the "Company")
         [ ]% [Initial Securities] (the "Securities") issued under the Indenture
         (the "Indenture") dated as of ______ __, 2001, between the Company and
         Wilmington Trust Company


Dear Sirs:

In connection with our proposed sale of ________ aggregate principal amount of
the Securities, we confirm that such sale has been effected pursuant to and in
accordance with Regulation S under the Securities Act of 1933, as amended, and,
accordingly, we represent that:

         (1) the offer of the Securities was not made to a person in the United
States;

         (2) at the time the buy order was originated, the transferee was
outside the United States or we and any person acting on our behalf reasonably
believed that the transferee was outside the United States;

         (3) no directed selling efforts have been made by us in the United
States in contravention of the requirements of Rule 903(b) or Rule 904(b) of
Regulation S, as applicable; and

         (4) the transaction is not part of a plan or scheme to evade the
registration requirements of the Securities Act of 1933.

         You and the Company are entitled to rely upon this letter and are
irrevocably authorized to produce this letter or a copy hereof to any interested
party in any administrative or legal proceedings or official inquiry with
respect to the matters covered hereby. Terms used in this certificate have the
meanings set forth in Regulation S under the Securities Act of 1933.




                                            Very truly yours,

                                            [Name of Transferor]


                                            By:
                                               ---------------------------------
                                                      Authorized Signatory




                                      C-1

<PAGE>   63
                                    [Form II]


Wilmington Trust Company
Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890-0001
Attention: Corporate Trust Administration


Re:      Calpine Canada Energy Finance II ULC (the "Company")
         [ ]% [Initial Securities] (the "Securities") issued under the Indenture
         (the "Indenture") dated as of ______ __, 2001, between the Company and
         Wilmington Trust Company


Dear Sirs:

In connection with our proposed sale of ________ aggregate principal amount of
the Securities, we confirm that such sale has been effected pursuant to and in
accordance with Regulation S under the Securities Act of 1933, as amended, and,
accordingly, we represent that:

         (1) the offer of the Securities was not made to a person in the United
States;

         (2) at the time the buy order was originated, the transferee was
outside the United States or we and any person acting on our behalf reasonably
believed that the transferee was outside the United States;

         (3) no directed selling efforts have been made by us in the United
States in contravention of the requirements of Rule 903(b) or Rule 904(b) of
Regulation S, as applicable; and

         (4) the transaction is not part of a plan or scheme to evade the
registration requirements of the Securities Act of 1933.

         You and the Company are entitled to rely upon this letter and are
irrevocably authorized to produce this letter or a copy hereof to any interested
party in any administrative or legal proceedings or official inquiry with
respect to the matters covered hereby. Terms used in this certificate have the
meanings set forth in Regulation S under the Securities Act of 1933.


                                            Very truly yours,

                                            [Name of Transferor]


                                            By:
                                                --------------------------------
                                                      Authorized Signatory

<PAGE>   64
                                                                       EXHIBIT D



                           Form of Guarantee Agreement




                                      D-1

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-5.1
<SEQUENCE>5
<FILENAME>f74776a1ex5-1.txt
<DESCRIPTION>EXHIBIT 5.1
<TEXT>
<PAGE>   1

                                                                     Exhibit 5.1


                                                              September 19, 2001


Calpine Corporation
50 West San Fernando Street
San Jose, CA 95113

Calpine Canada Energy Finance ULC
Suite 800, Purdy's Wharf, Tower 1
1959 Upper Water Street
P.O. Box 997
Halifax, Nova Scotia B3J 3N2

Calpine Canada Energy Finance II ULC
Suite 800, Purdy's Wharf, Tower 1
1959 Upper Water Street
P.O. Box 997
Halifax, Nova Scotia B3J 3N2

Ladies and Gentlemen:

               We are acting as counsel to Calpine Corporation, a Delaware
corporation (the "Company"), Calpine Canada Energy Finance ULC, an unlimited
liability company organized under the laws of Nova Scotia, Canada ("Energy
Finance"), and Calpine Canada Energy Finance II ULC, an unlimited liability
company organized under the laws of Nova Scotia, Canada ("Energy Finance II"),
in connection with the shelf registration under the Securities Act of 1933, as
amended (the "Securities Act"), pursuant to the Registration Statement on Form
S-3 (File No. 333-67446) initially filed with the Securities and Exchange
Commission (the "Commission") on August 14, 2001 and amended on September 19,
2001 (such Registration Statement, which includes, pursuant to Rule 429 under
the Securities Act, $275,000,000 of unsold common stock, preferred stock and
debt securities of the Company registered on Registration Statement No.
333-40652 previously filed by the Company on Form S-3 and declared effective on
August 3, 2000 and $1,000,000,000 of unsold common stock, preferred stock and
debt securities of the Company and debt securities of Energy Finance guaranteed
by the Company registered on Registration Statement No. 333-57338 previously
filed by the Company and Energy Finance on Form S-3 and declared effective on
April 19, 2001, as the same may be amended or supplemented from time to time, is
herein referred to as the "Registration Statement") with respect to (i) the
Company's common stock, par value $.001 per share (the "Common Securities"),
preferred stock, par value $.001 per share (the "Preferred Securities"), and
unsecured debt securities (the "Debt Securities"), (ii) unsecured debt
securities of Energy Finance (the "Energy Finance Debt Securities") fully and
unconditionally guaranteed by the Company, (iii) unsecured debt securities of
Energy Finance II (the "Energy Finance II Debt Securities") fully and
unconditionally guaranteed by the Company and (iv) the associated

<PAGE>   2

guarantees issued by the Company with respect to the Energy Finance Debt
Securities (the "Energy Finance Guarantees") and the Energy Finance II Debt
Securities (the "Energy Finance II Guarantees" and, together with the Energy
Finance Guarantees, the "Guarantees"). The Debt Securities are to be issued
pursuant to an indenture (the "Indenture" and, together with the Energy Finance
Indenture, the "Subsidiary Indentures"), dated as of August 10, 2000, between
the Company and Wilmington Trust Company, as Trustee (the "Trustee"), which is
incorporated by reference as an exhibit to the Registration Statement. The
Energy Finance Debt Securities are to be issued pursuant to an indenture (the
"Energy Finance Indenture"), dated as of April 25, 2001, between Energy Finance
and the Trustee, which is incorporated by reference as an exhibit to the
Registration Statement. The Energy Finance II Debt Securities are to be issued
pursuant to an indenture (the "Energy Finance II Indenture" and, together with
the Energy Finance I Indenture, the "Subsidiary Indentures") in the form set
forth as an exhibit to Amendment No.1 to the Registration Statement, to be
entered into by Energy Finance II and the Trustee. The Energy Finance Guarantees
are to be issued by the Company pursuant to a Guarantee Agreement (the "Energy
Finance Guarantee Agreement"), dated as of April 25, 2001, between the Company
and the Trustee, which is incorporated by reference as an exhibit to the
Registration Statement. The Energy Finance II Guarantees are to be issued by the
Company pursuant to a Guarantee Agreement (the "Energy Finance II Guarantee
Agreement" and, together with the Energy Finance Guarantee Agreement, the
"Guarantee Agreements") in the form set forth as an exhibit to the Registration
Statement, to be entered into by the Company and the Trustee.

               We have reviewed such corporate records, certificates and other
documents, and such questions of law, as we have considered necessary or
appropriate for the purposes of this opinion. We have assumed that each of the
parties (other than the Company) has duly authorized, executed and delivered the
documents to which it is a party. We have further assumed that each of Energy
Finance and Energy Finance II is an unlimited liability company duly organized,
validly existing and in good standing under the laws of the Province of Nova
Scotia and has all requisite power, authority and legal right to execute,
deliver and perform the applicable Subsidiary Indenture and Energy Finance Debt
Securities or Energy Finance II Debt Securities, as applicable, and that,
insofar as the law of the Province of Nova Scotia is concerned, each of the
Subsidiary Indentures, the Energy Finance Debt Securities and the Energy Finance
II Debt Securities constitutes the valid and binding obligation of Energy
Finance or Energy Finance II, as applicable, enforceable in accordance with its
terms.

               We have relied as to certain matters on information obtained from
public officials, officers of the Company, Energy Finance and Energy Finance II
and other sources believed by us to be responsible.

               Based upon the foregoing, and subject to the qualifications set
forth below, we are of the opinion that:

(1)     The Company is a corporation duly incorporated, validly existing and in
        good standing under the laws of the State of Delaware.

(2)     When, as and if: (i) the Registration Statement shall have become
        effective pursuant to the Securities Act, (ii) the appropriate corporate
        action has been taken by the Company to authorize the issuance of the
        Common Securities and fix or otherwise determine the consideration to be
        received for such Common Securities, (iii) any legally required
        consents, approvals, authorizations and other orders of the Commission
        and other regulatory authorities are obtained, (iv) such Common
        Securities with terms so fixed

<PAGE>   3

        shall have been duly sold, issued and delivered by the Company against
        payment therefor in accordance with such corporate action and as
        contemplated by the Registration Statement and assuming compliance with
        the Securities Act, and (v) certificates evidencing shares of the Common
        Securities have been duly executed by the duly authorized officers of
        the Company in accordance with applicable law, then, upon the happening
        of such events, such Common Securities will be validly issued, fully
        paid and nonassessable.

(3)     When, as and if: (i) the Registration Statement shall have become
        effective pursuant to the provisions of the Securities Act, (ii)
        appropriate corporate action has been taken by the Company to authorize
        the issuance of Preferred Securities, to fix the terms thereof and to
        authorize the execution and filing of a Certificate of Designations
        relating thereto with the Secretary of State of the State of Delaware,
        (iii) such Certificate of Designations shall have been executed by duly
        authorized officers of the Company and so filed by the Company, all in
        accordance with the laws of the State of Delaware, (iv) any legally
        required consents, approvals, authorizations and other orders of the
        Commission and any other regulatory authorities are obtained, (v) such
        Preferred Securities with terms so fixed shall have been duly sold,
        issued and delivered by the Company against payment therefor in
        accordance with such corporate action and as contemplated by the
        Registration Statement and assuming compliance with the Securities Act,
        and (vi) certificates evidencing shares of Preferred Securities have
        been duly executed by the duly authorized officers of the Company in
        accordance with applicable law, then, upon the happening of such events,
        such Preferred Securities will be validly issued, fully paid and
        nonassessable.

(4)     When, as and if: (i) the Registration Statement shall have become
        effective pursuant to the provisions of the Securities Act, (ii) the
        appropriate corporate action has been taken by the Company to authorize
        the form, terms, execution and delivery of the Indenture and the terms
        of any series of Debt Securities, (iii) such series of Debt Securities
        shall have been sold and issued in substantially the form and containing
        the terms described in the Indenture and such corporate action and as
        contemplated by the Registration Statement and assuming compliance with
        the Securities Act, (iv) any legally required consents, approvals,
        authorizations and other orders of the Commission and any other
        regulatory authorities with respect to such series of Debt Securities
        are obtained and (v) certificates evidencing such series of Debt
        Securities have been authenticated by the Trustee, then, upon the
        happening of such events, such series of Debt Securities, when issued,
        will be binding obligations of the Company, enforceable against the
        Company in accordance with their terms, subject to bankruptcy,
        insolvency, fraudulent transfer, reorganization, moratorium and other
        laws of general applicability relating to or affecting creditors' rights
        and to general equity principles.

(5)     When, as and if: (i) the Registration Statement shall have become
        effective pursuant to the provisions of the Securities Act, (ii) the
        appropriate corporate action has been taken by Energy Finance to
        authorize the form, terms, execution and delivery of the Energy Finance
        Indenture and the terms of any series of Energy Finance Debt Securities,
        (iii) such series of Energy Finance Debt Securities shall have been sold
        and issued in substantially the form and containing the terms described
        in the Energy Finance Indenture and such corporate action and as
        contemplated by the Registration Statement and assuming compliance with
        the Securities Act, (iv) any legally required consents, approvals,
        authorizations and other orders of the Commission and any other
        regulatory

<PAGE>   4

        authorities with respect to such series of Energy Finance Debt
        Securities are obtained and (v) certificates evidencing such series of
        Energy Finance Debt Securities have been duly authenticated by the
        Trustee, then, upon the happening of such events, such series of Energy
        Finance Debt Securities, when issued, will be valid and binding
        obligations of Energy Finance, enforceable against Energy Finance in
        accordance with their terms, subject to bankruptcy, insolvency,
        fraudulent transfer, reorganization, moratorium and other laws of
        general applicability relating to or affecting creditors' rights and to
        general equity principles.

(6)     When, as and if: (i) the Registration Statement shall have become
        effective pursuant to the provisions of the Securities Act, (ii) the
        appropriate corporate action has been taken by Energy Finance II to
        authorize the form, terms, execution and delivery of the Energy Finance
        II Indenture and the terms of any series of Energy Finance II Debt
        Securities, (iii) such series of Energy Finance II Debt Securities shall
        have been sold and issued in substantially the form and containing the
        terms described in the Energy Finance II Indenture and such corporate
        action and as contemplated by the Registration Statement and assuming
        compliance with the Securities Act, (iv) any legally required consents,
        approvals, authorizations and other orders of the Commission and any
        other regulatory authorities with respect to such series of Energy
        Finance II Debt Securities are obtained and (v) certificates evidencing
        such series of Energy Finance II Debt Securities have been duly
        authenticated by the Trustee, then, upon the happening of such events,
        such series of Energy Finance II Debt Securities, when issued, will be
        valid and binding obligations of Energy Finance II, enforceable against
        Energy Finance II in accordance with their terms, subject to bankruptcy,
        insolvency, fraudulent transfer, reorganization, moratorium and other
        laws of general applicability relating to or affecting creditors' rights
        and to general equity principles.

(7)     When, as and if: (i) the Registration Statement shall have become
        effective pursuant to the provisions of the Securities Act, (ii) the
        appropriate corporate action has been taken by the Company to authorize
        the form, terms, execution and delivery of the Guarantee Agreements and
        the terms of the Guarantees, (iii) the Guarantees shall have been issued
        in substantially the form and containing the terms described in the
        Guarantee Agreements and such corporate action and as contemplated by
        the Registration Statement and assuming compliance with the Securities
        Act, and (iv) any legally required consents, approvals, authorizations
        and other orders of the Commission and any other regulatory authorities
        with respect to the Guarantees are obtained, then, upon the happening of
        such events, the Guarantees, when issued, will be valid and binding
        obligations of the Company in accordance with their respective terms,
        subject to bankruptcy, insolvency, fraudulent transfer, reorganization,
        moratorium and other laws of general applicability relating to or
        affecting creditors' rights and to general equity principles.

               The foregoing opinion is subject to the qualifications that we
express no opinion as to (i) waivers of defenses or statutory or constitutional
rights or waivers of unmatured claims or rights, (ii) rights to indemnification,
contribution or exculpation to the extent that they purport to indemnify any
party against, or release or limit any party's liability for, its own breach or
failure to comply with statutory obligations, or to the extent such provisions
are contrary to public policy, or (iii) rights to collection of liquidated
damages or penalties.

               We are members of the bar of the State of New York. We do not
purport to be experts in, and do not express any opinion on, any laws other than
the law of the State of New

<PAGE>   5

York, the Delaware General Corporation Law and the Federal law of the United
States of America.

               We hereby consent to the filing of this opinion as Exhibit 5.1 to
the Registration Statement and to the reference to our firm under the heading
"Legal Matters" in the Prospectus contained in the Registration Statement. In
giving such consent, we do not thereby admit that we are in the category of
persons whose consent is required under Section 7 of the Securities Act.


                                            Very truly yours,


                                            /s/ COVINGTON & BURLING

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-5.2
<SEQUENCE>6
<FILENAME>f74776a1ex5-2.txt
<DESCRIPTION>EXHIBIT 5.2
<TEXT>
<PAGE>   1
                                                                     EXHIBIT 5.2

                [LETTERHEAD OF STEWART MCKELVEY STERLING SCALES]

File Reference: NS2031-1149

September 19, 2001

CALPINE CORPORATION
CALPINE CANADA ENERGY FINANCE I ULC
CALPINE CANADA ENERGY FINANCE II ULC
*

Dear Sirs:

Re:  CALPINE CORPORATION ("CALPINE" OR THE "COMPANY")
     CALPINE CANADA ENERGY FINANCE ULC ("ENERGY FINANCE")
     CALPINE CANADA ENERGY FINANCE II ULC ("ENERGY FINANCE II")

We have acted as special Nova Scotia counsel to Energy Finance and Energy
Finance II in connection with the shelf registration under the Securities Act of
1933, as amended (the "1933 ACT"), pursuant to the Registration Statement on
Form S-3 (File No. 333-67446) initially filed with the Securities and Exchange
Commission on August 14, 2001 and amended on September 19, 2001 (such
Registration Statement, which includes, pursuant to Rule 429 under the 1933 Act,
$275,000,000 of unsold common stock, preferred stock and debt securities of the
Company registered on Registration Statement No. 333-40652 previously filed by
the Company on Form S-3 and declared effective on August 3, 2000 and
$1,000,000,000 of unsold common stock, preferred stock and debt securities of
the Company and debt securities of Energy Finance guaranteed by the Company
registered on Registration Statement No. 333-57338 previously filed by the
Company and Energy Finance on Form S-3 and declared effective on April 19, 2001,
as the same may be amended or supplemented from time to time, is herein referred
to as the "REGISTRATION STATEMENT") with respect to (i) the Company's common
stock, par value $.001 per share (the "COMMON SECURITIES"), preferred stock, par
value $.001 per share (the "PREFERRED SECURITIES"), and unsecured debt
securities (the "Debt Securities"), (ii) unsecured debt securities of Energy
Finance (the "ENERGY FINANCE DEBT SECURITIES") fully and unconditionally
guaranteed by the Company, (iii) unsecured debt securities of Energy Finance II
(the "ENERGY FINANCE II DEBT SECURITIES" and, collectively with the Energy
Finance Debt Securities, the "DEBT SECURITIES") fully and unconditionally
guaranteed by the Company and (iv) the associated guarantees issued by the
Company with respect to the Energy Finance Debt Securities (the "ENERGY FINANCE
GUARANTEES") and the Energy Finance II Debt Securities (the "ENERGY FINANCE II
GUARANTEES" and, together with the Energy Finance Guarantees, the "GUARANTEES").
The Debt Securities are to be issued pursuant to an indenture (the "INDENTURE"),
dated as of August 10, 2000, between the Company and Wilmington Trust Company,
as Trustee (the "TRUSTEE"), which is incorporated by reference as an exhibit to
the Registration Statement. The Energy Finance Debt Securities are to be issued
pursuant to an indenture (the "ENERGY FINANCE INDENTURE"), dated as of April 25,
2001, between Energy Finance and the Trustee, which is incorporated by reference
as an exhibit to the Registration Statement. The Energy Finance II Debt
Securities are to be issued pursuant to an indenture (the "ENERGY FINANCE II
INDENTURE" and, collectively with the Energy Finance Indenture, the
"INDENTURES") in the form set forth as an exhibit to Amendment No.1 to the
Registration Statement, to be entered into by Energy Finance II and the Trustee.
The Energy Finance Guarantees are to be issued by the Company pursuant to a
Guarantee Agreement (the "ENERGY FINANCE GUARANTEE AGREEMENT"), dated as of
April 25, 2001, between the Company and the Trustee, which is incorporated by
reference as an exhibit to the Registration Statement. The Energy Finance II
Guarantees are to be issued by the Company pursuant to a Guarantee Agreement
(the "ENERGY FINANCE II GUARANTEE AGREEMENT" and, together with the Energy
Finance Guarantee Agreement, the "GUARANTEE AGREEMENTS") in the form set forth
as an exhibit to the Registration Statement, to be entered into by the Company
and the Trustee.

<PAGE>   2

September 19, 2001
Page 2

We have considered such questions of law and examined such statutes, public and
corporate records, certificates of governmental authorities and officers of
Energy Finance and Energy Finance II, including the corporate and organizational
documents of Energy Finance and Energy Finance II, minutes and records of the
corporate proceedings of the Energy Finance and Energy Finance II with respect
to the registration and proposed issuance of the above-referenced securities and
the Registration Statement and the exhibits thereto, and other documents and
conducted such other examinations as we have considered necessary or desirable
to enable us to express the opinions hereinafter set forth. In such examination
we have assumed the legal capacity of all individuals, the veracity of the
information contained in the documents, the genuineness of all signatures and
the authenticity of all documents submitted to us as originals and the
conformity to authentic original documents of all documents submitted to us as
certified, conformed, facsimile or photostatic copies of original documents.

In stating our opinions, we have also assumed the completeness, truth and
accuracy of all facts set forth in official public records and certificates and
other documents supplied by public officials.

We are solicitors qualified to practice law in the Province of Nova Scotia and
we express no opinion as to any laws or any matters governed by any laws other
than the laws of the Province of Nova Scotia and the federal laws of Canada
applicable therein.

As to various questions of fact material to our opinion, which we have not
verified independently, we have relied upon documents or certificates of
governmental authorities and the Company or its officers. In expressing the
opinion in paragraph (a) with respect to the valid existence of the Energy
Finance and Energy Finance II we have relied exclusively on Certificates of
Status issued under the Companies Act (Nova Scotia) dated on September 17, 2001,
copies of which have been provided to you.

On the basis of the foregoing we are of the opinion that:

(a)  Each of Energy Finance and Energy Finance II has been duly incorporated, is
     validly existing as an unlimited company in good standing under the laws of
     the jurisdiction of its incorporation.

(b)  Assuming that (i) each of the Indentures and the Energy Finance Debt
     Securities and the Energy Finance II Debt Securities is authorized,
     executed and delivered and constitutes an enforceable obligation of Energy
     Finance or Energy Finance II, as applicable, under the laws of the State of
     New York as provided therein, and (ii) the choice of the laws of the State
     of New York to govern the Energy Finance Debt Securities and the Energy
     Finance II Debt Securities is bona fide, the choice of the laws of the
     State of New York to govern the Energy Finance Debt Securities and the
     Energy Finance II Debt Securities will be upheld as a valid choice of law
     and, if specifically pleaded and proved, the laws of the State of New York
     will be applied by the courts of competent jurisdiction in the Province of
     Nova Scotia, except with respect to procedure, which will be governed by
     the laws of Nova Scotia; provided that such choice of law is not contrary
     to public policy, as that term is understood under Nova Scotia law. Those
     lawyers in our firm engaged in the preparation of this opinion have no
     knowledge that Nova Scotia public policy would be breached by application
     of laws of the State of New York to the Energy Finance Debt Securities and
     the Energy Finance II Debt Securities.

Consent is hereby given to the filing, as an exhibit to the Registration
Statement, of this letter. In giving such consent we do not admit that we come
within the category of persons whose consent is required under Section 7 of the
1933 Act.

Yours truly,

/s/ Stewart McKelvey Stirling Scales

STEWART MCKELVEY STIRLING SCALES

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-8.1
<SEQUENCE>7
<FILENAME>f74776a1ex8-1.txt
<DESCRIPTION>EXHIBIT 8.1
<TEXT>
<PAGE>   1
                                                                     Exhibit 8.1


                                                             September 19,  2001


Calpine Corporation
50 West San Fernando Street
San Jose, CA 95113

Calpine Canada Energy Finance ULC
Suite 800, Purdy's Wharf, Tower 1
1959 Upper Water Street
P.O. Box 997
Halifax, Nova Scotia B3J 3N2

Calpine Canada Energy Finance II ULC
Suite 800, Purdy's Wharf, Tower 1
1959 Upper Water Street
P.O. Box 997
Halifax, Nova Scotia B3J 3N2


Ladies and Gentlemen:

               We have acted as your United States tax counsel in connection
with the registration under the Securities Act of 1933, as amended (the
"Securities Act"), pursuant to the Shelf Registration Statement on Form S-3
(File No. 333-67446) initially filed with the Securities and Exchange
Commission, on August 14, 2001 and amended on September 19, 2001 (such
Registration Statement, as amended or supplemented from time to time, is herein
referred to as the "Registration Statement"), of (i) common stock, par value
$.001 per share (the "Common Securities"), preferred stock, par value $.001 per
share (the "Preferred Securities"), and unsecured debt securities (the "Debt
Securities") of Calpine Corporation (the "Company"), (ii) unsecured debt
securities of Calpine Canada Energy Finance ULC fully and unconditionally
guaranteed by the Company (the "Energy Finance Debt Securities"), (iii)
unsecured debt securities of Calpine Canada Energy Finance II ULC fully and
unconditionally guaranteed by the Company (the "Energy Finance II Debt
Securities") and (iv) the associated guarantees issued by the Company with
respect to the Energy Finance Debt Securities and the Energy Finance II Debt
Securities (collectively, the "Guarantees").

               We have reviewed such corporate records, certificates and other
documents, and such questions of law, as we have considered necessary or
appropriate for the purposes of this opinion. We have assumed that all
signatures are genuine, that all documents submitted to us as originals are
authentic and that all copies of documents submitted to us conform to the
originals.

               Based upon and subject to the foregoing, the statements in the
Registration Statement under the caption "Certain United States Federal Income
Tax Consequences" represent our opinion of the United States federal income tax
law matters referred to therein and

<PAGE>   2

such statements are (subject to the qualifications and other matters stated
therein) accurate in all material respects.

               The foregoing opinion is based on the Internal Revenue Code of
1986, as amended, Treasury Regulations promulgated thereunder, Internal Revenue
Services rulings and pronouncements, and judicial decisions now in effect, any
of which may be changed at any time with retroactive effect.

               We are members of the bar of the State of New York. We do not
express any opinion on any matters other than the United States federal income
tax law matters specifically referred to herein.

               We hereby consent to the filing of this opinion as Exhibit 8.1 to
the Registration Statement. In giving such consent, we do not thereby admit that
we are in the category of persons whose consent is required under Section 7 of
the Securities Act.

                                            Very truly yours,


                                            /s/ Covington & Burling

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-8.2
<SEQUENCE>8
<FILENAME>f74776a1ex8-2.txt
<DESCRIPTION>EXHIBIT 8.2
<TEXT>
<PAGE>   1

                                                                     Exhibit 8.2


September 19, 2001


Calpine Corporation
50 West San Fernando Street
San Jose, California  95113
USA

Calpine Canada Energy Finance ULC
Suite 800, Purdy's Wharf, Tower 1
1959 Upper Water Street
P.O. Box 997
Halifax, Nova Scotia  B3J 3N2

Calpine Canada Energy Finance II ULC
Suite 800, Purdy's Wharf, Tower 1
1959 Upper Water Street
P.O. Box 997
Halifax, Nova Scotia  B3J 3N2

Dear Sirs:

We have acted as Canadian tax counsel to Calpine Corporation ("Calpine"),
Calpine Canada Energy Finance ULC ("Energy Finance") and Calpine Canada Energy
Finance II ULC ("Energy Finance II") in connection with the proposed issuance by
Energy Finance and Energy Finance II of up to US $2,775,000,000, or the
equivalent thereof in other currencies, principal amount of senior debt
securities (the "Notes"), which are to be irrevocably and unconditionally
guaranteed by Calpine. As requested, we are rendering our opinion with respect
to a summary of certain Canadian federal income tax consequences to original
purchasers of the Notes that may be issued pursuant to the Registration
Statement on Form S-3 (the "Registration Statement"), of Calpine, Energy Finance
and Energy Finance II, which was initially filed with the United States
Securities and Exchange Commission (the "SEC") on August 14, 2001. For the
purpose of providing our opinion, we have reviewed, and our opinion is based
upon, the following documents:

        (a)     the Registration Statement;

        (b)     the amended Registration Statement (the "Amended Registration
                Statement") of Calpine, Energy Finance and Energy Finance II,
                which is to be filed with the SEC and with applicable Canadian
                securities regulators (the "Canadian

<PAGE>   2

                                      -2-

                Securities Regulators") on September 19, 2001, utilizing
                procedures provided under National Instrument 71-101 of the
                Canadian securities administrators;

        (c)     the trust indenture dated April 25, 2001 between Energy Finance
                and Wilmington Trust Company, and the guarantee agreement dated
                April 25, 2001 between Calpine and Wilmington Trust Company,
                which are to be utilized in connection with the issuance of
                Notes by Energy Finance; and

        (d)     the form of the trust indenture and the guarantee agreement
                which are to be utilized in connection with the issuance of
                Notes by Energy Finance II, each in the form set forth as an
                exhibit to the Registration Statement.

Our opinion is based on the current provisions of the Income Tax Act (Canada)
(the "Tax Act") and the Regulations thereunder (the "Regulations") in force on
the date hereof, specific proposals (the "Tax Proposals") to amend the Tax Act
or the Regulations publicly announced by the Minister of Finance prior to the
date hereof, and our understanding of the current published administrative and
assessing practices of the Canada Customs and Revenue Agency (the "CCRA"). Our
opinion is not exhaustive of all possible Canadian income tax consequences and,
except for the Tax Proposals, does not take into account or anticipate any
changes in law or changes in the administrative and assessing practices of the
CCRA, whether by legislative, governmental or judicial action, nor does it take
into account income tax laws or considerations of any province or territory of
Canada or any jurisdiction other than Canada. No assurance can be given that the
Tax Proposals will become law in their present form or at all. We assume that
the obligations contained in the operative documents which pertain to the Notes,
and which are contemplated by the Registration Statement, will be performed in
accordance with the terms described therein.

Based on the foregoing and subject to the assumptions, qualifications and
limitations contained therein, we hereby confirm our opinion contained in the
Amended Registration Statement under the caption "Certain Canadian Federal
Income Tax Considerations".

We have not considered, and render no opinion on, any aspect of law other than
as expressly set forth above.

<PAGE>   3

                                      -3-

We hereby consent to the filing of this opinion as Exhibit 8.2 to the Amended
Registration Statement. In giving such consent, we do not thereby admit that we
are in the category of persons whose consent is required under Section 7 of the
United States Securities Act of 1933, as amended.


                                            Yours truly,

                                            /s/ MCCARTHY TETRAULT LLP

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-12.1
<SEQUENCE>9
<FILENAME>f74776a1ex12-1.txt
<DESCRIPTION>EXHIBIT 12.1
<TEXT>
<PAGE>   1
                                                                    Exhibit 12.1


<TABLE>
<CAPTION>
                                                                                                                        SIX MONTHS
                                                                           YEAR ENDED DECEMBER 31,                    ENDED JUNE 30,
                                                        1996         1997          1998          1999        2000         2001
                                                        ----         ----          ----          ----        ----         ----
<S>                                                    <C>         <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                   14,023       38,281        36,106       140,454     618,298      384,556

Fixed Charges                                          50,374       78,039       109,021       165,354     349,006      331,928

Amortization of Capitalized Interest                        -            -           136           331         447          283

Distributed Income of Equity Investees                  1,274       21,042        27,717        43,318      29,979        2,459

Interest Capitalized                                        -       (6,200)       (7,000)      (47,300)   (206,973)    (219,623)

Minority interest in pretax income of subsidiaries
that have not incurred fixed charges                        -            -             -           265        (895)           -

Total Earnings                                         65,671      131,162       165,980       302,422     789,862      499,603

COMPUTATION OF FIXED CHARGES:
Interest expensed and capitalized                      46,996       72,987       102,732       150,548     281,656      282,879

Estimate of interest within rental expense              3,378        5,052         6,289        12,241      23,140       18,487

Distributions on HIGH TIDES                                 -            -             -         2,565      44,210       30,562

Total fixed charges                                    50,374       78,039       109,021       165,354     349,006      331,928

RATIO OF EARNINGS TO FIXED CHARGES                      1.30x        1.68x         1.52x         1.83x       2.26x        1.51x
</TABLE>






</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-23.1
<SEQUENCE>10
<FILENAME>f74776a1ex23-1.txt
<DESCRIPTION>EXHIBIT 23.1
<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 Amendment No. 1 to Registration Statement on Form S-3 (No.
333-67446) of our report dated April 19, 2001 and to all references to our Firm
included in this Amendment No. 1 to Registration Statement on Form S-3. Our
report dated March 14, 2001 included in Calpine Corporation's Form 10-K for the
year ended December 31, 2000 is no longer appropriate since restated financial
statements have been presented giving effect to a business combination
accounted for as a pooling-of-interests.

/s/ Arthur Andersen LLP

San Jose, California
September 17, 2001

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-23.5
<SEQUENCE>11
<FILENAME>f74776a1ex23-5.txt
<DESCRIPTION>EXHIBIT 23.5
<TEXT>
<PAGE>   1
                                                                    EXHIBIT 23.5

                           [ERNST & YOUNG LETTERHEAD]

                  CONSENT OF INDEPENDENT CHARTERED ACCOUNTANTS

We consent to the reference to our firm under the caption "Experts" and to the
incorporation by reference in Amendment No. 1 to the joint registration
statement (Form S-3 No. 333-67446) and related prospectus of Calpine
Corporation, Calpine Canada Energy Finance ULC and Calpine Canada Energy
Finance II ULC of our report dated February 16, 2001 with respect to the
consolidated financial statements of Encal Energy Ltd. included in the Current
Report on Form 8-K of Calpine Corporation dated September 10, 2001 filed
with the Securities and Exchange Commission in the United States.

                                                           /s/ Ernst & Young LLP

Calgary, Alberta
September 17, 2001

</TEXT>
</DOCUMENT>
</SUBMISSION>
