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<TEXT>
                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549
                          -----------------------------

                                   FORM 8-A/A

                                 AMENDMENT NO. 3

                FOR REGISTRATION OF CERTAIN CLASSES OF SECURITIES
                     PURSUANT TO SECTION 12(b) OR (g) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

                               CALPINE CORPORATION
--------------------------------------------------------------------------------
             (Exact Name of Registrant as Specified in Its Charter)

                     Delaware                                  77-0212977
-------------------------------------------------        -----------------------
     (State of Incorporation or Organization)                (IRS Employer
                                                           Identification No.)

50 West San Fernando Street, San Jose, California                 95113
-------------------------------------------------        -----------------------
    (Address of Principal Executive Offices)                   (Zip Code)

--------------------------------------------------------------------------------
  If this form relates to the              If this form relates to the
  registration of a class of securities    registration of a class of securities
  pursuant to Section 12(b) of the         pursuant to Section 12(g) of the
  Exchange Act and is effective            Exchange Act and is effective
  pursuant to General Instruction          pursuant to General Instruction
  A.(c), please check the following        A.(d), please check the following
  box.  (X)                                box.  ( )

Securities Act registration statement file number to which this form
relates:             N/A
            ----------------------
               (If applicable)

Securities to be registered pursuant to Section 12(b) of the Act:

                                                     Name of each exchange
         Title of each class                         on which each class is
         to be registered                            to be registered
         ----------------                            ----------------
      Preferred Stock Purchase                       The New York Stock Exchange

Securities to be registered pursuant to Section 12(g) of the Act:

                                      None
--------------------------------------------------------------------------------
                                (Title of Class)

<PAGE>


     On September 19, 2001,  Calpine  Corporation  (the  "Company")  amended its
Rights  Agreement,  dated June 5, 1997 between the Company and  EquiServe  Trust
Company,  N.A (as  successor  rights agent to First Chicago Trust Company of New
York,  the "Rights  Agent"),  as  reflected  in an Amended and  Restated  Rights
Agreement,  dated as of  September  19, 2001  between the Company and the Rights
Agent. The principal changes effected by the amendment are:

     o    An increase in the  Purchase  Price for each Unit of  Preferred  Stock
          from $80.00 to $140.00;

     o    The  substitution  of action taken by the Board of  Directors  for all
          actions previously required or permitted to be taken by the Continuing
          Directors;

     o    Limiting to 90 days the period following a Section 11(a)(ii) Event for
          which the Rights are exercisable; and

     o    Providing for a proportionate  adjustment to the Purchase Price in the
          event of a split or combination of the Common Stock.

The  description  of the  Rights,  as set  forth in the  Company's  Registration
Statement  on Form 8-A,  dated June 16, 1997,  as amended by an Amendment  No. 1
thereto,  dated June 16, 2001,  and an Amendment  No. 2 thereto,  dated June 23,
1997, is hereby further amended to read in its entirety as follows:

ITEM 1.  DESCRIPTION OF SECURITIES TO BE REGISTERED

     On June 5,  1997,  the  Board of  Directors  of  Calpine  Corporation  (the
"Company") declared a dividend of one preferred share purchase right (a "Right")
for each  outstanding  share of Common  Stock (the  "Common  Stock"),  par value
$0.001 per share, of the Company. The dividend was payable on June 18, 1997 (the
"Record  Date") to the  stockholders  of record on that date. In addition,  each
share of Common  Stock issued by the Company  subsequent  to the Record Date has
been  accompanied  by a Right.  Each Right  entitles  the  registered  holder to
purchase from the Company one  one-thousandth  of a share (a "Unit") of Series A
Junior Participating Preferred Stock, par value $0.001 per share (the "Preferred
Stock"),  of the Company at a price of $140.00 per Unit (the "Purchase  Price"),
subject to adjustment.  The description and terms of the Rights are set forth in
an Amended and Restated  Rights  Agreement,  dated as of September 19, 2001 (the
"Rights  Agreement")  between the Company and EquiServe Trust Company,  N.A., as
Rights Agent (the "Rights Agent").

     Until the  earlier to occur of (i) a public  announcement  that a person or
group of affiliated or associated persons (an "Acquiring  Person") have acquired
beneficial  ownership of 15% or more of the outstanding  Common Stock or (ii) 10
business days (or such later date as may be determined by action of the Board of
Directors of the Company  prior to such time as any Person  becomes an Acquiring
Person)  following the commencement of, or announcement of an intention to make,
a tender offer or exchange offer the  consummation  of which would result in the
beneficial  ownership  by a person  or group of 15% or more of such  outstanding
Common Stock (the earlier of such dates being called the  "Distribution  Date"),
the  Rights  will  be  evidenced,  with  respect  to  any of  the  Common  Stock
certificates outstanding as of the Record Date, by such Common Stock certificate
with a copy of the  Summary  of  Rights to  Purchase  Preferred  Stock  attached
thereto.

     The Rights Agreement provides that, until the Distribution Date, the Rights
will be transferred with and only with the Common Stock.  Until the Distribution
Date (or earlier  redemption  or  expiration  of the  Rights),  new Common Stock
certificates  issued  after the Record  Date,  upon  transfer or new issuance of
Common  Stock will  contain a notation  incorporating  the Rights  Agreement  by
reference.  Until the Distribution Date (or earlier  redemption or expiration of
the Rights),  the surrender for transfer of any  certificates  for Common Stock,
outstanding  as of the Record Date,  even without such notation or a copy of the
Summary of Rights to Purchase Preferred Stock being attached thereto,  will also
constitute  the  transfer  of  the  Rights  associated  with  the  Common  Stock
represented  by  such  certificate.   As  soon  as  practicable   following  the
Distribution  Date,  separate   certificates   evidencing  the  Rights  ("Rights
Certificates") will be mailed to holders of record of the Common Stock as of the
Close of Business on the Distribution Date and such separate Rights Certificates
alone will evidence the Rights.

     The Rights are not exercisable until the Distribution Date. The Rights will
expire at the close of business on June 18, 2007 (the "Final Expiration  Date"),
unless the Final  Expiration  Date is  extended or unless the Rights are earlier
redeemed or exchanged by the Company, in each case as described below.

     The Purchase  Price  payable and the number of Units of Preferred  Stock or
other securities or property issuable upon exercise of the Rights are subject to
adjustment  from time to time to  prevent  dilution  (i) in the event of a stock
dividend on, or a subdivision, combination or reclassification of, the Preferred
Stock, (ii) upon the grant to holders of the Units of Preferred Stock of certain
rights or warrants to subscribe  for or purchase  Units of Preferred  Stock at a
price, or securities convertible into Units of Preferred Stock with a conversion
price,  less than the then current market price of the Units of Preferred  Stock
or (iii) upon the  distribution  to holders of the Units of  Preferred  Stock of
evidences of indebtedness or assets  (excluding  regular periodic cash dividends
paid out of  earnings  or retained  earnings  or  dividends  payable in Units of
Preferred  Stock)  or of  subscription  rights or  warrants  (other  than  those
referred to above).

     The  Purchase  Price  payable  and the number of Units of  Preferred  Stock
issuable upon exercise of each Right are also subject to adjustment in the event
of  a  stock  dividend  on  the  Common  Stock  payable  in  Common  Stock  or a
subdivision,  consolidation or combination of the Common Stock occurring, in any
such case, prior to the Distribution Date.

     Units of Preferred Stock  purchasable  upon exercise of the Rights will not
be  redeemable.  Each Unit of  Preferred  Stock will be  entitled to a quarterly
dividend  equal to any dividends  declared per share of Common  Stock;  provided
that if no dividend is declared on the Common  Stock during such  quarter,  each
Unit of Preferred Stock will be entitled to a dividend of $.001. In the event of
liquidation, each Unit of Preferred Stock will be entitled to a payment equal to
the greater of $1.00 and any payment made per share of Common  Stock.  Each Unit
of Preferred  Stock will have one vote,  voting  together with the Common Stock.
Finally, in the event of any merger, consolidation or other transaction in which
shares of Common  Stock are  exchanged,  each Unit of  Preferred  Stock  will be
entitled to receive an amount  equal to the amount  received per share of Common
Stock. These rights are protected by customary antidilution provisions.

     Because of the nature of the dividend,  liquidation and voting rights,  the
value of the number of Units of Preferred Stock  purchasable  upon exercise of a
Right should approximate the value of one share of Common Stock.

     In the event  that,  after the Rights  become  exercisable,  the Company is
acquired in a merger or other business combination transaction with an Acquiring
Person or an affiliate  thereof,  or 50% or more of its  consolidated  assets or
earning power are sold to an Acquiring  Person or an affiliate  thereof,  proper
provision will be made so that each holder of a Right will  thereafter  have the
right to receive,  upon exercise  thereof at the then current  exercise price of
the Rights, that number of shares of common stock of the acquiring company which
at the time of such  transaction  will  have a market  value  of two  times  the
exercise price of the Rights.

     In the event that any person or group of affiliated  or associated  persons
becomes the beneficial owner of 15% or more of the outstanding  shares of Common
Stock, proper provision shall be made so that each holder of a Right, other than
Rights  beneficially  owned by the Acquiring  Person  (which will  thereafter be
void),  will  thereafter  have the right to receive upon exercise that number of
Units of Preferred Stock (or cash, shares of Common Stock or other securities or
property) having a market value of two times the exercise price of the Rights.

     At any time after the  acquisition  by a person or group of  affiliated  or
associated  persons of  beneficial  ownership of 15% or more of the  outstanding
shares of Common Stock and prior to the  acquisition  by such person or group of
50% or more of the outstanding Common Stock, the Company may exchange the Rights
(other than Rights  owned by such  person or group which have become  void),  in
whole or in part, at an exchange ratio of one Unit of Preferred  Stock per Right
(subject to adjustment).

     With  certain  exceptions,  no  adjustment  in the  Purchase  Price will be
required until  cumulative  adjustments  require an adjustment of at least 1% in
such  Purchase  Price.  No fractional  shares of Preferred  Stock will be issued
(other than fractions which are integral  multiples of one  one-thousandth  of a
share of  Preferred  Stock,  which  may,  at the  election  of the  Company,  be
evidenced by depositary  receipts)  and, in lieu thereof,  an adjustment in cash
will be made based on the market  price of the Units of  Preferred  Stock on the
last trading day prior to the date of exercise.

     At any  time  prior  to the  first  date  of  public  announcement  that an
Acquiring  Person has become  such,  the Board of  Directors  of the Company may
redeem  the  Rights in  whole,  but not in part,  at a price of $.01 per  Right,
subject to adjustment (the "Redemption Price"). The redemption of the rights may
be made  effective  at such time on such basis and with such  conditions  as the
Board of Directors in its sole  discretion may establish.  Immediately  upon any
redemption  of the Rights,  the right to exercise the Rights will  terminate and
the only right of the holders of Rights will be to receive the Redemption Price.
The Rights are also  redeemable  under other  circumstances  as specified in the
Rights Agreement.

     The terms of the Rights may be  amended  by the Board of  Directors  of the
Company without the consent of the holders of the Rights,  except that, from and
after a Distribution  Date, no such amendment may adversely affect the interests
of the holders of the Rights.

     Until a Right is  exercised,  the  holder  thereof,  as such,  will have no
rights as a stockholder of the Company, including, without limitation, the right
to vote or to receive dividends.

     The Rights  have  certain  anti-takeover  effects.  The  Rights  will cause
substantial  dilution to a person or group that  attempts to acquire the Company
on terms not approved by the Company's Board of Directors, except pursuant to an
offer conditioned on a substantial  number of Rights being acquired.  The Rights
should not interfere with any merger or other business  combination  approved by
the Board of  Directors  since the Rights may be  redeemed by the Company at the
Redemption Price prior to the occurrence of a Distribution Date.

     A copy of the  Rights  Agreement  has been filed  with the  Securities  and
Exchange Commission as an Exhibit to this Registration  Statement on Form 8-A/A.
A copy of the Rights  Agreement  is  available  free of charge from the Company.
This  summary  description  of the Rights does not purport to be complete and is
qualified in its entirety by reference to the Rights Agreement,  which is hereby
incorporated herein by reference.

ITEM 2.  EXHIBITS

     1.   Amended and Restated Rights Agreement, dated as of September 19, 2001,
          between  Calpine  Corporation  and EquiServe  Trust Company,  N.A., as
          Rights Agent

                                   SIGNATURE

     Pursuant to the  requirements of Section 12 of the Securities  Exchange Act
of 1934, the Registrant has duly caused this registration statement to be signed
on its behalf by the undersigned, thereunto duly authorized.

                               CALPINE CORPORATION

                              By: /s/ Ann B. Curtis
                                  -----------------
                                  Ann B. Curtis
                            Executive Vice President

Dated:  September 28, 2001

<PAGE>

                                  EXHIBIT INDEX

      Exhibit                        Description                         Page
      -------                        -----------                         ----

          1    Amended and Restated Rights Agreement, dated
               as of September 19, 2001, between Calpine Corporation
               and EquiServe Trust Company, N.A., as Rights Agent


<PAGE>


                               CALPINE CORPORATION
                                       AND
                          EQUISERVE TRUST COMPANY, N.A.
                                 (RIGHTS AGENT)
                      AMENDED AND RESTATED RIGHTS AGREEMENT
                         DATED AS OF SEPTEMBER 19, 2001



<PAGE>
                                TABLE OF CONTENTS
<TABLE>
<S>     <C>                                                                  <C>
Section 1.   Certain Definitions............................................  1

Section 2.   Appointment of Rights Agent....................................  5

Section 3.   Issue of Rights Certificates...................................  5

Section 4.   Form of Rights Certificates....................................  7

Section 5.   Countersignature and Registration.............................   7

Section 6.   Transfer, Split-Up, Combination and Exchange of Rights
             Certificates; Mutilated, Destroyed, Lost or Stolen Rights
             Certificates..................................................   8

Section 7.   Exercise of Rights; Purchase Price; Expiration Date
             of Rights.....................................................   9

Section 8.   Cancellation and Destruction of Rights Certificates...........  10

Section 9.   Reservation and Availability of Preferred Stock...............  11

Section 10.  Preferred Stock Record Date...................................  12

Section 11.  Adjustment of Purchase Price, Number of Shares or Number
             of Rights.....................................................  12

Section 12.  Certificate of Adjusted Purchase Price or Number of Shares....  20

Section 13.  Consolidation, Merger or Sale or Transfer of Assets
             or Earning Power..............................................  20

Section 14.  Fractional Rights and Fractional Shares.......................  23

Section 15.  Rights of Action..............................................  24

Section 16.  Agreement of Rights Holders...................................  24

Section 17.  Rights Certificate Holder Not Deemed a Stockholder............  25

Section 18.  Concerning the Rights Agent...................................  25

Section 19.  Merger or Consolidation or Change of Name of Rights Agent.....  26

Section 20.  Duties of Rights Agent........................................  26

Section 21.  Change of Rights Agent........................................  28

Section 22.  Issuance of New Rights Certificates...........................  29

Section 23.  Redemption and Termination....................................  29

Section 24.  Exchange......................................................  30

Section 25.  Notice of Certain Events......................................  31

Section 26.  Notices.......................................................  32

Section 27.  Supplements and Amendments....................................  32

Section 28.  Successors....................................................  33

Section 29.  Determinations and Actions by the Board of Directors..........  33

Section 30.  Benefits of This Agreement....................................  33

Section 31.  Severability..................................................  33

Section 32.  Governing Law.................................................  34

Section 33.  Counterparts..................................................  34

Section 34.  Descriptive Headings..........................................  34
</TABLE>

EXHIBITS

Exhibit A - Form  of  Certificate  of  Designation  of  Series  A  Participating
            Preferred Stock
Exhibit B - Form of Rights Certificate
Exhibit C - Summary of Rights to Purchase Shares of Preferred Stock


<PAGE>

                      AMENDED AND RESTATED RIGHTS AGREEMENT

          AMENDED AND RESTATED RIGHTS AGREEMENT, dated as of September 19, 2001,
between  Calpine  Corporation,  a  Delaware  corporation  (the  "Company"),  and
EquiServe Trust Company,  N.A. (as successor rights agent to First Chicago Trust
Company of New York) (the "Rights Agent").

          WHEREAS,  effective  June 5, 1997 (the  "Rights  Dividend  Declaration
Date"),  the Company and the Rights Agent entered into a Rights  Agreement  (the
"Original Rights Agreement") and the Board of Directors  authorized and declared
a distribution of one Right (each, a "Right") for each share of Common Stock (as
hereinafter  defined) of the Company outstanding as of the Close of Business (as
hereinafter  defined) on June 18, 1997 (the "Record Date"), each Right initially
representing the right to purchase one  one-thousandth  of a share (a "Unit") of
Preferred  Stock (as  hereinafter  defined)  upon the terms and  subject  to the
conditions  herein  set forth,  and has  further  authorized  and  directed  the
issuance  of one Right with  respect  to each  share of Common  Stock that shall
become outstanding  between the Record Date and the earliest of the Distribution
Date,  the  Redemption  Date or the  Final  Expiration  Date (as such  terms are
hereinafter defined); and

          WHEREAS,  the  Board of  Directors  has  approved  the  execution  and
delivery  of this  Amended  and  Restated  Rights  Agreement  for the purpose of
incorporating into the Original Rights Agreement certain amendments  thereto, as
further set forth herein,  that the Board of Directors  has  determined to be in
the best interests of the Company and its stockholders.

          NOW,  THEREFORE,  in  consideration  of the  premises  and the  mutual
agreements herein set forth, the parties hereby agree as follows:

          Section 1. Certain  Definitions.  For purposes of this Agreement,  the
following terms have the meanings indicated:

          (a) "Acquiring  Person"  shall  mean  any  Person  (as  such  term  is
hereinafter  defined) who or which,  together with all Affiliates and Associates
(as such terms are hereinafter  defined) of such Person, shall be the Beneficial
Owner  (as such term is  hereinafter  defined)  of 15% or more of the  shares of
Common Stock of the Company then outstanding, but shall not include the Company,
any  Subsidiary  (as such  term is  hereinafter  defined)  of the  Company,  any
employee  benefit plan of the Company or any  Subsidiary of the Company,  or any
entity  holding  shares of Common Stock for or pursuant to the terms of any such
plan. Notwithstanding the foregoing:

          (i) no Person shall become an  "Acquiring  Person" as the result of an
     acquisition of shares of Common Stock by the Company which, by reducing the
     number of shares outstanding,  increases the proportionate number of shares
     beneficially  owned by such  Person to 15% or more of the  shares of Common
     Stock of the Company then outstanding;  provided, however, that if a Person
     shall  become the  Beneficial  Owner of 15% or more of the shares of Common
     Stock of the Company then  outstanding by reason of share  purchases by the
     Company and shall,  after such share  purchases by the Company,  become the
     Beneficial  Owner of any additional  shares of Common Stock of the Company,
     then such Person shall be deemed to be an "Acquiring Person" hereunder; and

          (ii) if the Board of Directors of the Company determines in good faith
     that a Person who would  otherwise  be an  "Acquiring  Person"  (as defined
     pursuant to the foregoing provisions of this paragraph (a)) has become such
     inadvertently,  and such  Person  divests  as  promptly  as  practicable  a
     sufficient  number of shares of Common  Stock so that such Person  would no
     longer be an  "Acquiring  Person"  (as defined  pursuant  to the  foregoing
     provisions of this paragraph  (a)), then such Person shall not be deemed to
     be an "Acquiring Person" for any purpose of this Agreement.

          (b)  "Adjustment   Shares"  has  the  meaning  set  forth  in  Section
11(a)(ii).

          (c) "Affiliate"  and  "Associate"  shall have the respective  meanings
ascribed to such terms in Rule 12b-2 of the General Rules and Regulations  under
the Exchange Act (as such term is hereinafter defined).

          (d) A Person shall be deemed the  "Beneficial  Owner" of, and shall be
deemed to "beneficially own," any securities:

          (i) which such Person or any of such Person's Affiliates or Associates
     beneficially owns, directly or indirectly, for purposes of Section 13(d) of
     the Exchange Act and Rule 13d-3  thereunder (or any comparable or successor
     law or regulation); or

          (ii) which  such  Person  or  any  of  such  Person's   Affiliates  or
     Associates,  directly or indirectly,  has (A) the right to acquire (whether
     such right is  exercisable  immediately  or only after the passage of time)
     pursuant to any agreement,  arrangement or understanding (whether or not in
     writing,  other than customary agreements with and between underwriters and
     selling  group  members  with  respect to a bona fide  public  offering  of
     securities),  or upon the exercise of conversion  rights,  exchange rights,
     rights  (other  than  the  Rights),  warrants  or  options,  or  otherwise;
     provided,  however,  that a Person shall not be deemed the Beneficial Owner
     of, or to beneficially  own,  securities  tendered  pursuant to a tender or
     exchange  offer made by or on behalf of such Person or any of such Person's
     Affiliates or Associates  until such tendered  securities  are accepted for
     purchase or exchange;  or (B) the right to vote pursuant to any  agreement,
     arrangement or  understanding;  provided  further,  however,  that a Person
     shall not be deemed the "Beneficial  Owner" of, or to  "beneficially  own,"
     any  security  under this  subparagraph  (ii) as a result of an  agreement,
     arrangement  or  understanding  to vote such  security  if such  agreement,
     arrangement  or  understanding:  (x) arises  solely from a revocable  proxy
     given in response to a public proxy or consent  solicitation  made pursuant
     to, and in accordance  with, the applicable  provisions of the Exchange Act
     and the Exchange Act Regulations,  and (y) is not reportable by such Person
     on Schedule  13D under the  Exchange  Act (or any  comparable  or successor
     report); or

          (iii) which are  beneficially  owned,  directly or indirectly,  by any
     other Person (or any Affiliate or Associate thereof) with which such Person
     (or any of such  Person's  Affiliates  or  Associates)  has any  agreement,
     arrangement  or  understanding,  (whether  or not in  writing,  other  than
     customary  agreements  with and  between  underwriters  and  selling  group
     members with respect to a bona fide public offering of securities), for the
     purpose of acquiring, holding, voting (except to the extent contemplated by
     the proviso to subparagraph  (ii)(B) of this paragraph (d)) or disposing of
     any securities of the Company; provided,  however, that in no case shall an
     officer or director of the  Company be deemed (A) the  Beneficial  Owner of
     any  securities  beneficially  owned by another  officer or director of the
     Company  solely by reason of actions  undertaken  by such  persons in their
     capacity  as  officers or  directors  of the Company or (B) the  Beneficial
     Owner of securities  held of record by the trustee of any employee  benefit
     plan of the Company or any Subsidiary of the Company for the benefit of any
     employee of the Company or any  Subsidiary  of the Company,  other than the
     officer  or  director,  by reason of any  influence  that such  officer  or
     director may have over the voting of the securities held in the plan;

Notwithstanding   anything  in  this   definition  of  "Beneficial   Owner"  and
"beneficially  own" to the contrary,  the phrase "then  outstanding,"  when used
with  reference to a Person who is the  Beneficial  Owner of  securities  of the
Company,  shall mean the number of such  securities  then issued and outstanding
together  with the  number  of such  securities  not then  actually  issued  and
outstanding which such Person would be deemed to beneficially own hereunder.

          (e) "Business Day" shall mean any day other than a Saturday, a Sunday,
or a day on which banking  institutions  in the State of California or the state
in which the principal  office of the Rights Agent is located are  authorized or
obligated by law or executive order to close.

          (f) "Close of  Business"  on  any given  date  shall  mean 5:00  P.M.,
California  time, on such date;  provided,  however,  that if such date is not a
Business Day it shall mean 5:00 P.M.,  California  time, on the next  succeeding
Business Day.

          (g) "Common  Stock" when used with reference to the Company shall mean
the shares of common stock,  par value $0.001,  of the Company.  "Common  Stock"
when used with  reference  to any Person  other than the Company  shall mean the
capital stock (or other equity  interest) with the greatest voting power of such
other  Person or, if such other Person is a Subsidiary  of another  Person,  the
Person or Persons which ultimately control such first-mentioned Person.

          (h) "Company" shall have the meaning set forth in the recitals to this
Agreement.

          (i) "current per share market  price" shall have the meaning set forth
in Section 11(d)(i) hereof.

          (j) "Current  Value"  shall  have  the  meaning  set forth in  Section
11(a)(iii) hereof.

          (k) "Distribution  Date"  shall  have the meaning set forth in Section
3(a) hereof.

          (l) "equivalent  preferred shares" shall have the meaning set forth in
Section 11(b) hereof.

          (m) "Exchange Act" shall mean the Securities  Exchange Act of 1934, as
amended.

          (n) "Exchange  Act  Regulations"  shall  mean  the  General  Rules and
Regulations under the Exchange Act.

          (o) "Expiration Date" shall  have the  meaning  set forth in Section 7
hereof.

          (p) "Final  Expiration  Date"  shall  have the  meaning  set forth in
Section 7(a) hereof.

          (q) "NASDAQ" shall have the meaning set forth in Section 11(d) hereof.

          (r) "Person"  shall mean any  individual,  firm,  corporation or other
entity, and shall include any successor (by merger or otherwise) of such entity.

          (s) "Preferred  Stock" shall mean shares of Series A Preferred  Stock,
par value $0.001,  of the Company having the rights and preferences set forth in
the Form of Certificate of Designation attached to this Agreement as Exhibit A.

          (t) "preferred stock  equivalents" shall have the meaning set forth in
Section 11(a)(iii) hereof.

          (u) "Purchase  Price" shall have the meaning set forth in Section 7(b)
hereof.

          (v) "Record  Date" shall have the meaning set forth in the recitals to
this Agreement.

          (w) "Redemption Date" shall have the meaning set forth in Section 7(a)
hereof.

          (x) "Redemption  Price"  shall  have the  meaning set forth in Section
23(a) hereof.

          (y) "Right"  shall have the meaning set forth in the  recitals to this
Agreement.

          (z) "Rights Agent" shall have the meaning set forth in the recitals to
this Agreement.

          (aa) "Rights  Certificate" shall have the meaning set forth in Section
3(a) hereof.

          (bb) "Rights  Dividend  Declaration  Date" shall  have the meaning set
forth in the recitals to this Agreement.

          (cc) "Section  11(a)(ii)  Event"  shall  mean any event  described  in
Section 11(a)(ii)(A), (B) or (C) hereof.

          (dd) "Section 11(a)(ii) Trigger Date" shall have the meaning set forth
in Section 11(a)(iii) hereof.

          (ee) "Section 13 Event" shall mean any event  described in clause (i),
(ii) or (iii) of Section 13(a) hereof.

          (ff) "Section  24(a)  Exchange  Ratio"  has the  meaning  set forth in
Section 24(a) hereof.

          (gg) "Securities  Act"  shall  mean  the  Securities  Act of 1933,  as
amended.

          (hh) "Shares  Acquisition  Date"  shall  mean the first date of public
announcement  (which,  for purposes of this definition,  shall include,  without
limitation, a report filed pursuant to Section 13(d) of the Exchange Act) by the
Company or an Acquiring Person that an Acquiring Person has become such.

          (ii) "Spread"  shall have the meaning set forth in Section  11(a)(iii)
hereof.

          (jj) "Subsidiary"  of  any Person shall mean any  corporation or other
entity of which a majority of the voting power of the voting  equity  securities
or equity interest is owned, directly or indirectly, by such Person.

          (kk) "Trading  Day"  shall  have  the  meaning  set  forth in  Section
11(d)(i) hereof.

          (ll) "Triggering  Event" shall mean any Section 11(a)(ii) Event or any
Section 13 Event.

          Section 2.  Appointment of Rights Agent.  The Company hereby  appoints
the Rights  Agent to act as agent for the Company in  accordance  with the terms
and conditions hereof, and the Rights Agent hereby accepts such appointment. The
Company  may from  time to time  appoint  such  co-Rights  Agents as it may deem
necessary or desirable  upon ten days prior written  notice to the Rights Agent.
The  Rights  Agent  shall  have no duty to  supervise,  and shall in no event be
liable for, the acts or omissions of any such co-Rights Agents.

          Section 3. Issue of Rights Certificates.  (a) Until the earlier of (i)
the  Close of  Business  on the  Shares  Acquisition  Date and (ii) the Close of
Business on the tenth  Business Day (or such later date as may be  determined by
action of the  Company's  Board of  Directors  prior to such time as any  Person
becomes an Acquiring  Person and of which the Company will give the Rights Agent
prompt  written  notice)  after the date that a tender or exchange  offer by any
Person  (other than the Company,  any  Subsidiary  of the Company,  any employee
benefit  plan of the Company or of any  Subsidiary  of the Company or any entity
holding shares of Common Stock for or pursuant to the terms of any such plan) is
first  published  or sent or given  within the  meaning of Rule  14d-4(a) of the
Exchange  Act  Regulations  or  any  successor  rule  or  of  the  first  public
announcement  of the  intention  of any  Person  (other  than the  Company,  any
Subsidiary  of the Company,  any employee  benefit plan of the Company or of any
Subsidiary  of the Company or any entity  holding  shares of Common Stock for or
pursuant to the terms of any such plan) to commence, a tender or exchange offer,
if upon consummation thereof such Person would be the Beneficial Owner of 15% or
more of the shares of Common Stock then outstanding (the earlier of (i) and (ii)
above being the "Distribution  Date"), (x) the Rights will be evidenced (subject
to the  provisions  of Section  3(b) hereof) by the  certificates  for shares of
Common Stock registered in the names of the holders thereof (which  certificates
shall  also be deemed  to be Rights  Certificates)  and not by  separate  Rights
Certificates,  and  (y)  the  right  to  receive  Rights  Certificates  will  be
transferable  only in connection with the transfer of shares of Common Stock. As
soon as  practicable  after the  Distribution  Date, the Company will notify the
Rights Agent thereof and the Company will prepare and execute,  the Rights Agent
will countersign,  and the Company will send or cause to be sent (and the Rights
Agent will, if requested, send) by first-class,  insured,  postage-prepaid mail,
to each record  holder of shares of Common  Stock as of the Close of Business on
the Distribution Date, at the address of such holder shown on the records of the
Company, a Rights Certificate,  in substantially the form of Exhibit B hereto (a
"Rights  Certificate"),  evidencing  one Right for each share of Common Stock so
held. As of the  Distribution  Date, the Rights will be evidenced solely by such
Rights Certificates.

          (b) On the Record  Date,  or as soon as  practicable  thereafter,  the
Company  sent a copy of a Summary  of Rights to  Purchase  Preferred  Stock,  by
first-class,  postage-prepaid  mail,  to each record  holder of shares of Common
Stock as of the Close of  Business  on the Record  Date,  at the address of such
holder  shown on the  records of the  Company.  A Summary of Rights to  Purchase
Preferred  Stock,  as in effect on the date  hereof,  is set forth in  Exhibit C
hereto.  With respect to certificates for shares of Common Stock  outstanding as
of the Record Date, until the Distribution Date, the Rights will be evidenced by
such certificates registered in the names of the holders thereof together with a
copy of the  Summary of Rights to Purchase  Preferred  Stock  attached  thereto.
Until the Distribution Date (or the Expiration Date), the surrender for transfer
of any  certificate  for shares of Common Stock  outstanding on the Record Date,
with or without a copy of the  Summary  of Rights to  Purchase  Preferred  Stock
attached  thereto,  shall also constitute the transfer of the Rights  associated
with the shares of Common Stock represented thereby.

          (c) Certificates  for shares of Common Stock which become  outstanding
(including, without limitation, reacquired shares of Common Stock referred to in
the last sentence of this  paragraph (c)) after the date hereof but prior to the
earlier of the  Distribution  Date and the Expiration  Date shall have impressed
on, printed on, written on or otherwise affixed to them the following legend:

          This certificate also evidences and entitles the holder hereof to
          certain rights as set forth in a Rights Agreement between Calpine
          Corporation and EquiServe Trust Company,  N.A.,  dated as of June
          5, 1997,  as amended  and  restated  on  September  19, 2001 (the
          "Rights  Agreement"),  the terms of which are hereby incorporated
          herein  by  reference  and a copy  of  which  is on  file  at the
          principal executive offices of Calpine Corporation. Under certain
          circumstances,  as set forth in the Rights Agreement, such Rights
          will be evidenced by separate  certificates and will no longer be
          evidenced by this certificate.  Calpine  Corporation will mail to
          the holder of this  certificate  a copy of the  Rights  Agreement
          without charge after receipt of a written request therefor. Under
          certain  circumstances,  as set  forth in the  Rights  Agreement,
          Rights  issued to any Person who becomes an Acquiring  Person (as
          defined in the Rights Agreement), whether currently held by or on
          behalf of such  person or by any  subsequent  holder,  may become
          null and void.

With respect to such  certificates  containing the foregoing  legend,  until the
earlier of the Distribution  Date and the Expiration Date, the Rights associated
with the  shares of  Common  Stock  represented  by such  certificates  shall be
evidenced by such certificates alone, and the surrender for transfer of any such
certificate shall also constitute the transfer of the Rights associated with the
shares of Common  Stock  represented  thereby.  In the  event  that the  Company
purchases or acquires any shares of Common Stock after the Record Date but prior
to the Distribution Date, any Rights associated with such shares of Common Stock
shall be deemed  cancelled and retired so that the Company shall not be entitled
to exercise any Rights  associated  with the shares of Common Stock which are no
longer outstanding.

          Section 4. Form of Rights Certificates.  (a) The  Rights  Certificates
(and  the  forms  of  election  to  purchase  Units of  Preferred  Stock  and of
assignment to be printed on the reverse thereof) shall be substantially the same
as Exhibit B hereto and may have such marks of identification or designation and
such legends,  summaries or endorsements printed thereon as the Company may deem
appropriate and as are not  inconsistent  with the provisions of this Agreement,
or as may be  required  to comply  with any  applicable  law or with any rule or
regulation  made  pursuant  thereto or with any rule or  regulation of any stock
exchange or  transaction  reporting  system on which the Rights may from time to
time be listed, or to conform to usage.  Subject to the provisions of Section 11
and Section 22 hereof, the Rights Certificates shall entitle the holders thereof
to purchase the number of Units of Preferred Stock as shall be set forth therein
at the price per Unit of Preferred  Stock set forth  therein,  but the number of
such  Units of  Preferred  Stock and the  Purchase  Price  shall be  subject  to
adjustment as provided herein.

          (b) Any Rights  Certificate  issued  pursuant  hereto that  represents
Rights  beneficially  owned by:  (i) an  Acquiring  Person or any  Associate  or
Affiliate of an Acquiring  Person,  (ii) a transferee of an Acquiring Person (or
of any such Associate or Affiliate) who becomes a transferee after the Acquiring
Person becomes such or (iii) a transferee of an Acquiring Person (or of any such
Associate or Affiliate) who becomes a transferee  prior to or concurrently  with
the Acquiring  Person  becoming such and receives such Rights pursuant to either
(A) a transfer (whether or not for  consideration)  from the Acquiring Person to
holders of equity  interests in such Acquiring Person or to any Person with whom
such Acquiring Person has any continuing agreement, arrangement or understanding
regarding the transferred  Rights or (B) a transfer which the Board of Directors
of the Company has determined is part of a plan,  arrangement  or  understanding
which has as a primary purpose or effect  avoidance of Section 7(e) hereof shall
contain (to the extent feasible) the following legend:

          The Rights  represented  by this Rights  Certificate  are or were
          beneficially  owned by a Person  who was or became  an  Acquiring
          Person or an Affiliate  or  Associate of an Acquiring  Person (as
          such terms are defined in the Rights  Agreement  between  Calpine
          Corporation and EquiServe  Trust Company,  N.A., as Rights Agent,
          dated as of June 5, 1997,  as amended and  restated on  September
          19,  2001 (the  "Rights  Agreement")).  Accordingly,  this Rights
          Certificate and the Rights represented hereby may become null and
          void in the circumstances specified in Section 7(e) of the Rights
          Agreement.

          Section  5. Countersignature   and   Registration.    (a)  The  Rights
Certificates  shall be executed on behalf of the Company by its  Chairman of the
Board, its President, any of its Senior Vice Presidents, Vice Presidents, or its
Treasurer or Chief Financial Officer, either manually or by facsimile signature,
shall have affixed thereto the Company's seal or a facsimile thereof,  and shall
be attested by the  Secretary or an Assistant  Secretary of the Company,  either
manually or by facsimile  signature.  The Rights  Certificates shall be manually
countersigned  by the Rights Agent and shall not be valid for any purpose unless
countersigned.  In case any  officer of the Company who shall have signed any of
the Rights  Certificates  shall cease to be such  officer of the Company  before
countersignature  by the Rights  Agent and issuance and delivery by the Company,
such Rights Certificates, nevertheless, may be countersigned by the Rights Agent
and issued and delivered by the Company with the same force and effect as though
the person who signed such Rights Certificates had not ceased to be such officer
of the  Company;  and any  Rights  Certificate  may be  signed  on behalf of the
Company by any person who, at the actual  date of the  execution  of such Rights
Certificate,  shall be a proper  officer  of the  Company  to sign  such  Rights
Certificate,  although at the date of the execution of this Rights Agreement any
such person was not such an officer.

          (b) Following  the  Distribution  Date,  the Rights Agent will keep or
cause  to be  kept,  at its  office  designated  for  such  purpose,  books  for
registration  and transfer of the Rights  Certificates  issued  hereunder.  Such
books shall show the names and addresses of the respective holders of the Rights
Certificates,  the number of Rights  evidenced on its face by each of the Rights
Certificates and the date of each of the Rights Certificates.

          Section 6. Transfer,  Split-Up,  Combination  and  Exchange  of Rights
Certificates;  Mutilated,  Destroyed,  Lost or Stolen Rights  Certificates.  (a)
Subject to the  provisions  of Sections  4(b),  7(e) and 14 hereof,  at any time
after the Close of Business  on the  Distribution  Date,  and at or prior to the
Close of Business  on the  Expiration  Date,  any Rights  Certificate  or Rights
Certificates  may be  transferred,  split up,  combined or exchanged for another
Rights  Certificate or Rights  Certificates,  entitling the registered holder to
purchase a like number of Units of Preferred  Stock (or,  following a Triggering
Event, other securities, cash or other assets, as the case may be) as the Rights
Certificate  or Rights  Certificates  surrendered  then  entitled such holder to
purchase.  Any  registered  holder  desiring to transfer,  split up,  combine or
exchange any Rights  Certificate or Rights  Certificates shall make such request
in  writing  delivered  to the  Rights  Agent,  and shall  surrender  the Rights
Certificate or Rights  Certificates  to be  transferred,  split up,  combined or
exchanged at the office of the Rights Agent designated for such purpose. Neither
the  Rights  Agent  nor the  Company  shall  be  obligated  to take  any  action
whatsoever  with  respect  to  the  transfer  of  any  such  surrendered  Rights
Certificate  until the  registered  holder shall have  completed  and signed the
certificate  contained  in the form of  assignment  on the reverse  side of such
Rights  Certificate  and shall have  provided  such  additional  evidence of the
identity of the Beneficial Owner (or former  Beneficial  Owner) or Affiliates or
Associates thereof as the Company shall reasonably request. Thereupon the Rights
Agent  shall,  subject to Sections  4(b),  7(e) and 14 hereof,  countersign  and
deliver  to  the  person  entitled  thereto  a  Rights   Certificate  or  Rights
Certificates,  as the case may be, as so  requested.  The  Company  may  require
payment of a sum sufficient to cover any tax or governmental  charge that may be
imposed in connection  with any transfer,  split up,  combination or exchange of
Rights Certificates.

          (b) Upon  receipt  by the  Company  and the Rights  Agent of  evidence
reasonably satisfactory to them of the loss, theft, destruction or mutilation of
a Rights Certificate,  and, in case of loss, theft or destruction,  of indemnity
or security  reasonably  satisfactory  to them,  and, at the Company's  request,
reimbursement  to the Company and the Rights  Agent of all  reasonable  expenses
incidental  thereto,  and upon surrender to the Rights Agent and cancellation of
the Rights  Certificate  if  mutilated,  the Company will make and deliver a new
Rights  Certificate  of like  tenor to the  Rights  Agent  for  delivery  to the
registered holder in lieu of the Rights Certificate so lost,  stolen,  destroyed
or mutilated.

          Section 7.  Exercise of Rights;  Purchase  Price;  Expiration  Date of
Rights. (a) Except as provided in Sections 23(c) and 7(e), the registered holder
of any Rights  Certificate may exercise the Rights evidenced  thereby (except as
otherwise  provided  herein)  in  whole  or  in  part  at  any  time  after  the
Distribution  Date upon  surrender of the Rights  Certificate,  with the form of
election  to  purchase  and  certification  on the  reverse  side  thereof  duly
executed,  to the Rights Agent at the office of the Rights Agent  designated for
such  purpose,  together  with  payment of the  Purchase  Price for each Unit of
Preferred  Stock  as to  which  the  Rights  are  exercised,  at or prior to the
earliest  of (i) the Close of Business  on the tenth  anniversary  of the Rights
Dividend  Declaration Date (the "Final Expiration Date"), (ii) the time at which
the Rights are  redeemed  as  provided  in  Section 23 hereof  (the  "Redemption
Date"),  or (iii) the time at which such  Rights are  exchanged  as  provided in
Section 24 hereof  (the  earlier of (i),  (ii) and (iii)  being the  "Expiration
Date").

          (b) The Purchase  Price for each Unit of Preferred  Stock  pursuant to
the  exercise of a Right is $140.00 as of the date  hereof,  shall be subject to
adjustment  from time to time as provided in Sections 11 and 13 hereof and shall
be payable in lawful money of the United  States of America in  accordance  with
paragraph (c) below.

          (c) Upon  receipt  of a Rights  Certificate  representing  exercisable
Rights,  with the form of election to purchase  duly  executed,  accompanied  by
payment of the  Purchase  Price for the number of Units of  Preferred  Stock (or
other securities or property,  as the case may be) to be purchased and an amount
equal to any  applicable  transfer tax required to be paid by the holder of such
Rights  Certificate in accordance with Section 9 hereof in cash, or by certified
check or cashier's  check payable to the order of the Company,  the Rights Agent
shall,  subject to Section 20(k) hereof,  thereupon promptly (i) (A) requisition
from any transfer agent of the Preferred Stock (or make available, if the Rights
Agent  is  the  transfer  agent  for  the  Preferred  Stock)  a  certificate  or
certificates for the number of Units of Preferred Stock to be purchased, and the
Company hereby irrevocably authorizes its transfer agent to comply with all such
requests,  or (B) if the Company  shall have elected to deposit the total number
of Units of Preferred Stock issuable upon exercise of the Rights  hereunder with
a depositary agent,  requisition from the depositary agent a depositary  receipt
or depositary  receipts  representing such number of Units of Preferred Stock as
are to be purchased (in which case certificates for the Units of Preferred Stock
represented by such receipt or receipts shall be deposited by the transfer agent
with the depositary  agent), and the Company hereby directs the depositary agent
to comply with such request, (ii) when appropriate, requisition from the Company
the  amount  of cash to be paid in lieu of  issuance  of  fractional  shares  in
accordance with Section 14 hereof,  (iii) after receipt of such  certificates or
depositary receipts,  cause the same to be delivered to or upon the order of the
registered holder of such Rights  Certificate,  registered in such name or names
as may be  designated  by such holder and (iv) when  appropriate,  after receipt
thereof, deliver such cash to or upon the order of the registered holder of such
Rights  Certificate.  The payment of the  Purchase  Price (as such amount may be
reduced  (including to zero) pursuant to Section  11(a)(iii) hereof) may be made
in cash or by  certified  bank check or bank  draft  payable to the order of the
Company. In the event that the Company is obligated to issue other securities of
the Company, pay cash and/or distribute other property pursuant to Section 11(a)
hereof,  the Company  will make all  arrangements  necessary  so that such other
securities,  cash and/or other  property are available for  distribution  by the
Rights Agent, if and when appropriate.

          (d) In case the  registered  holder of any  Rights  Certificate  shall
exercise less than all the Rights evidenced  thereby,  a new Rights  Certificate
evidencing  a number  of Rights  equivalent  to the  number of Rights  remaining
unexercised shall be issued by the Rights Agent to the registered holder of such
Rights  Certificate  or to such  registered  holder's duly  authorized  assigns,
subject to the provisions of Section 14 hereof.

          (e) Notwithstanding  anything in this Agreement to the contrary,  from
and after the first occurrence of a Triggering  Event,  any Rights  beneficially
owned by (i) an  Acquiring  Person or an  Associate or Affiliate of an Acquiring
Person,  (ii) a transferee of an Acquiring  Person (or of any such  Associate or
Affiliate)  who becomes a transferee  after the Acquiring  Person  becomes such,
(iii)  a  transferee  of an  Acquiring  Person  (or of  any  such  Associate  or
Affiliate) who becomes a transferee prior to or concurrently  with the Acquiring
Person  becoming such and receives such Rights pursuant to either (A) a transfer
(whether  or not for  consideration)  from the  Acquiring  Person to  holders of
equity  interests  in such  Acquiring  Person  or to any  Person  with  whom the
Acquiring  Person has any continuing  agreement,  arrangement  or  understanding
regarding the transferred  Rights or (B) a transfer which the Board of Directors
of the Company has determined is part of a plan,  arrangement  or  understanding
which has as a primary  purpose or effect the  avoidance of this Section 7(e) or
(iv) any  subsequent  transferee  shall become null and void without any further
action  and no holder of such  Rights  shall  have any  rights  whatsoever  with
respect  to such  Rights,  whether  under any  provision  of this  Agreement  or
otherwise.  The  Company  shall use all  reasonable  efforts to ensure  that the
provisions of this Section 7(e) and Section 4(b) hereof are complied  with,  but
shall have no  liability  to any holder of Rights  Certificates  or to any other
Person as a result of its failure to make any determinations  with respect to an
Acquiring  Person or any of such Acquiring  Person's  Affiliates,  Associates or
transferees hereunder.

          (f)  Notwithstanding  anything  in  this  Agreement  to the  contrary,
neither the Rights Agent nor the Company  shall be  obligated  to undertake  any
action with respect to a registered  holder upon the occurrence of any purported
exercise as set forth in this Section 7 unless such registered holder shall have
(i)  completed and signed the  certificate  contained in the form of election to
purchase set forth on the reverse side of the Rights Certificate surrendered for
such exercise and (ii) provided such additional  evidence of the identity of the
Beneficial  Owner (or  former  Beneficial  Owner) or  Affiliates  or  Associates
thereof as the Company shall reasonably request.

          Section 8. Cancellation  and Destruction of Rights  Certificates.  All
Rights Certificates surrendered for the purpose of exercise, transfer, split up,
combination  or exchange  shall,  if surrendered to the Company or to any of its
agents,  be delivered to the Rights Agent for cancellation or in cancelled form,
or, if surrendered to the Rights Agent,  shall be cancelled by it, and no Rights
Certificates  shall be issued in lieu thereof  except as expressly  permitted by
any of the provisions of this Rights Agreement. The Company shall deliver to the
Rights  Agent for  cancellation  and  retirement,  and the Rights Agent shall so
cancel and retire,  any other  Rights  Certificate  purchased or acquired by the
Company otherwise than upon the exercise thereof. The Rights Agent shall deliver
all  cancelled  Rights  Certificates  to the Company,  or shall,  at the written
request of the Company, destroy such cancelled Rights Certificates,  and in such
case shall deliver a certificate of destruction thereof to the Company.

          Section 9. Reservation  and  Availability of Preferred  Stock. (a) The
Company  covenants  and agrees that it will use its best  efforts to cause to be
reserved  and kept  available  out of and to the  extent of its  authorized  and
unissued Units of Preferred  Stock not reserved for another purpose that will be
sufficient to permit the exercise in full of all  outstanding  Rights.  Upon the
occurrence  of any events  resulting in an increase in the  aggregate  number of
shares of Preferred Stock (or other equity  securities of the Company)  issuable
upon  exercise of all  outstanding  Rights above the number then  reserved,  the
Company shall make appropriate increases in the number of shares so reserved.

          (b) If the Units of Preferred  Stock to be issued and  delivered  upon
the  exercise  of the  Rights are at any time  listed on a  national  securities
exchange or included for  quotation on any  transaction  reporting  system,  the
Company  shall during the period from the  Distribution  Date to the  Expiration
Date use its best efforts to cause all shares  reserved for such  issuance to be
listed on such  exchange  or  included  for  quotation  on any such  transaction
reporting system upon official notice of issuance upon such exercise.

          (c) The  Company  shall use its best  efforts to (i) file,  as soon as
practicable  following the earliest date after the first occurrence of a Section
11(a)(ii) Event in which the  consideration  to be delivered by the Company upon
exercise of the Rights has been determined in accordance with Section 11(a)(iii)
hereof, or as soon as is required by law following the Distribution Date, as the
case may be, a registration  statement  under the Securities Act with respect to
the securities  purchasable upon exercise of the Rights on an appropriate  form,
(ii)  cause  such  registration   statement  to  become  effective  as  soon  as
practicable  after such filing and (iii) cause such  registration  statement  to
remain effective (with a prospectus at all times meeting the requirements of the
Securities  Act) until the earlier of (A) the date as of which the Rights are no
longer  exercisable for such securities and (B) the Expiration Date. The Company
will also take such action as may be appropriate  under, or to ensure compliance
with, the securities or "blue sky" laws of the various states in connection with
the  exercisability  of  the  Rights.  Notwithstanding  any  provision  of  this
Agreement  to  the  contrary,  the  Rights  shall  not  be  exercisable  in  any
jurisdiction unless the requisite  qualification in such jurisdiction shall have
been  obtained  or an  exemption  therefrom  shall  be  available  and  until  a
registration statement has been declared effective.

          (d) The Company covenants and agrees that it will take all such action
as may be necessary to ensure that all Units of Preferred Stock (and,  following
the occurrence of a Triggering Event, any other securities that may be delivered
upon exercise of Rights) shall, at the time of delivery of the  certificates for
such Units of Preferred  Stock  (subject to payment of the Purchase  Price),  be
duly and validly authorized and issued and fully paid and non-assessable.

          (e) The Company further covenants and agrees that it will pay when due
and payable any and all federal and state  transfer  taxes and charges which may
be payable in respect of the issuance or delivery of the Rights  Certificates or
of any Units of Preferred  Stock upon the exercise of Rights.  The Company shall
not,  however,  be  required  to pay any  transfer  tax which may be  payable in
respect of any  transfer or delivery of Rights  Certificates  to a person  other
than, or the issuance or delivery of  certificates  or  depositary  receipts for
Units of Preferred Stock in a name other than that of, the registered  holder of
the Rights Certificate evidencing Rights surrendered for exercise or to issue or
to deliver any certificates or depositary  receipts for Units of Preferred Stock
upon the  exercise  of any  Rights  until any such tax shall have been paid (any
such tax being payable by the holder of such Rights  Certificate  at the time of
surrender)  or  until  it  has  been  established  to the  Company's  reasonable
satisfaction that no such tax is due.

          Section 10. Preferred Stock Record Date. Each person in whose name any
certificate  for Units of Preferred  Stock (or,  following  the  occurrence of a
Triggering Event,  other securities) is issued upon the exercise of Rights shall
for all  purposes  be deemed to have become the holder of record of the Units of
Preferred  Stock (or,  following  the  occurrence of a Triggering  Event,  other
securities)  represented  thereby on, and such  certificate  shall be dated, the
date  upon  which  the  Rights  Certificate  evidencing  such  Rights  was  duly
surrendered  and  payment of the  Purchase  Price (and any  applicable  transfer
taxes)  was made;  provided,  however,  that if the date of such  surrender  and
payment is a date upon which the Preferred  Stock (or,  following the occurrence
of a  Triggering  Event,  other  securities)  transfer  books of the Company are
closed,  such person  shall be deemed to have  become the record  holder of such
shares on, and such certificate shall be dated, the next succeeding Business Day
on which the Preferred  Stock transfer  books of the Company are open;  provided
further,  however,  that if  delivery  of Units of  Preferred  Stock is  delayed
pursuant to Section 9(c), such Persons shall be deemed to have become the record
holders of such Units of  Preferred  Stock  only when such  Units  first  become
deliverable.  Prior to the exercise of the Rights evidenced thereby,  the holder
of a Rights  Certificate shall not be entitled to any rights of a stockholder of
the  Company  with  respect  to  capital  stock for which  the  Rights  shall be
exercisable,  including,  without  limitation,  the  right to vote,  to  receive
dividends or other distributions or to exercise any preemptive rights, and shall
not be entitled to receive any notice of any proceedings of the Company,  except
as provided herein.  Prior to the exercise of the Rights evidenced thereby,  the
holder of a Rights  Certificate  shall not be entitled to any rights of a holder
of a Unit of  Preferred  Stock  for  which  the  Rights  shall  be  exercisable,
including,  without limitation, the right to vote, to receive dividends or other
distributions or to exercise any preemptive rights, and shall not be entitled to
receive any notice of any proceedings of the Company, except as provided herein.

          Section 11. Adjustment of Purchase Price,  Number of Shares or  Number
of Rights.  The Purchase  Price,  the number and kinds of securities  covered by
each Right and the number of Rights  outstanding  are subject to adjustment from
time to time as provided in this Section 11.

          (a) (i) In the event the  Company  shall at any time after the date of
     this  Agreement  (A) declare a dividend on the  Preferred  Stock payable in
     shares  of  Preferred  Stock,  (B)  subdivide  the  outstanding  shares  of
     Preferred Stock, (C) combine the outstanding Preferred Stock into a smaller
     number of shares  Preferred  Stock or (D) issue any  shares of its  capital
     stock in a  reclassification  of the Preferred  Stock  (including  any such
     reclassification  in connection with a consolidation or merger in which the
     Company is the  continuing or surviving  corporation),  except as otherwise
     provided in this Section 11(a), the Purchase Price in effect at the time of
     the  record  date  for  such  dividend  or of the  effective  date  of such
     subdivision,  combination or  reclassification,  and the number and kind of
     shares of capital  stock  issuable on such date,  shall be  proportionately
     adjusted so that the holder of any Rights  exercised  after such time shall
     be entitled to receive the  aggregate  number and kind of shares of capital
     stock which,  if such Rights had been exercised  immediately  prior to such
     date and at a time when the Preferred  Stock  transfer books of the Company
     were  open,  such  holder  would have  owned  upon such  exercise  and been
     entitled to receive by virtue of such dividend, subdivision, combination or
     reclassification;   provided,   however,   that  in  no  event   shall  the
     consideration  to be paid upon the  exercise  of one Right be less than the
     aggregate par value of the shares of capital stock of the Company  issuable
     upon  exercise of one Right.  If an event  occurs  which  would  require an
     adjustment  under both this  Section  11(a)(i) and Section  11(a)(ii),  the
     adjustment  provided for in this Section  11(a)(i) shall be in addition to,
     and shall be made prior to, any  adjustment  required  pursuant  to Section
     11(a)(ii).

          (ii) Subject  to Section 24 of this  Agreement,  in the event that (A)
     any Acquiring Person or any Associate or Affiliate of any Acquiring Person,
     at any time after the date of this Agreement, directly or indirectly, shall
     (1) merge into the Company or  otherwise  combine  with the Company and the
     Company shall be the continuing or surviving  corporation of such merger or
     combination  and  shares of  Common  Stock  shall  remain  outstanding  and
     unchanged, (2) in one transaction or a series of transactions, transfer any
     assets to the Company or any of its  Subsidiaries  in exchange (in whole or
     in part) for shares of Common  Stock,  for other equity  securities  of the
     Company  or any  such  Subsidiary,  or for  securities  exercisable  for or
     convertible  into shares of equity  securities of the Company or any of its
     Subsidiaries  (whether  shares of Common Stock or  otherwise)  or otherwise
     obtain  from  the  Company  or any of its  Subsidiaries,  with  or  without
     consideration,   any  additional   shares  of  such  equity  securities  or
     securities exercisable for or convertible into such equity securities other
     than pursuant to a pro rata distribution to all holders of shares of Common
     Stock), (3) sell, purchase, lease, exchange,  mortgage, pledge, transfer or
     otherwise  acquire  or  dispose  of,  in one  transaction  or a  series  of
     transactions,  to, from or with the Company or any of its  Subsidiaries  or
     any  employee  benefit  plan  maintained  by  the  Company  or  any  of its
     Subsidiaries  or any trustee or fiduciary  with respect to such plan acting
     in such  capacity,  assets  (including  securities) on terms and conditions
     less  favorable to the Company or such  Subsidiary  or plan than those that
     could have been obtained in arm's-length  negotiations with an unaffiliated
     third  party,  other than  pursuant to a  transaction  set forth in Section
     13(a)  hereof,  (4) sell,  purchase,  lease,  exchange,  mortgage,  pledge,
     transfer or otherwise acquire or dispose of, in one transaction or a series
     of transactions, to, from or with the Company or any of its Subsidiaries or
     any  employee  benefit  plan  maintained  by  the  Company  or  any  of its
     Subsidiaries  or any trustee or fiduciary  with respect to such plan acting
     in such capacity (other than  transactions,  if any,  consistent with those
     engaged in, as of the date hereof, by the Company and such Acquiring Person
     or such Associate or Affiliate), assets (including securities or intangible
     assets)  having an  aggregate  fair market  value of more than  $5,000,000,
     other than pursuant to a transaction set forth in Section 13(a) hereof, (5)
     receive, or any designee,  agent or representative of such Acquiring Person
     or any Affiliate or Associate of such Acquiring  Person shall receive,  any
     compensation  from  the  Company  or  any of its  Subsidiaries  other  than
     compensation  for full-time  employment  as a regular  employee at rates in
     accordance with the Company's (or its Subsidiaries') past practices, or (6)
     receive the benefit,  directly or indirectly  (except  proportionately as a
     holder  of  shares  of  Company  Common  Stock  or as  required  by  law or
     governmental regulation),  of any loans, advances,  guarantees,  pledges or
     other  financial  assistance  or any tax  credits  or other tax  advantages
     provided by the Company or any of its  Subsidiaries or any employee benefit
     plan maintained by the Company or any of its Subsidiaries or any trustee or
     fiduciary  with  respect to such plan acting in such  capacity;  or (B) any
     Person  shall  become an  Acquiring  Person,  unless the event  causing the
     Person to become an Acquiring  Person is a transaction set forth in Section
     13(a); or (C) during such time as there is an Acquiring Person, there shall
     be any reclassification of securities  (including any reverse stock split),
     or  recapitalization  of the Company, or any merger or consolidation of the
     Company with any of its Subsidiaries or any other  transaction or series of
     transactions involving the Company or any of its Subsidiaries, other than a
     transaction or  transactions to which the provisions of Section 13(a) apply
     (whether or not with or into or otherwise  involving an Acquiring  Person),
     which has the effect, directly or indirectly, of increasing by more than 1%
     the  proportionate  share of the outstanding  shares of any class of equity
     securities  of the Company or any of its  Subsidiaries  that is directly or
     indirectly  beneficially owned by any Acquiring Person or any Person or any
     Associate or Affiliate of any Acquiring Person;

then  promptly  following  the  occurrence  of an  event  described  in  Section
11(a)(ii)(A),  (B) or (C) (a "Section 11(a)(ii) Event"),  proper provision shall
be made so that each  holder of a Right,  except as  provided  in  Section  7(e)
hereof,  shall,  for a period  ending  90 days  after  the later to occur of the
Section  11(a)(ii)  Event and the effective date of the  registration  statement
under the Securities  Act  contemplated  by Section 9 hereof,  have the right to
receive for each Right,  upon exercise  thereof in accordance  with the terms of
this Agreement and payment of the  then-current  Purchase  Price, in lieu of the
number of Units of Preferred Stock for which a Right was exercisable immediately
prior to the first occurrence of a Section 11(a)(ii) Event, such number of Units
of  Preferred  Stock as shall  equal the  result  obtained  by  multiplying  the
then-current  Purchase Price by the then number of Units of Preferred  Stock for
which  a  Right  was  exercisable  (or  would  have  been   exercisable  if  the
Distribution  Date had occurred)  immediately prior to the first occurrence of a
Triggering  Event,  and  dividing  that  product by 50% of the current per share
market price (determined  pursuant to Section 11(d) hereof) for shares of Common
Stock on the date of occurrence of the Triggering Event (such number of Units of
Preferred Stock being hereinafter referred to as the "Adjustment Shares").

          (iii) In lieu of issuing Units of Preferred  Stock in accordance  with
     Section 11(a)(ii) hereof, the Company may, if the Board of Directors of the
     Company  determines  that such action is necessary or  appropriate  and not
     contrary to the interest of holders of Rights  (and,  in the event that the
     number of Units of Preferred  Stock which are  authorized  by the Company's
     Certificate of  Incorporation  but not outstanding or reserved for issuance
     for purposes  other than upon exercise of the Rights are not  sufficient to
     permit the exercise in full of the Rights,  or if any necessary  regulatory
     approval  for such  issuance  has not been  obtained  by the  Company,  the
     Company  shall):  (A) determine the excess of (1) the value of the Units of
     Preferred Stock issuable upon the exercise of a Right (the "Current Value")
     over (2) the Purchase Price (such excess being referred to as the "Spread")
     and (B) with respect to each Right,  make adequate  provision to substitute
     for such Units of Preferred Stock,  upon exercise of the Rights,  (1) cash,
     (2) a reduction in the Purchase Price,  (3) other equity  securities of the
     Company (including,  without limitation, Common Stock or shares or units of
     shares of any series of preferred stock which the Board of Directors of the
     Company has deemed to have the same value as the Units of  Preferred  Stock
     (such shares or units of preferred stock are herein called "preferred stock
     equivalents")),  except to the extent that the Company has not obtained any
     necessary regulatory approval for such issuance, (4) debt securities of the
     Company,  except  to the  extent  that the  Company  has not  obtained  any
     necessary  regulatory  approval for such issuance,  (5) other assets or (6)
     any  combination of the foregoing,  having an aggregate  value equal to the
     Current Value,  where such aggregate value has been determined by the Board
     of  Directors  of the  Company,  based  upon  the  advice  of a  nationally
     recognized  investment  banking firm  selected by the Board of Directors of
     the Company; provided, however, if the Company shall not have made adequate
     provision to deliver value  pursuant to clause (B) above within thirty (30)
     days  following the later of (x) occurrence of a Section  11(a)(ii)  Event,
     and (y) the date on which the  Company's  right of  redemption  pursuant to
     Section 23(a) expires (the later of (x) and (y) being referred to herein as
     the "Section 11(a)(iii) Trigger Date"), then the Company shall be obligated
     to  deliver,  upon  the  surrender  for  exercise  of a Right  and  without
     requiring  payment of the Purchase Price,  Units of Preferred Stock (to the
     extent  available),  and then, if necessary,  cash, which Units and/or cash
     have an aggregate value equal to the Spread.

          (b) In the event  that the  Company  shall  fix a record  date for the
issuance of rights,  options or  warrants  to all holders of Units of  Preferred
Stock  entitling them (for a period  expiring within 45 calendar days after such
record date) to subscribe  for or purchase  Units of Preferred  Stock (or shares
having the same  rights,  privileges  and  preferences  as the  Preferred  Stock
("equivalent  preferred  shares"))  or  securities  convertible  into  Units  of
Preferred Stock or equivalent  preferred shares at a price per Unit of Preferred
Stock or equivalent  preferred share (or having a conversion price per share, if
a security  convertible  into Units of Preferred  Stock or equivalent  preferred
shares) less than the then current per share market price of a Unit of Preferred
Stock (as  determined  pursuant  to  Section  11(d)) on such  record  date,  the
Purchase  Price to be in effect  after such record date shall be  determined  by
multiplying the Purchase Price in effect  immediately  prior to such record date
by a fraction,  the numerator of which shall be the number of Units of Preferred
Stock  outstanding  on such  record  date plus the number of Units of  Preferred
Stock  which  the  aggregate  offering  price of the  total  number  of Units of
Preferred Stock and/or equivalent  preferred shares so to be offered (and/or the
aggregate  initial  conversion  price  of the  convertible  securities  so to be
offered)  would  purchase at such current  market price and the  denominator  of
which shall be the number of Units of Preferred Stock outstanding on such record
date plus the number of additional  Units of Preferred  Stock and/or  equivalent
preferred  shares to be offered for  subscription or purchase (or into which the
convertible securities so to be offered are initially convertible). In case such
subscription  price may be paid in a consideration part or all of which shall be
in a form  other  than  cash,  the  value  of  such  consideration  shall  be as
determined  in good  faith  by the  Board of  Directors  of the  Company,  whose
determination  shall be described in a statement filed with the Rights Agent and
shall be binding on the Rights  Agent and the  holders of the  Rights.  Units of
Preferred  Stock owned by or held for the  account of the  Company  shall not be
deemed  outstanding  for the purpose of any such  computation.  Such  adjustment
shall be made  successively  whenever  such a record  date is fixed;  and in the
event that such  rights,  options or warrants  are not so issued,  the  Purchase
Price shall be adjusted to be the  Purchase  Price which would then be in effect
if such record date had not been fixed.

          (c) In case the Company shall fix a record date for a distribution  to
all holders of Units of Preferred Stock (including any such distribution made in
connection with a consolidation or merger in which the Company is the continuing
or  surviving  corporation)  of evidences  of  indebtedness,  cash (other than a
regular  quarterly cash dividend) assets (other than a dividend payable in Units
of Preferred Stock but including any dividend payable in equity securities other
than  Preferred  Stock) or  subscription  rights or  warrants  (excluding  those
referred to in Section 11(d)  hereof),  the Purchase Price to be in effect after
such record date shall be determined by multiplying the Purchase Price in effect
immediately  prior to such  record date by a fraction,  the  numerator  of which
shall be the then  current per share  market  price (as  determined  pursuant to
Section 11(d)) of the Preferred  Stock on such record date, less the fair market
value (as  determined  in good faith by the Board of  Directors  of the Company,
whose  determination  shall be  described  in a statement  filed with the Rights
Agent and shall be binding on the Rights  Agent and the holder of rights) of the
cash,  assets  or  evidences  of  indebtedness  to be  distributed  or  of  such
subscription rights or warrants distributable in respect of a share of Preferred
Stock and the  denominator of which shall be such current per share market price
(as determined  pursuant to Section 11(d)) of a share of Preferred  Stock.  Such
adjustments shall be made successively whenever such a record date is fixed; and
in the event that such  distribution  is not so made,  the Purchase  Price shall
again be adjusted to be the Purchase Price which would then be in effect if such
record date had not been fixed.

          (d) (i) For the purpose of any computation hereunder, the "current per
     share market price" of any security (a  "Security"  for the purpose of this
     Section  11(d)(i))  on any date  shall be deemed to be the  average  of the
     daily  closing  prices  per  share of such  Security  for the  thirty  (30)
     consecutive Trading Days (as such term is hereinafter  defined) immediately
     prior to such date; provided,  however, that in the event that the "current
     per share  market  price" of the  Security  is  determined  during a period
     following the announcement by the issuer of such Security of (A) a dividend
     or  distribution  on such  Security  payable in shares of such  Security or
     securities   convertible   into  such  shares,   or  (B)  any  subdivision,
     combination  or   reclassification  of  such  Security  and  prior  to  the
     expiration of thirty (30) Trading Days after the ex-dividend  date for such
     dividend  or  distribution,  or  the  record  date  for  such  subdivision,
     combination or reclassification,  then, and in each such case, the "current
     per share  market  price"  shall be  appropriately  adjusted to reflect the
     "current market price" per share  equivalent of such Security.  The closing
     price for each day shall be the last sale price,  regular  way, or, in case
     no such sale takes  place on such day,  the  average of the closing bid and
     asked  prices,  regular  way, in either  case as reported in the  principal
     consolidated transaction reporting system with respect to securities listed
     or admitted to trading on the Nasdaq National Market System  ("NASDAQ") or,
     if the  Security is not listed or  admitted  to trading on the  NASDAQ,  as
     reported in the principal  consolidated  transaction  reporting system with
     respect to securities listed on the principal national  securities exchange
     on which the  Security is listed or admitted to trading or, if the Security
     is not listed or admitted to trading on any national  securities  exchange,
     the last quoted price or, if not so quoted, the average of the high bid and
     low asked prices in the over-the-counter  market, as reported by the NASDAQ
     or such other  system then in use,  or, if on any such date the Security is
     not quoted by any such  organization,  the  average of the  closing bid and
     asked prices as furnished by a professional market maker making a market in
     the Security  selected by the Board of Directors of the Company.  If on any
     such date no market maker is making a market in the Security,  the "current
     per share market price" of such Security on such date as determined in good
     faith by the Board of  Directors of the Company as provided for above shall
     be used.  The term  "Trading  Day" shall mean a day on which the  principal
     national securities exchange on which the Security is listed or admitted to
     trading is open for the  transaction of business or, if the Security is not
     listed or  admitted  to  trading on any  national  securities  exchange,  a
     Business Day.

          (ii) For the purpose of any  computation  hereunder,  the "current per
     share  market  price"  of  the  Preferred  Stock  shall  be  determined  in
     accordance with the method set forth in Section  11(d)(i).  If the "current
     per share market price" of the Preferred  Stock cannot be determined in the
     manner  provided  above or if the  Preferred  Stock is not publicly held or
     listed or traded in a manner described in clause (i) of this Section 11(d),
     the  "current  per share  market  price" of the  Preferred  Stock  shall be
     conclusively  deemed to be an amount equal to $1,000 (as such amount may be
     appropriately adjusted for such events as stock splits, stock dividends and
     recapitalizations  with respect to shares of Common Stock  occurring  after
     the Rights  Dividend  Declaration  Date)  multiplied by the current  market
     price per share of Common Stock.  If shares of neither the Common Stock nor
     Preferred Stock is publicly held or so listed or traded, "current per share
     market price" of the Preferred Stock shall mean the fair value per share as
     determined  in good faith by the Board of Directors  of the Company,  whose
     determination shall be described in a statement filed with the Rights Agent
     and shall be binding on the Rights Agent and the holders of the Rights.

          (e) No adjustment in the Purchase Price shall be required  unless such
adjustment  would require an increase or decrease of at least 1% in the Purchase
Price;  provided,  however, that any adjustments which by reason of this Section
11(e) are not  required  to be made  shall be  carried  forward  and taken  into
account in any subsequent  adjustment.  All  calculations  under this Section 11
shall be made to the  nearest  cent or to the nearest  one  one-thousandth  of a
share of Preferred Stock or one  one-hundredth of any other share or security as
the case may be.  Notwithstanding  the first sentence of this Section 11(e), any
adjustment  required by this  Section 11 shall be made no later than the earlier
of (i)  three  years  from  the  date of the  transaction  which  requires  such
adjustment or (ii) the Expiration Date.

          (f) If as a result of an adjustment made pursuant to Section 11(a)(ii)
hereof,  the holder of any Rights thereafter  exercised shall become entitled to
receive any shares of capital stock of the Company other than Units of Preferred
Stock, thereafter the number of such other shares so receivable upon exercise of
any Rights and the Purchase  Price thereof  shall be subject to adjustment  from
time to time in a manner and on terms as nearly equivalent as practicable to the
provisions with respect to the Preferred Stock contained in Section 11(a),  (b),
(c), (d),  (e),  (g),  (h),  (i),  (j), (k), (l) and (m), and the  provisions of
Sections 7, 9, 10, 13 and 14 with respect to the Preferred  Stock shall apply on
like terms to any such other shares.

          (g) All Rights  originally  issued by the  Company  subsequent  to any
adjustment  made to the Purchase  Price  hereunder  shall  evidence the right to
purchase, at the adjusted Purchase Price, the number of Units of Preferred Stock
purchasable from time to time hereunder upon exercise of the Rights, all subject
to further adjustment as provided herein.

          (h) Unless the Company  shall have  exercised its election as provided
in Section 11(i),  upon each adjustment of the Purchase Price as a result of the
calculations made in Sections 11(b) and (c), each Right outstanding  immediately
prior to the making of such adjustment  shall  thereafter  evidence the right to
purchase,  at the  adjusted  Purchase  Price,  that number of Units of Preferred
Stock  (calculated to the nearest  one-millionth  of a share of Preferred Stock)
obtained by dividing (i) the product  obtained by multiplying  (x) the number of
Units of Preferred Stock covered by a Right immediately prior to this adjustment
by (y) the Purchase Price in effect  immediately prior to such adjustment of the
Purchase  Price,  by (ii) the Purchase  Price in effect  immediately  after such
adjustment of the Purchase Price.

          (i) The  Company may elect on or after the date of any  adjustment  of
the  Purchase  Price to adjust  the  number of  Rights in  substitution  for any
adjustment  in the  number  of Units of  Preferred  Stock  purchasable  upon the
exercise of a Right. Each of the Rights outstanding after such adjustment of the
number of Rights shall be exercisable for the number of Units of Preferred Stock
for which a Right was exercisable  immediately  prior to such  adjustment.  Each
Right held of record  prior to such  adjustment  of the  number of Rights  shall
become that  number of Rights  (calculated  to the  nearest one  one-thousandth)
obtained  by  dividing  the  Purchase  Price  in  effect  immediately  prior  to
adjustment  of the Purchase  Price by the Purchase  Price in effect  immediately
after  adjustment  of the  Purchase  Price.  The  Company  shall  make a  public
announcement  of its  election  to adjust the number of Rights,  indicating  the
record date for the  adjustment,  and,  if known at the time,  the amount of the
adjustment  to be made.  This record date may be the date on which the  Purchase
Price is adjusted or any day thereafter,  but, if the Rights  Certificates  have
been  issued,  shall be at  least  ten days  later  than the date of the  public
announcement.  If Rights  Certificates have been issued, upon each adjustment of
the number of Rights  pursuant to this  Section  11(i),  the Company  shall,  as
promptly as practicable,  cause to be distributed to holders of record of Rights
Certificates  on such  record date Rights  Certificates  evidencing,  subject to
Section 14 hereof, the additional Rights to which such holders shall be entitled
as a result of such adjustment, or, at the option of the Company, shall cause to
be distributed to such holders of record in substitution and replacement for the
Rights  Certificates  held by such holders prior to the date of adjustment,  and
upon  surrender  thereof,  if required by the Company,  new Rights  Certificates
evidencing  all the Rights to which such  holders  shall be entitled  after such
adjustment.  Rights Certificates to be so distributed shall be issued,  executed
and  countersigned  in the manner provided for herein and shall be registered in
the names of the  holders of record of Rights  Certificates  on the record  date
specified in the public announcement.

          (j) Irrespective of  any adjustment or change in the Purchase Price or
the number of Units of Preferred Stock issuable upon the exercise of the Rights,
the Rights  Certificates  theretofore  and  thereafter  issued may  continue  to
express the Purchase  Price per Unit and the number of Units of Preferred  Stock
which were expressed in the initial Rights Certificates issued hereunder.

          (k) Before taking any action that would cause an  adjustment  reducing
the Purchase  Price below the then par value of the number of Units of Preferred
Stock issuable upon exercise of the Rights, the Company shall take any corporate
action which may, in the opinion of its counsel,  be necessary in order that the
Company may validly and  legally  issue fully paid and  nonassessable  number of
Units of Preferred Stock at such adjusted Purchase Price.

          (l) In any  case in  which  this  Section  11  shall  require  that an
adjustment  in the  Purchase  Price be made  effective as of a record date for a
specified  event,  the Company may elect to defer until the  occurrence  of such
event the issuing to the holder of any Rights  exercised  after such record date
of that number of Units of Preferred Stock and other capital stock or securities
of the Company,  if any, issuable upon such exercise over and above the Units of
Preferred  Stock and other capital  stock or securities of the Company,  if any,
issuable upon such  exercise on the basis of the Purchase  Price in effect prior
to such adjustment;  provided,  however,  that the Company shall deliver to such
holder a due bill or other appropriate instrument evidencing such holder's right
to receive such additional shares  (fractional or otherwise) upon the occurrence
of the event requiring such adjustment.

          (m) Anything in this Section 11 to the contrary  notwithstanding,  the
Company  shall be entitled to make such  reductions  in the Purchase  Price,  in
addition to those adjustments  expressly  required by this Section 11, as and to
the extent that it in its sole  discretion  shall  determine  to be advisable in
order that any (i)  consolidation  or subdivision of the Preferred  Stock,  (ii)
issuance wholly for cash of any Unit of Preferred Stock at less than the current
market price,  (iii) issuance  wholly for cash of Preferred  Stock or securities
which by their terms are convertible  into or exchangeable  for Preferred Stock,
(iv) dividends on Preferred  Stock payable in Preferred Stock or (v) issuance of
rights,  options or warrants  referred to in this Section 11,  hereafter made by
the Company to holders of Units of its  Preferred  Stock shall not be taxable to
such stockholders.

          (n) The Company  shall not, at any time after the  Distribution  Date,
(i) consolidate with any other Person (other than a Subsidiary of the Company in
a transaction  which complies with Section  11(o)),  (ii) merge with or into any
other Person  (other than a  Subsidiary  of the Company in a  transaction  which
complies  with  Section  11(o)),  or  (iii)  sell or  transfer  (or  permit  any
Subsidiary  to  sell  or  transfer),   in  one  transaction,   or  a  series  of
transactions, assets or earning power aggregating more than 50% of the assets or
earning  power of the  Company  and its  Subsidiaries  (taken as a whole) to any
other Person or Persons (other than the Company  and/or any of its  Subsidiaries
in one or more  transactions  each of which complies with Section 11(o)), if (x)
at the time of or immediately after such consolidation, merger or sale there are
any  rights,   warrants  or  other  instruments  or  securities  outstanding  or
agreements in effect which would  substantially  diminish or otherwise eliminate
the  benefits   intended  to  be  afforded  by  the  Rights  or  (y)  prior  to,
simultaneously with or immediately after such consolidation, merger or sale, the
Person which  constitutes or would constitute the "Principal Party" for purposes
of  Section  13(a)  shall  have  distributed  or  otherwise  transferred  to its
stockholders  or other persons  holding an equity interest in such Person Rights
previously  owned  by  such  Person  or any of its  Affiliates  and  Associates;
provided,  however,  this  Section  11(n)  shall not affect  the  ability of any
Subsidiary of the Company to  consolidate  with,  merge with or into, or sell or
transfer assets or earning power to, any other Subsidiary of the Company.

          (o) After the  Distribution  Date,  the Company  shall not,  except as
permitted by Section 23 or Section 27, take (or permit any  Subsidiary  to take)
any action if at the time such action is taken it is reasonably foreseeable that
such action will  diminish  substantially  or otherwise  eliminate  the benefits
intended to be afforded by the Rights.

          (p) In  the  event  that,  at  any  time  after  the  Rights  Dividend
Declaration  Date and prior to the  Distribution  Date,  the  Company  shall (i)
declare or pay any dividend on  outstanding  shares of Common  Stock  payable in
shares  of  Common  Stock  or  (ii)  effect  a   subdivision,   combination   or
consolidation  of the Common Stock (by  reclassification  or  otherwise  than by
payment of dividends in shares of Common  Stock) into a greater or lesser number
of  shares  of  Common  Stock,  then in any  such  case (x) the  Purchase  Price
following  any such event  shall be  adjusted  to equal the result  obtained  by
multiplying the Purchase Price immediately prior to such event by a fraction the
numerator  of which  shall be the number of shares of Common  Stock  outstanding
immediately  before such event and the  denominator of which shall be the number
of shares of Common Stock  outstanding  immediately after such event and (y) the
number of Units of  Preferred  Stock  purchasable  after such event upon  proper
exercise of each Right shall be determined by multiplying the number of Units of
Preferred  Stock so purchasable  immediately  prior to such event by a fraction,
the  numerator  of which is the  number of shares  of Common  Stock  outstanding
immediately  before  such  event and the  denominator  of which is the number of
shares of Common Stock outstanding immediately after such event. The adjustments
provided for in this Section  11(p) shall be made  successively  whenever such a
dividend is declared or paid or such a subdivision, combination or consolidation
is effected.

          Section 12. Certificate  of  Adjusted   Purchase   Price or  Number of
Shares. Whenever an adjustment is made as provided in Sections 11 and 13 hereof,
the  Company  shall  promptly  (a)  prepare a  certificate  setting  forth  such
adjustment,  and a brief statement of the facts  accounting for such adjustment,
(b) file with the Rights  Agent and with each  transfer  agent for the shares of
Common Stock or Units of Preferred Stock a copy of such certificate and (c) mail
a brief  summary  thereof to each holder of a Rights  Certificate  in accordance
with Section 26 hereof.  Notwithstanding the foregoing sentence,  the failure by
the Company to make such  certification or give such notice shall not affect the
validity of or the force or effect of the requirement for such  adjustment.  The
Rights Agent shall be fully protected in relying on any such  certificate and on
any  adjustment  contained  therein and shall not be deemed to have knowledge of
such adjustment unless and until it shall have received such certificate.

          Section  13.  Consolidation,  Merger or Sale or  Transfer of Assets or
Earning  Power.  (a) In the event  that,  following a Shares  Acquisition  Date,
directly or indirectly,  (x) the Company shall  consolidate  with, or merge with
and into,  any  other  Person  (other  than a  Subsidiary  of the  Company  in a
transaction which complies with Section 11(o)), and the Company shall not be the
continuing or surviving  corporation of such  consolidation  or merger,  (y) any
Person (other than a Subsidiary of the Company in a transaction  which  complies
with Section 11(o)) shall  consolidate with the Company,  or merge with and into
the Company and the Company shall be the continuing or surviving  corporation of
such  consolidation  or merger and, in  connection  with such  consolidation  or
merger,  all or part of the  shares of Common  Stock  shall be  changed  into or
exchanged for stock or other securities of any other Person or cash or any other
property, or (z) the Company shall sell or otherwise transfer (or one or more of
its  Subsidiaries  shall sell or  otherwise  transfer)  to any Person or Persons
(other than a Subsidiary  of the Company in a  transaction  which  complies with
Section 11(o)), in one or more transactions,  directly or indirectly,  assets or
earning  power  aggregating  50% or more of the assets or  earning  power of the
Company and its Subsidiaries (taken as a whole) (any such event being a "Section
13 Event"), then, and in each such case, proper provision shall be made so that:
(i) each holder of a Right, except as provided in Section 7(e), shall thereafter
have the  right  to  receive,  upon the  exercise  thereof  at the then  current
Purchase  Price,  such number of validly  authorized and issued,  fully paid and
non-assessable  shares of Common Stock of the  Principal  Party (as such term is
hereinafter  defined),   which  shares  shall  not  be  subject  to  any  liens,
encumbrances,  rights of first refusal,  transfer  restrictions or other adverse
claims,  as shall be equal to the result  obtained by (1)  multiplying  the then
current  Purchase  Price by the number of Units of  Preferred  Stock for which a
Right is exercisable  immediately  prior to the first occurrence of a Section 13
Event  (or,  if a  Section  11(a)(ii)  Event  has  occurred  prior to the  first
occurrence  of a  Section  13 Event,  multiplying  the  number of such  Units of
Preferred  Stock for which a Right would be  exercisable  hereunder  but for the
occurrence of such Section  11(a)(ii) Event by the Purchase Price which would be
in effect hereunder but for such first occurrence) and (2) dividing that product
by 50% of the current per share  market  price  (determined  pursuant to Section
11(d))  of the  shares of Common  Stock of such  Principal  Party on the date of
consummation  of  such  Section  13  Event;  (ii)  such  Principal  Party  shall
thereafter be liable for, and shall assume,  by virtue of such Section 13 Event,
all the obligations and duties of the Company pursuant to this Agreement;  (iii)
the term  "Company"  shall,  for all purposes of this  Agreement,  thereafter be
deemed to refer to such Principal Party, it being specifically intended that the
provisions of Section 11 shall apply only to such Principal  Party following the
first  occurrence of a Section 13 Event;  (iv) such  Principal  Party shall take
such steps  (including,  but not limited  to, the  reservation  of a  sufficient
number of shares of its Common Stock) in connection with the consummation of any
such  transaction  as may be  necessary  to ensure that the  provisions  of this
Agreement  shall  thereafter  be  applicable  to  its  shares  of  Common  Stock
thereafter  deliverable upon the exercise of the Rights;  and (v) the provisions
of  Section  11(a)(ii)  shall  be of  no  further  effect  following  the  first
occurrence of any Section 13 Event.

          (b) "Principal Party" shall mean:

          (i) in the case of any  transaction  described in clause (x) or (y) of
     the first sentence of Section  13(a),  (A) the Person that is the issuer of
     any  securities  into which  shares of Common  Stock are  converted in such
     merger or  consolidation,  or, if there is more than one such  issuer,  the
     issuer of shares of Common  Stock that has the  highest  aggregate  current
     market  price  (determined  pursuant  to  Section  11(d))  and  (B)  if  no
     securities are so issued, the Person that is the other party to such merger
     or consolidation, or, if there is more than one such Person, the Person the
     Common  Stock of which  has the  highest  aggregate  current  market  price
     (determined pursuant to Section 11(d)); and

          (ii) in the case of any  transaction  described  in clause  (z) of the
     first sentence of Section 13(a), the Person that is the party receiving the
     largest portion of the assets or earning power transferred pursuant to such
     transaction  or  transactions,  or, if each  Person that is a party to such
     transaction  or  transactions  receives  the same  portion of the assets or
     earning power  transferred  pursuant to such transaction or transactions or
     if the Person  receiving the largest portion of the assets or earning power
     cannot be  determined,  whichever  Person the Common Stock of which has the
     highest  aggregate  current  market price  (determined  pursuant to Section
     11(d));  provided,  however, that in any such case, (1) if the Common Stock
     of such Person is not at such time and has not been  continuously  over the
     preceding  twelve-month  period registered under Section 12 of the Exchange
     Act ("Registered Common Stock"),  or such Person is not a corporation,  and
     such Person is a direct or indirect  Subsidiary of another  Person that has
     Registered Common Stock outstanding,  "Principal Party" shall refer to such
     other  Person;  (2) if the Common  Stock of such  Person is not  Registered
     Common  Stock or such  Person is not a  corporation,  and such  Person is a
     direct or  indirect  Subsidiary  of  another  Person but is not a direct or
     indirect  Subsidiary of another  Person which has  Registered  Common Stock
     outstanding, "Principal Party" shall refer to the ultimate parent entity of
     such first-mentioned  Person; (3) if the Common Stock of such Person is not
     Registered  Common  Stock or such  Person  is not a  corporation,  and such
     Person is directly or indirectly  controlled  by more than one Person,  and
     one or more of such other Persons has Registered Common Stock  outstanding,
     "Principal  Party" shall refer to  whichever  of such other  Persons is the
     issuer of the Registered  Common Stock having the highest aggregate current
     per share market price (determined  pursuant to Section 11(d));  and (4) if
     the Common  Stock of such  Person is not  Registered  Common  Stock or such
     Person is not a  corporation,  and such Person is  directly  or  indirectly
     controlled  by more than one  Person,  and none of such other  Persons  has
     Registered  Common  Stock  outstanding,  "Principal  Party"  shall refer to
     whichever  ultimate  parent entity is the  corporation  having the greatest
     stockholders'   equity  or,  if  no  such  ultimate   parent  entity  is  a
     corporation,  shall refer to whichever ultimate parent entity is the entity
     having the greatest net assets.

          (c) The Company shall not consummate any such  consolidation,  merger,
sale or transfer  unless the Principal  Party shall have a sufficient  number of
authorized  shares of Common  Stock which have not been  issued or reserved  for
issuance to permit the  exercise in full of the Rights in  accordance  with this
Section 13, and unless prior thereto the Company and such Principal  Party shall
have  executed  and  delivered  to the  Rights  Agent a  supplemental  agreement
providing for the terms set forth in  paragraphs  (a) and (b) of this Section 13
and further providing that the Principal Party will:

          (i) (A) file on an appropriate form, as soon as practicable  following
     the  execution  of such  agreement,  a  registration  statement  under  the
     Securities  Act with  respect  to the  shares of Common  Stock  that may be
     acquired upon exercise of the Rights, (B) cause such registration statement
     to  remain  effective  (and to  include  a  prospectus  complying  with the
     requirements of the Securities  Act) until the Expiration  Date, and (C) as
     soon as  practicable  following the execution of such  agreement  take such
     action as may be required to ensure that any  acquisition of such shares of
     Common Stock upon the exercise of the Rights  complies with any  applicable
     state securities or "blue sky" laws; and

          (ii) deliver to holders of the Rights historical  financial statements
     for the  Principal  Party and each of its  Affiliates  which  comply in all
     respects  with the  requirements  for  registration  on Form 10  under  the
     Exchange Act.

          (d) In  case  the  Principal  Party  which  is  to  be  a  party  to a
transaction  referred  to in  this  Section  13  has a  provision  in any of its
authorized  securities or in its Certificate of Incorporation or Bylaws or other
instrument  governing  its corporate  affairs,  which  provision  would have the
effect of (i) causing such Principal Party to issue, in connection with, or as a
consequence of, the  consummation  of a transaction  referred to in this Section
13, shares of Common Stock of such Principal Party at less than the then current
market  price per share  (determined  pursuant to Section  11(d)) or  securities
exercisable for, or convertible  into,  shares of Common Stock of such Principal
Party at less than such then  current  marker  price  (other  than to holders of
Rights  pursuant to this Section 13) or (ii) providing for any special  payment,
tax or similar  provisions  in  connection  with the  issuance  of the shares of
Common Stock of such Principal  Party pursuant to the provisions of this Section
13, then, in such event,  the Company shall not consummate any such  transaction
unless prior  thereto the Company and such  Principal  Party shall have executed
and delivered to the Rights Agent a  supplemental  agreement  providing that the
provision in question of such Principal Party shall have been cancelled,  waived
or amended,  or that the authorized  securities  shall be redeemed,  so that the
applicable provision will have no effect in connection with, or as a consequence
of, the consummation of the proposed transaction.

          (e) The  provisions  of this  Section  13  shall  similarly  apply  to
successive  mergers or consolidations or sales or other transfers.  In the event
that a  Section  13 Event  shall  occur at any time  after the  occurrence  of a
Section  11(a)(ii)  Event,  the Rights which have not theretofore been exercised
shall thereafter become exercisable in the manner described in Section 13(a).

          Section 14. Fractional Rights and Fractional  Shares.  (a) The Company
shall not be  required  to issue  fractions  of Rights or to  distribute  Rights
Certificates  which  evidence  fractional  Rights.  In lieu  of such  fractional
Rights, there shall be paid to the registered holders of the Rights Certificates
with regard to which such  fractional  Rights would  otherwise  be issuable,  an
amount in cash equal to the same fraction of the current market value of a whole
Right.  For the purposes of this Section  14(a),  the current  market value of a
whole  Right  shall be the  closing  price of the  Rights  for the  Trading  Day
immediately  prior to the date on which such  fractional  Rights would have been
otherwise issuable.  The closing price for any day shall be the last sale price,
regular  way,  or, in case no such sale takes place on such day,  the average of
the closing bid and asked prices, regular way, in either case as reported in the
principal  consolidated  transaction reporting system with respect to securities
listed or  admitted to trading on the NASDAQ or, if the Rights are not listed or
admitted to trading on the NASDAQ,  as  reported in the  principal  consolidated
transaction  reporting system with respect to securities listed on the principal
national  securities  exchange  on which the Rights are  listed or  admitted  to
trading or, if the Rights are not listed or admitted to trading on any  national
securities exchange,  the last quoted price or, if not so quoted, the average of
the high bid and low asked prices in the over-the-counter market, as reported by
NASDAQ or such other  system  then in use or, if on any such date the Rights are
not quoted by any such  organization,  the  average of the closing bid and asked
prices as furnished by a professional market maker making a market in the Rights
selected by the Board of Directors  of the Company.  If on any such date no such
market  maker is making a market in the Rights,  the fair value of the Rights on
such date as  determined  in good faith by the Board of Directors of the Company
shall be used.

          (b) The Company shall not be required to issue  fractions of Preferred
Stock (other than fractions which are integral  multiples of one  one-thousandth
of a share of  Preferred  Stock) upon  exercise  of the Rights or to  distribute
certificates  which evidence  fractional  Preferred  Stock (other than fractions
which are  integral  multiples  of one  one-thousandth  of a share of  Preferred
Stock). Fractions of Preferred Stock in integral multiples of one one-thousandth
of a share of Preferred Stock may, at the election of the Company,  be evidenced
by depositary receipts, pursuant to an appropriate agreement between the Company
and a depositary  selected by it; provided,  however,  that such agreement shall
provide that the holders of such depositary  receipts shall have all the rights,
privileges and  preferences  to which they are entitled as beneficial  owners of
the  Preferred  Stock  represented  by  such  depositary  receipts.  In  lieu of
fractional  shares of  Preferred  Stock that are not  integral  multiples of one
one-thousandth  of a share of  Preferred  Stock,  the  Company  shall pay to the
registered holders of Rights  Certificates at the time such Rights are exercised
as herein  provided an amount in cash equal to the same  fraction of the current
market value of one share of Preferred  Stock as determined  pursuant to Section
11(d).

          (c) The  holder of a Right by the  acceptance  of the Right  expressly
waives such holder's  right to receive any  fractional  Rights or any fractional
shares upon exercise of a Right (except as provided above).

          Section 15. Rights of Action.  All rights of action in respect of this
Agreement,  excepting  the  rights of action  given to the  Rights  Agent  under
Section 18 hereof, are vested in the respective registered holders of the Rights
Certificates  (and,  prior to the Distribution  Date, the registered  holders of
certificates  representing shares of Common Stock); and any registered holder of
any Rights  Certificate  (or,  prior to the  Distribution  Date,  a  certificate
representing shares of Common Stock), without the consent of the Rights Agent or
of the holder of any other Rights  Certificate  (or,  prior to the  Distribution
Date,  of a  certificate  representing  shares of Common  Stock),  may,  in such
holder's  own  behalf  and for  such  holder's  own  benefit,  enforce,  and may
institute  and maintain any suit,  action or  proceeding  against the Company to
enforce,  or otherwise  act in respect of, such  holder's  right to exercise the
Rights  evidenced  by such  Rights  Certificate  in the manner  provided in such
Rights Certificate and in this Agreement.  Without limiting the foregoing or any
remedies  available to the holders of Rights,  it is  specifically  acknowledged
that the  holders  of Rights  would not have an  adequate  remedy at law for any
breach of this  Agreement  and will be entitled to specific  performance  of the
obligations  hereunder  and  injunctive  relief  against  actual  or  threatened
violations of the obligations of any Person subject to this Agreement.

          Section 16.  Agreement of Rights Holders.  Every holder of a Right, by
accepting  the same,  consents  and agrees with the Company and the Rights Agent
and with every other holder of a Right that:

          (a) prior to the  Distribution  Date, the Rights will be  transferable
only in connection with the transfer of shares of the Company's Common Stock;

          (b)  after  the  Distribution   Date,  the  Rights   Certificates  are
transferable  only on the registry  books of the Rights Agent if  surrendered at
the office of the Rights Agent  designated  for such  purpose,  duly endorsed or
accompanied by a proper instrument of transfer;

          (c)  subject to  Sections  6(a) and 7(f)  hereof,  the Company and the
Rights Agent may deem and treat the person in whose name the Rights  Certificate
(or, prior to the Distribution Date, the associated Common Stock certificate) is
registered  as the absolute  owner thereof and of the Rights  evidenced  thereby
(notwithstanding   any   notations   of  ownership  or  writing  on  the  Rights
Certificates  or the associated  Common Stock  certificate  made by anyone other
than the Company or the Rights Agent) for all purposes  whatsoever,  and neither
the  Company  nor the  Rights  Agent  shall be  affected  by any  notice  to the
contrary; and

          (d)  notwithstanding  anything  in  this  Agreement  to the  contrary,
neither the Company nor the Rights Agent shall have any  liability to any holder
of a Right or other  Person as a result of its  inability  to perform any of its
obligations  under this  Agreement  by reason of any  preliminary  or  permanent
injunction  or other  order,  decree  or ruling  issued by a court of  competent
jurisdiction  or by a  governmental,  regulatory  or  administrative  agency  or
commission,  or any statute,  rule, regulation or executive order promulgated or
enacted by any  governmental  authority,  prohibiting  or otherwise  restraining
performance of such obligation; provided, however, the Company must use its best
efforts to have any such order, decree or ruling lifted or otherwise  overturned
as soon as possible.

          Section 17. Rights  Certificate  Holder Not Deemed a  Stockholder.  No
holder, as such, of any Rights  Certificate  shall be entitled to vote,  receive
dividends  or be deemed for any  purpose  the  holder of the Units of  Preferred
Stock or any other  securities  of the Company which may at any time be issuable
upon  the  exercise  of the  Rights  represented  thereby,  nor  shall  anything
contained  herein or in any Rights  Certificate  be construed to confer upon the
holder of any Rights Certificate, as such, any of the rights of a stockholder of
the  Company  or any right to vote for the  election  of  directors  or upon any
matter submitted to stockholders at any meeting thereof,  or to give or withhold
consent to any  corporate  action,  or to receive  notice of  meetings  or other
actions affecting  stockholders (except as provided in Section 25 hereof), or to
receive  dividends or  subscription  rights,  or  otherwise,  until the Right or
Rights  evidenced  by such  Rights  Certificate  shall  have been  exercised  in
accordance with the provisions hereof.

          Section 18.  Concerning the Rights Agent. The Company agrees to pay to
the  Rights  Agent  reasonable  compensation  for all  services  rendered  by it
hereunder and, from time to time, on demand of the Rights Agent,  its reasonable
expenses and counsel fees and other disbursements incurred in the administration
and execution of this  Agreement and the exercise and  performance of its duties
hereunder.  The Company  also agrees to  indemnify  the Rights Agent for, and to
hold it harmless  against,  any loss,  liability,  or expense,  incurred without
gross negligence or willful  misconduct on the part of the Rights Agent, for any
action  taken,  suffered or omitted by the Rights Agent in  connection  with the
execution,  acceptance and administration of this Agreement and the exercise and
performance  hereunder  of its  duties,  including  the  costs and  expenses  of
defending  against and  appealing  any claim of liability in the  premises.  The
indemnity  provided  herein shall survive the  termination of this Agreement and
the expiration of the Rights.  The costs and expenses incurred in enforcing this
right of indemnification shall be paid by the Company.

          The Rights Agent may conclusively rely upon and shall be protected and
shall incur no  liability  for, or in respect of any action  taken,  suffered or
omitted by it in connection  with its  administration  of this Agreement and the
exercise and  performance  of its duties  hereunder in reliance  upon any Rights
Certificate  or  certificate  for Units of  Preferred  Stock or shares of Common
Stock or for other  securities  of the  Company,  instrument  of  assignment  or
transfer, power of attorney, endorsement,  affidavit, letter, notice, direction,
consent, certificate, statement, or other paper or document believed by it to be
genuine  and  to  be  signed,   executed  and,  where  necessary,   verified  or
acknowledged,  by the proper person or persons,  or otherwise upon the advice of
counsel as set forth in Section 20 hereof.

          Section 19. Merger or Consolidation or Change of Name of Rights Agent.
(a) Any  corporation  into which the Rights Agent or any successor  Rights Agent
may be merged or with which it may be consolidated, or any corporation resulting
from any  merger or  consolidation  to which the Rights  Agent or any  successor
Rights  Agent  shall be a party,  or any  corporation  succeeding  to the  stock
transfer or corporate trust business of the Rights Agent or any successor Rights
Agent,  shall be the successor to the Rights Agent under this Agreement  without
the  execution  or filing of any paper or any  further act on the part of any of
the  parties  hereto,  provided  that such  corporation  would be  eligible  for
appointment  as a  successor  Rights  Agent under the  provisions  of Section 21
hereof.  In case at the time such  successor  Rights Agent shall  succeed to the
agency created by this Agreement any of the Rights  Certificates shall have been
countersigned  but not delivered,  any such successor Rights Agent may adopt the
countersignature  of the  predecessor  Rights  Agent  and  deliver  such  Rights
Certificates  so  countersigned;  and in  case at that  time  any of the  Rights
Certificates shall not have been  countersigned,  any successor Rights Agent may
countersign  such  Rights  Certificates  either  in the name of the  predecessor
Rights Agent or in the name of the successor Rights Agent; and in all such cases
such  Rights  Certificates  shall  have the full  force  provided  in the Rights
Certificates and in this Agreement.

          (b) In case at any time the name of the Rights  Agent shall be changed
and at such time any of the Rights  Certificates  shall have been  countersigned
but not  delivered,  the Rights Agent may adopt the  countersignature  under its
prior name and deliver Rights Certificates so countersigned; and in case at that
time any of the  Rights  Certificates  shall  not have been  countersigned,  the
Rights Agent may countersign such Rights  Certificates  either in its prior name
or in its changed  name;  and in all such cases such Rights  Certificates  shall
have the full force provided in the Rights Certificates and in this Agreement.

          Section 20. Duties of Rights Agent.  The Rights Agent  undertakes  the
duties and  obligations  imposed by this Agreement upon the following  terms and
conditions  and no  implied  duties  or  obligations  shall  be read  into  this
Agreement  against the Rights Agent, by all of which the Company and the holders
of Rights Certificates, by their acceptance thereof, shall be bound:

          (a) Before  the Rights  Agent acts or  refrains  from  acting,  it may
consult  with  legal  counsel of its choice  (who may be legal  counsel  for the
Company),  and the advice or opinion of such counsel  shall be full and complete
authorization  and  protection  to the  Rights  Agent  as to any  action  taken,
suffered  or omitted by it in good faith and in  accordance  with such advice or
opinion.

          (b) Whenever in the  administration,  exercise and  performance of its
duties  under  this  Agreement  the Rights  Agent  shall  deem it  necessary  or
desirable  that any fact or matter be proved or established by the Company prior
to taking,  suffering  or  omitting  any action  hereunder,  such fact or matter
(unless other evidence in respect thereof be herein specifically prescribed) may
be deemed to be conclusively  proved and established by a certificate  signed by
any  one  of the  Chairman  of the  Board,  the  Chief  Executive  Officer,  the
President,  any Senior Vice  President or Vice  President,  the Treasurer or the
Secretary of the Company and delivered to the Rights Agent; and such certificate
shall be full  authorization to the Rights Agent for any action taken,  suffered
or  omitted  in good  faith by it under  the  provisions  of this  Agreement  in
reliance upon such certificate.

          (c) The Rights Agent shall be liable  hereunder to the Company and any
other Person only for its own gross negligence or willful misconduct.

          (d) The  Rights  Agent  shall not be liable for or by reason of any of
the statements of fact or recitals  contained in this Agreement or in the Rights
Certificates (except its countersignature  thereof) or be required to verify the
same, but all such  statements and recitals are and shall be deemed to have been
made by the Company only.

          (e)  The  Rights   Agent   shall  not  be  under  any   liability   or
responsibility  in respect of the legality,  validity or  enforceability of this
Agreement or the execution and delivery hereof (except the due execution  hereof
by the Rights Agent) or in respect of the legality,  validity or  enforceability
or  the  execution  of  any  Rights  Certificate  (except  its  countersignature
thereof); nor shall it be liable or responsible for any breach by the Company of
any  covenant  or  condition  contained  in  this  Agreement  or in  any  Rights
Certificate; nor shall it be responsible for any change in the exercisability of
the Rights  (including the Rights becoming void pursuant to Section 7(e) hereof)
or any adjustment in the terms of the Rights  (including  the manner,  method or
amount thereof) provided for in Section 3, 11, 13, 23 or 24, or the ascertaining
of the  existence  of facts that would  require  any such  change or  adjustment
(except  (i)  with  respect  to the  exercise  of  Rights  evidenced  by  Rights
Certificates after receipt of the certificate described in Section 12 hereof and
(ii) any change or adjustment  of which the Rights Agent has actual  knowledge);
nor  shall it by any act  hereunder  be  deemed  to make any  representation  or
warranty as to the  authorization or reservation of any Units of Preferred Stock
to be issued  pursuant  to this  Agreement  or any Rights  Certificate  or as to
whether any Preferred Stock will, when issued, be validly authorized and issued,
fully paid and nonassessable.

          (f) The Company agrees that it will perform, execute,  acknowledge and
deliver or cause to be performed, executed,  acknowledged and delivered all such
further and other acts, instruments and assurances as may reasonably be required
by the Rights Agent for the carrying  out or  performing  by the Rights Agent of
the provisions of this Agreement.

          (g) The  Rights  Agent is hereby  authorized  and  directed  to accept
instructions with respect to the administration, exercise and performance of its
duties  hereunder from any one of the Chairman of the Board, the Chief Executive
Officer,  the  President,  any Senior  Vice  President  or Vice  President,  the
Secretary or the  Treasurer of the  Company,  and to apply to such  officers for
advice  or  instructions  in  connection  with its  duties,  and it shall not be
responsible  or liable for any action  taken,  suffered or omitted by it in good
faith in accordance  with  instructions  of any such officer or for any delay in
acting while waiting for those instructions. Any application by the Rights Agent
for  written  instructions  from the  Company  may,  at the option of the Rights
Agent,  set forth in writing  any action  proposed to be taken or omitted by the
Rights Agent under this Rights Agreement and the date on and/or after which such
action  shall be taken or such  omission  shall be  effective.  The Rights Agent
shall not be liable for any action taken by, or omission of, the Rights Agent in
accordance with a proposal included in any such application on or after the date
specified  in such  application  (which  date  shall  not be less  than five (5)
Business Days after the date any officer of the Company  actually  received such
application,  unless  any such  officer  shall have  consented  in writing to an
earlier date) unless,  prior to taking any such action (or the effective date in
the  case  of an  omission),  the  Rights  Agent  shall  have  received  written
instructions in response to such  application  specifying the action to be taken
or omitted.

          (h)  The  Rights  Agent  and any  stockholder,  director,  officer  or
employee of the Rights Agent may buy, sell or deal in any of the Rights or other
securities of the Company or become pecuniarily interested in any transaction in
which the  Company  may be  interested,  or  contract  with or lend money to the
Company or otherwise  act as fully and freely as though it were not Rights Agent
under this Agreement. Nothing herein shall preclude the Rights Agent from acting
in any other capacity for the Company or for any other legal entity.

          (i) The Rights  Agent may  execute and  exercise  any of the rights or
powers hereby vested in it or perform any duty hereunder  either itself or by or
through its attorneys or agents, and the Rights Agent shall not be answerable or
accountable for any act, default, neglect or misconduct of any such attorneys or
agents or for any loss to the  Company  resulting  from any such  act,  default,
neglect or misconduct,  provided  reasonable care was exercised in the selection
and continued employment thereof.

          (j) No provision of this  Agreement  shall require the Rights Agent 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 its rights if
the Rights Agent in good faith believes that repayment of such funds or adequate
indemnification against such risk or liability is not reasonably assured to it.

          (k) If,  with  respect to any Rights  Certificate  surrendered  to the
Rights Agent for exercise,  transfer,  split up,  combination  or exchange,  the
certification on the form of assignment or form of election to purchase,  as the
case may be, that the Rights  evidenced by the Rights  Certificate are not owned
by an Acquiring  Person,  or an Affiliate or Associate  thereof,  has either not
been completed or in any manner indicates any other response thereto, the Rights
Agent shall not take any further action with respect to such requested exercise,
transfer,  split up, combination or exchange,  without first consulting with the
Company.

          Section 21. Change of Rights Agent.  The Rights Agent or any successor
Rights Agent pay resign and be discharged  from its duties under this  Agreement
upon  thirty  (30) days'  notice in writing  mailed to the  Company  and to each
transfer  agent of the Common Stock or  Preferred  Stock (as to which the Rights
Agent has received prior written notice) by registered or certified mail, and to
the holders of the Rights  Certificates  by  first-class  mail.  The Company may
remove the Rights  Agent or any  successor  Rights  Agent upon thirty (30) days'
notice in writing,  mailed to the Rights Agent or successor Rights Agent, as the
case may be, and to each transfer  agent of the Common Stock or Preferred  Stock
(as to which the Rights Agent has received  prior written  notice) by registered
or certified mail, and to the holders of the Rights  Certificates by first-class
mail. If the Rights Agent shall resign or be removed or shall  otherwise  become
incapable of acting,  the Company shall appoint a successor to the Rights Agent.
If the  Company  shall fail to make such  appointment  within a period of thirty
(30) days after giving  notice of such removal or after it has been  notified in
writing of such  resignation  or incapacity  by the  resigning or  incapacitated
Rights Agent, then the registered holder of any Rights  Certificate may apply to
any court of competent  jurisdiction  for the appointment of a new Rights Agent.
Any successor Rights Agent, whether appointed by the Company or by such a court,
shall be a corporation  or trust company  organized and doing business under the
laws  of the  United  States  or of any  state  of the  United  States,  in good
standing,  authorized  under  such  laws to  exercise  corporate  trust or stock
transfer  powers,  and subject to supervision or examination by federal or state
authority and which has,  individually or combined with its  Affiliates,  at the
time of its  appointment  as Rights  Agent a combined  capital and surplus of at
least $100  million.  After  appointment,  the  successor  Rights Agent shall be
vested with the same powers,  rights,  duties and  responsibilities as if it had
been  originally  named as Rights  Agent  without  further act or deed;  but the
predecessor  Rights  Agent shall  deliver and transfer to the  successor  Rights
Agent any property at the time held by it hereunder, and execute and deliver any
further assurance,  conveyance, act or deed necessary for the purpose. Not later
than the effective  date of any such  appointment  the Company shall file notice
thereof in writing with the predecessor  Rights Agent and each transfer agent of
the Common Stock or Preferred Stock, and mail a notice thereof in writing to the
registered  holders  of the  Rights  Certificates.  Failure  to give any  notice
provided  for in this  Section 21,  however,  or any defect  therein,  shall not
affect the  legality  or validity  of the  resignation  or removal of the Rights
Agent or the appointment of the successor Rights Agent, as the case may be.

          Section 22. Issuance of New Rights  Certificates.  Notwithstanding any
of the  provisions  of this  Agreement  or of the  Rights to the  contrary,  the
Company may, at its option,  issue new Rights Certificates  evidencing Rights in
such  form  as may be  approved  by its  Board  of  Directors,  to  reflect  any
adjustment  or change in the  Purchase  Price and the number or kind or class of
shares or other securities or property purchasable under the Rights Certificates
made in  accordance  with the  provisions  of this  Agreement.  In addition,  in
connection  with the  issuance or sale of shares of Common Stock  following  the
Distribution  Date and prior to the Expiration Date, the Company (a) shall, with
respect to shares of Common Stock so issued or sold  pursuant to the exercise of
stock  options or under any  employee  benefit plan or  arrangement  or upon the
exercise,  conversion  or  exchange  of  securities  of  the  Company  currently
outstanding  or issued at any time in the future by the  Company and (b) may, in
any other case, if deemed  necessary or appropriate by the Board of Directors of
the Company,  issue Rights  Certificates  representing the appropriate number of
Rights in connection with such issuance or sale; provided,  however, that (i) no
such Rights Certificate shall be issued and this sentence shall be null and void
ab initio if, and to the extent  that,  such  issuance  or this  sentence  would
create a significant  risk of or result in material  adverse tax consequences to
the  Company or the Person to whom such  Rights  Certificate  would be issued or
would create a significant risk of or result in such options' or employee plans'
or  arrangements'  failing  to  qualify  for  otherwise  available  special  tax
treatment  and (ii) no such  Rights  Certificate  shall be issued if, and to the
extent that,  appropriate  adjustment  shall otherwise have been made in lieu of
the issuance thereof.

          Section 23. Redemption and Termination.  (a) The Board of Directors of
the  Company  may,  at its  option,  at any time prior to the earlier of (i) the
Shares  Acquisition Date or (ii) the Final  Expiration Date,  redeem all but not
less than all the then  outstanding  Rights at a  redemption  price of $0.01 per
Right,  appropriately  adjusted to reflect any stock  split,  stock  dividend or
similar transaction  occurring after the Rights Dividend  Declaration Date (such
redemption price being hereinafter  referred to as the "Redemption  Price"), and
the Company may, at its option,  pay the Redemption Price either in cash, shares
of Common  Stock  (based on the  current  per share  market  price  thereof  (as
determined pursuant to Section 11(d) hereof) at the time of redemption),  or any
other form of consideration  deemed  appropriate by the Board of Directors.  The
redemption of the Rights by the Board of Directors may be made effective at such
time on such basis and with such  conditions  as the Board of  Directors  in its
sole discretion may establish.

          (b) Immediately upon the action of the Board of Directors ordering the
redemption  of the Rights  pursuant  to  paragraph  (a) of this  Section 23, and
without any further  action and  without any notice,  the right to exercise  the
Rights will  terminate  and the only right  thereafter  of the holders of Rights
shall be to receive the Redemption Price. The Company shall promptly give public
notice of any such redemption;  provided,  however, that the failure to give, or
any defect in, any such notice shall not affect the validity of such redemption.
Within  10 days  after  such  action  of the  Board of  Directors  ordering  the
redemption of the Rights,  the Company  shall give notice of such  redemption to
the Rights Agent and shall mail a notice of redemption to all the holders of the
then outstanding Rights at their last addresses as they appear upon the registry
books of the Rights Agent or, prior to the  Distribution  Date,  on the registry
books of the transfer agent for the Common Stock.  Any notice which is mailed in
the manner  herein  provided  shall be deemed  given,  whether or not the holder
receives  the notice.  Each such notice of  redemption  will state the method by
which the payment of the Redemption Price will be made.  Neither the Company nor
any of its  Affiliates or Associates  may redeem,  acquire or purchase for value
any Rights at any time in any manner other than that  specifically  set forth in
this Section 23 or in Section 24 hereof,  and other than in connection  with the
purchase of shares of Common Stock prior to the Distribution Date.

          (c)  Notwithstanding  anything  contained  in  this  Agreement  to the
contrary,  the Rights shall not be  exercisable  pursuant to Section 7(a) at any
time when the Rights are redeemable hereunder.

          Section 24. Exchange.  (a) The Board of Directors  of the Company,  at
its  option,  at any time after any  Person  becomes an  Acquiring  Person,  may
exchange all or part of the then outstanding and exercisable Rights (which shall
not include  Rights that have become void pursuant to the  provisions of Section
7(e)  hereof) for Units of Preferred  Stock at an exchange  ratio of one Unit of
Preferred  Stock per Right,  appropriately  adjusted to reflect any stock split,
stock  dividend  or similar  transaction  occurring  after the  Rights  Dividend
Declaration  Date (such  exchange  ratio  being  hereinafter  referred to as the
"Section 24(a) Exchange Ratio").  Notwithstanding the foregoing, the Company may
not effect such  exchange at any time after any Person  (other than the Company,
any  Subsidiary  of the Company,  any employee  benefit plan  maintained  by the
Company or any of its Subsidiaries,  or any trustee or fiduciary with respect to
such plan acting in such capacity),  together with all Affiliates and Associates
of such  Person,  becomes the  Beneficial  Owner of 50% or more of the shares of
Common Stock then outstanding.

          (b) Immediately  upon  the  action  of the Board of  Directors  of the
Company  ordering the exchange of any Rights  pursuant to subsection (a) of this
Section 24 and without any further  action and without any notice,  the right to
exercise such Rights shall  terminate and the only right  thereafter of a holder
of such Rights shall be to receive that number of Units of Preferred Stock equal
to the number of such  Rights  held by such  holder  multiplied  by the  Section
24(a)(i)  Exchange  Ratio.  The Company shall promptly give public notice of any
such exchange;  provided,  however,  that the failure to give, or any defect in,
such notice shall not affect the validity of such exchange. The Company promptly
shall mail a notice of any such exchange to all of the holders of such Rights at
their last addresses as they appear upon the registry books of the Rights Agent.
Any notice which is mailed in the manner herein  provided shall be deemed given,
whether or not the holder receives the notice. Each such notice of exchange will
state the method by which the  exchange of Units of  Preferred  Stock for Rights
will be effected and, in the event of any partial exchange, the number of Rights
which will be exchanged.  Any partial  exchange shall be effected pro rata based
on the number of Rights  (other than Rights  which have become void  pursuant to
the provisions of Section 7(e) hereof) held by each holder of Rights.

          (c) The Company shall not be required to issue fractions  smaller than
or  to  distribute  certificates  which  evidence  fractions  smaller  than  one
one-thousandth of a share of Preferred Stock. In lieu thereof, the Company shall
pay to the registered  holders of the Rights  Certificates  with regard to which
such fractional Units would otherwise be issuable an amount in cash equal to the
same  fraction of the current  market value (as  determined  pursuant to Section
11(d)(i) hereof) of one Unit of Preferred Stock.

          Section 25.  Notice of Certain  Events.  (a) In case the Company shall
propose (i) to pay any dividend  payable in stock of any class to the holders of
its  Preferred  Stock or to make any other  distribution  to the  holders of its
Preferred Stock (other than a regular quarterly cash dividend), (ii) to offer to
the holders of its  Preferred  Stock rights or warrants to  subscribe  for or to
purchase any additional Units of Preferred Stock or shares of stock of any class
or any other securities, rights or options, (iii) to effect any reclassification
of its  Preferred  Stock  (other  than a  reclassification  involving  only  the
subdivision of outstanding Preferred Stock), (iv) to effect any consolidation or
merger into or with any other Person  (other than a Subsidiary of the Company in
a transaction which complies with Section 11(o)), or to effect any sale or other
transfer  (or to permit  one or more of its  Subsidiaries  to effect any sale or
other transfer),  in one or more  transactions,  of 50% or more of the assets or
earning  power of the  Company and its  Subsidiaries  (taken as a whole) to, any
other Person,  (v) to effect the  liquidation,  dissolution or winding up of the
Company,  or (vi) to declare or pay any dividend on the Common Stock  payable in
shares of Common Stock or to effect a subdivision,  combination or consolidation
of the shares of Common Stock (by  reclassification or otherwise than by payment
of dividends in shares of Common  Stock),  then, in each such case,  the Company
shall give to each holder of a Rights Certificate, in accordance with Section 26
hereof,  a notice of such proposed  action,  which shall specify the record date
for the purposes of such stock dividend,  or distribution of rights or warrants,
or the  date  on  which  such  reclassification,  consolidation,  merger,  sale,
transfer, liquidation,  dissolution, or winding up is to take place and the date
of  participation  therein by the holders of the shares of Common  Stock  and/or
shares of  Preferred  Stock,  if any such date is to be fixed,  and such  notice
shall be so given in the case of any action  covered by clause (i) or (ii) above
at least ten (10) days prior to the record date for  determining  holders of the
shares of Preferred  Stock for  purposes of such action,  and in the case of any
such  other  action,  at least ten (10) days  prior to the date of the taking of
such proposed action or the date of participation  therein by the holders of the
shares of Common Stock and/or shares of Preferred Stock,  whichever shall be the
earlier.

          (b) In case any of the events set forth in  Section  11(a)(ii)  hereof
shall occur,  then the Company shall as soon as practicable  thereafter  give to
each holder of a Rights  Certificate,  in accordance  with Section 26 hereof,  a
notice of the  occurrence of such event,  which notice shall describe such event
and the consequences of such event to holders of Rights under Section  11(a)(ii)
hereof.  In the event any Person becomes an Acquiring  Person,  the Company will
promptly notify the Rights Agent thereof.

          Section 26. Notices.  Notices or demands  authorized by this Agreement
to be  given  or  made  by the  Rights  Agent  or by the  holder  of any  Rights
Certificate to or on the Company shall be sufficiently  given or made if sent by
first-class mail, postage prepaid,  addressed (until another address is filed in
writing with the Rights Agent) as follows:

    Calpine Corporation
    50 West San Fernando Street
    San Jose, California
    Attention:   Ann B.  Curtis
                 Executive Vice President and Corporate Secretary

Subject to the provisions of Section 21 hereof,  any notice or demand authorized
by this  Agreement  to be given or made by the  Company  or by the holder of any
Rights  Certificate  to or on the Rights  Agent shall be sent by  registered  or
certified  mail and shall be deemed  given upon  receipt  and  addressed  (until
another address is filed in writing with the Company) as follows:

    EquiServe Trust Company, N.A.
    525 Washington Boulevard, Suite 4660
    Jersey City, New Jersey 07310
    Attention: Tenders & Exchanges Administration

Notices  or  demands  authorized  by this  Agreement  to be given or made by the
Company or the Rights  Agent to the  holder of any Rights  Certificate  shall be
sufficiently  given  or  made  if sent by  first-class  mail,  postage  prepaid,
addressed  to such holder at the address of such holder as shown on the registry
books of the Company.

          Section 27. Supplements  and  Amendments.  Prior  to the  Distribution
Date, the Company may supplement or amend this Agreement in any respect, without
the approval of any holders of Rights, by action of its Board of Directors,  and
the Rights Agent shall,  if the Company so directs,  execute such  supplement or
amendment.  From and after the  Distribution  Date, the Company may from time to
time  supplement or amend this Agreement  without the approval of any holders of
Rights, by action of its Board of Directors, in order (i) to cure any ambiguity,
(ii) to  correct or  supplement  any  provision  contained  herein  which may be
defective or inconsistent with any other provisions herein,  (iii) to shorten or
lengthen  any  time  period  hereunder  or  (iv) to  change  or  supplement  the
provisions  hereunder  in any manner  which the  Company may deem  necessary  or
desirable and which shall not  adversely  affect the interests of the holders of
Rights  (other than an  Acquiring  Person or an  Affiliate  or  Associate  of an
Acquiring Person), including,  without limitation, to change the Purchase Price,
the  Redemption  Price,  any time periods herein  specified,  and any other term
hereof,  any such supplement or amendment to be evidenced by a writing signed by
the Company and the Rights Agent;  provided,  however,  that from and after such
time as any Person  becomes an Acquiring  Person,  this  Agreement  shall not be
amended in any manner which would adversely  affect the interests of the holders
of Rights.  Upon receipt of a  certificate  from an  appropriate  officer of the
Company  that the proposed  supplement  or  amendment  is  consistent  with this
Section 27 and,  after such time as any Person has become an  Acquiring  Person,
that the  proposed  supplement  or  amendment  does  not  adversely  affect  the
interests  of the  holders  of Rights,  the  Rights  Agent  shall  execute  such
supplement or amendment.

          Section 28.  Successors.  All the  covenants  and  provisions  of this
Agreement  by or for the benefit of the  Company or the Rights  Agent shall bind
and inure to the benefit of their respective successors and assigns hereunder.

          Section 29. Determinations and Actions by the Board of Directors.  For
all  purposes  of this  Agreement,  any  calculation  of the number of shares of
Common Stock  outstanding  at any  particular  time,  including  for purposes of
determining the particular percentage of such outstanding shares of Common Stock
of which any Person is the Beneficial  Owner,  shall be made in accordance  with
the last sentence of Rule  13d-3(d)(1)(i)  of the Exchange Act Regulations.  The
Board of Directors of the Company shall have the  exclusive  power and authority
to administer this Agreement and to exercise all rights and powers  specifically
granted to the Board of  Directors,  or the  Company,  or as may be necessary or
advisable  in  the   administration  of  this  Agreement,   including,   without
limitation,  the  right  and  power  to (i)  interpret  the  provisions  of this
Agreement and (ii) make all determinations deemed necessary or advisable for the
administration  of this Agreement  (including a  determination  to redeem or not
redeem the Rights or to amend the  Agreement).  All such actions,  calculations,
interpretations and determinations (including, for purposes of clause (y) below,
all  omissions  with  respect to the  foregoing),  which are done or made by the
Board of Directors in good faith, shall (x) be final,  conclusive and binding on
the Company,  the Rights Agent,  the holders of the Rights  Certificates and all
other parties and (y) not subject the Board of Directors to any liability to the
holders of the Rights.

          Section 30. Benefits  of This  Agreement.  Nothing  in this  Agreement
shall be construed to give to any person or corporation  other than the Company,
the Rights Agent and the  registered  holders of the Rights  (and,  prior to the
Distribution Date, shares of Common Stock) any legal or equitable right,  remedy
or claim  under this  Agreement;  but this  Agreement  shall be for the sole and
exclusive benefit of the Company, the Rights Agent and the registered holders of
the Rights (and, prior to the Distribution Date, shares of Common Stock).

          Section 31. Severability.   If  any  term,   provision,   covenant  or
restriction  of this Agreement is held by a court of competent  jurisdiction  or
other  authority  to be invalid,  void or  unenforceable,  the  remainder of the
terms, provisions,  covenants and restrictions of this Agreement shall remain in
full force and effect and shall in no way be affected,  impaired or invalidated;
provided,  however,  that  notwithstanding  anything  in this  Agreement  to the
contrary, if any such term,  provision,  covenant or restriction is held by such
court  or  authority  to be  invalid,  void or  unenforceable  and the  Board of
Directors of the Company determines in its good faith judgment that severing the
invalid  language  from this  Agreement  would  adversely  affect the purpose or
effect of this Agreement, the right of redemption set forth in Section 23 hereof
shall be reinstated  and shall not expire until the tenth Business Day following
the date of such determination by the Board of Directors of the Company.

          Section 32. Governing Law. This Agreement and each Rights  Certificate
issued  hereunder  shall be deemed to be a  contract  made under the laws of the
State of Delaware  and for all  purposes  shall be governed by and  construed in
accordance  with the laws of such State  applicable  to contracts to be made and
performed entirely within such State.

          Section 33. Counterparts. This Agreement may be executed in any number
of counterparts and each of such  counterparts  shall for all purposes be deemed
to be an original,  and all such counterparts shall together  constitute but one
and the same instrument.

          Section 34. Descriptive Headings.  Descriptive headings of the several
sections of this  Agreement  are  inserted  for  convenience  only and shall not
control or affect the meaning or construction of any of the provisions hereof.


<PAGE>


          IN WITNESS  WHEREOF,  the parties hereto have caused this Agreement to
be duly executed and attested, all as of the day and year first above written.


ATTEST:                                       CALPINE CORPORATION

By: /s/ Ann B. Curtis                         By: /s/ Peter Cartwright
    --------------------------------              -----------------------------
    Name:  Ann B. Curtis                          Name:  Peter Cartwright
    Title: Executive Vice President               Title: Chairman, President and
            and Corporate Secretary                      Chief Executive Officer


ATTEST:                                       EQUISERVE TRUST COMPANY, N.A.,
                                              As Rights Agent

By: /s/                                       By: /s/
    --------------------------------              -----------------------------
    Name:                                         Name:
    Title:                                        Title:


<PAGE>

                                                                       Exhibit A


                                      FORM

                                       of

                           CERTIFICATE OF DESIGNATION

                                       of

                     SERIES A PARTICIPATING PREFERRED STOCK

                                       of

                               CALPINE CORPORATION

                         (Pursuant to Section 151 of the
                        Delaware General Corporation Law)
                     ---------------------------------------

          Calpine  Corporation,  a corporation  organized and existing under the
General  Corporation  Law of the  State  of  Delaware  (hereinafter  called  the
"Corporation"),  hereby  certifies that the following  resolution was adopted by
the Board of  Directors  of the  Corporation  as  required by Section 151 of the
General Corporation Law at a meeting duly called and held on June 5, 1997:

          RESOLVED,  that pursuant to the authority granted to and vested in the
Board  of  Directors  of the  Corporation  (hereinafter  called  the  "Board  of
Directors" or the "Board") in accordance  with the provisions of the Certificate
of  Incorporation,  the Board of Directors  hereby creates a series of Preferred
Stock,  par value $0.001 per share (the "Preferred  Stock"),  of the Corporation
and hereby states the designation  and number of shares,  and fixes the relative
rights, preferences, and limitations thereof as follows:

          Series A Participating Preferred Stock:

          Section 1.  Designation and Amount.  he shares of such series shall be
designated as "Series A Participating  Preferred Stock" (the "Series A Preferred
Stock") and the number of shares constituting the Series A Preferred Stock shall
be One Hundred  Thousand  (100,000).  Such number of shares may be  increased or
decreased by resolution of the Board of Directors;  provided,  however,  that no
decrease  shall  reduce  the number of shares of Series A  Preferred  Stock to a
number less than the number of shares then outstanding plus the number of shares
reserved  for  issuance  upon the  exercise of  outstanding  options,  rights or
warrants or upon the  conversion  of any  outstanding  securities  issued by the
Corporation convertible into Series A Preferred Stock.

          Section 2.  Dividends and Distributions.

          (A) Subject to the rights of the  holders of  any shares of any series
     of Preferred Stock (or any similar stock) ranking prior and superior to the
     Series A Preferred Stock with respect to dividends,  each holder of a share
     of Series A  Preferred  Stock,  in  preference  to the holders of shares of
     Common  Stock,  par value  $0.001 per share (the  "Common  Stock"),  of the
     Corporation,  and of any other junior stock,  shall be entitled to receive,
     when,  as and if declared by the Board of  Directors  out of funds  legally
     available for the purpose, quarterly dividends payable in cash on the first
     day of March,  June,  September  and  December in each year (each such date
     being  referred  to  herein  as  a  "Quarterly   Dividend  Payment  Date"),
     commencing  on the first  Quarterly  Dividend  Payment Date after the first
     issuance of a share or fraction of a share of Series A Preferred  Stock, in
     an amount per share  (rounded to the nearest cent) equal to, subject to the
     provision for adjustment  hereinafter set forth, One Thousand (1,000) times
     the  aggregate  per share  amount of all cash  dividends,  and One Thousand
     (1,000)  times the  aggregate  per share  amount  (payable  in kind) of all
     non-cash dividends or other distributions, other than a dividend payable in
     shares of Common Stock or a subdivision of the outstanding shares of Common
     Stock (by  reclassification  or  otherwise),  declared on the Common  Stock
     since the immediately  preceding  Quarterly  Dividend Payment Date or, with
     respect  to the first  Quarterly  Dividend  Payment  Date,  since the first
     issuance of a share or fraction of a share of Series A Preferred  Stock. In
     the event the Corporation  shall at any time declare or pay any dividend on
     the Common Stock payable in shares of Common Stock, or effect a subdivision
     or combination or consolidation  of the outstanding  shares of Common Stock
     (by  reclassification  or otherwise than by payment of a dividend in shares
     of Common Stock) into a greater or lesser number of shares of Common Stock,
     then in each such case the  amount to which  holders  of shares of Series A
     Preferred Stock were entitled  immediately prior to such event under clause
     (b) of the preceding  sentence shall be adjusted by multiplying such amount
     by a  fraction,  the  numerator  of which is the number of shares of Common
     Stock outstanding immediately after such event and the denominator of which
     is the number of shares of Common Stock that were  outstanding  immediately
     prior to such event.

          (B) The  Corporation  shall declare a dividend or  distribution on the
     shares of Series A Preferred  Stock as provided  in  paragraph  (A) of this
     Section 2 immediately  after it declares a dividend or  distribution on the
     Common  Stock  (other than a dividend  payable in shares of Common  Stock);
     provided,  however,  that, in the event no dividend or  distribution  shall
     have been  declared  on the Common  Stock  during the  period  between  any
     Quarterly  Distribution  Date and the next  subsequent  Quarterly  Dividend
     Payment  Date,  a dividend of $1.00 per share of Series A  Preferred  Stock
     shall nevertheless be payable on such subsequent Quarterly Dividend Payment
     Date.

          (C) Dividends  shall  begin  to  accrue  and  be  cumulative  on  each
     outstanding  share  of  Series A  Participating  Preferred  Stock  from the
     Quarterly  Dividend  Payment Date next  preceding the date of issue of such
     share of Series A Participating  Preferred Stock,  unless the date of issue
     of such share is prior to the record date for the first Quarterly  Dividend
     Payment Date,  in which case  dividends on such share shall begin to accrue
     from  the date of issue of such  share,  or  unless  the date of issue is a
     Quarterly  Dividend Payment Date or is a date after the record date for the
     determination  of holders of shares of Series A Preferred Stock entitled to
     receive a quarterly  dividend and before such  Quarterly  Dividend  Payment
     Date, in either of which events such dividends shall begin to accrue and be
     cumulative from such Quarterly  Dividend  Payment Date.  Accrued but unpaid
     dividends shall not bear interest. Dividends paid on the shares of Series A
     Preferred  Stock in an amount less than the total amount of such  dividends
     at the time accrued and payable on such shares shall be allocated  pro rata
     on a  share-by-share  basis among all such shares at the time  outstanding.
     The  Board of  Directors  may fix a record  date for the  determination  of
     holders of shares of Series A Preferred  Stock entitled to receive  payment
     of a dividend or distribution declared thereon,  which record date shall be
     not more than 60 days prior to the date fixed for the payment thereof.

          Section 3.  Voting Rights. The holders of shares of Series A Preferred
Stock shall have the following voting rights:

          (A) Subject to the provision  for  adjustment  hereinafter  set forth,
     each share of Series A Preferred  Stock shall entitle the holder thereof to
     One  Thousand  (1,000)  votes  on all  matters  submitted  to a vote of the
     stockholders of the Corporation.  In the event the Corporation shall at any
     time declare or pay any  dividend on the Common Stock  payable in shares of
     Common Stock,  or effect a subdivision or combination or  consolidation  of
     the outstanding  shares of Common Stock (by  reclassification  or otherwise
     than by payment of a dividend in shares of Common  Stock) into a greater or
     lesser number of shares of Common Stock,  then in each such case the number
     of votes per share to which  holders of shares of Series A Preferred  Stock
     were  entitled  immediately  prior  to such  event  shall  be  adjusted  by
     multiplying such number by a fraction, the numerator of which is the number
     of shares of Common Stock outstanding  immediately after such event and the
     denominator  of which is the  number of shares  of Common  Stock  that were
     outstanding immediately prior to such event.

          (B) Except as otherwise  provided herein,  in any other Certificate of
     Designations  creating a series of Preferred Stock or any similar stock, or
     by law,  the holders of shares of Series A Preferred  Stock and the holders
     of shares of Common Stock and any other  capital  stock of the  Corporation
     having  general  voting  rights  shall  vote  together  as one class on all
     matters submitted to a vote of stockholders of the Corporation.

          (C)  (i) If at any time dividends  on any shares of Series A Preferred
     Stock  shall be in arrears in an amount  equal to six  quarterly  dividends
     thereon, then during the period (a "default period") from the occurrence of
     such event  until such time as all  accrued  and unpaid  dividends  for all
     previous  quarterly dividend periods and for the current quarterly dividend
     period on all shares of Series A  Preferred  Stock then  outstanding  shall
     have been declared and paid or set apart for payment, all holders of shares
     of Series A Preferred Stock,  voting separately as a class,  shall have the
     right to elect two (2) Directors.

               (ii) During any default period, such voting rights of the holders
          of shares of Series A Preferred Stock may be exercised  initially at a
          special meeting called pursuant to subparagraph  (iii) of this Section
          3(C) or at any  annual  meeting of  stockholders,  and  thereafter  at
          annual  meetings of  stockholders,  provided  that neither such voting
          rights nor any right of the  holders  of shares of Series A  Preferred
          Stock  to  increase,  in  certain  cases,  the  authorized  number  of
          Directors  may be  exercised  at any meeting  unless  one-third of the
          outstanding shares of Preferred Stock shall be present at such meeting
          in person or by  proxy.  The  absence  of a quorum of the  holders  of
          Common Stock shall not affect the exercise by the holders of shares of
          Series A Preferred  Stock of such rights.  At any meeting at which the
          holders of shares of Series A  Preferred  Stock  shall  exercise  such
          voting rights initially during an existing default period,  they shall
          have the right,  voting  separately as a class,  to elect Directors to
          fill up to two (2)  vacancies in the Board of  Directors,  if any such
          vacancies may then exist,  or, if such right is exercised at an annual
          meeting,  to elect two (2)  Directors.  If the number  which may be so
          elected at any special meeting does not amount to the required number,
          the  holders of the Series A  Preferred  Stock shall have the right to
          make such increase in the number of Directors as shall be necessary to
          permit the election by them of the required number.  After the holders
          of shares of Series A Preferred Stock shall have exercised their right
          to elect Directors during any default period,  the number of Directors
          shall not be increased  or  decreased  except as approved by a vote of
          the holders of shares of Series A Preferred  Stock as herein  provided
          or pursuant to the rights of any equity  securities  ranking senior to
          the Series A Preferred Stock.

               (iii) Unless  the  holders  of Series A  Preferred  Stock  shall,
          during an existing  default period,  have  previously  exercised their
          right to elect  Directors,  the Board of Directors  may order,  or any
          stockholder or stockholders  owning in the aggregate not less than 25%
          of the  total  number  of the  shares  of  Series  A  Preferred  Stock
          outstanding  may  request,  the  calling  of a special  meeting of the
          holders of shares of Series A Preferred  Stock,  which  meeting  shall
          thereupon  be called by the  Secretary of the  Corporation.  Notice of
          such meeting and of any annual  meeting at which  holders of shares of
          Series A Preferred Stock are entitled to vote pursuant to this Section
          3(C)(iii)  shall be given to each holder of record of shares of Series
          A  Preferred  Stock by mailing a copy of such notice to such holder at
          such  holder's  last  address as the same  appears on the books of the
          Corporation.  Such meeting shall be called for a time not earlier than
          20 days and not later  than 60 days  after such order or request or in
          default of the calling of such meeting within 60 days after such order
          or  request,  such  meeting  may be  called on  similar  notice by any
          stockholder or stockholders  owning in the aggregate not less than 25%
          of the total number of outstanding shares of Series A Preferred Stock.
          Notwithstanding  the  provisions  of this Section  3(C)(iii),  no such
          special  meeting  shall  be  called  during  the 60  days  immediately
          preceding  the  date  fixed  for  the  next  annual   meeting  of  the
          stockholders.

               (iv) During any default  period,  the holders of shares of Common
          Stock and shares of Series A  Preferred  Stock,  and other  classes or
          series of stock of the Corporation,  if applicable,  shall continue to
          be entitled to elect all the Directors  until holders of the shares of
          Series A Preferred Stock shall have exercised their right to elect two
          (2) Directors voting as a separate class,  after the exercise of which
          right (x) the  Directors so elected by the holders of shares of Series
          A Preferred  Stock shall  continue  in office  until their  successors
          shall have been elected by such holders or until the expiration of the
          default  period,  and (y) any  vacancy in the Board of  Directors  may
          (except  as  provided  in  Section  3(C)(ii))  be  filled by vote of a
          majority of the remaining Directors theretofore elected by the holders
          of the class of capital stock which elected the Director  whose office
          shall have become vacant. References in this Section 3(C) to Directors
          elected by the holders of a  particular  class of capital  stock shall
          include  Directors  elected by such  Directors  to fill  vacancies  as
          provided in clause (y) of the foregoing sentence.

               (v) Immediately upon the expiration of a default period,  (x) the
          right of the  holders  of  shares  of  Series A  Preferred  Stock as a
          separate  class to elect  Directors  shall cease,  (y) the term of any
          Directors elected by the holders of shares of Series A Preferred Stock
          as a separate class shall  terminate,  and (z) the number of Directors
          shall be such  number as may be  provided  for in the  Certificate  of
          Incorporation or by-laws irrespective of any increase made pursuant to
          the  provisions  of  Section  3(C)(ii)  (such  number  being  subject,
          however,  to change thereafter in any manner provided by law or in the
          Certificate of Incorporation  or by-laws).  Any vacancies in the Board
          of Directors  effected by the provisions of clauses (y) and (z) in the
          preceding  sentence  may be  filled  by a  majority  of the  remaining
          Directors.

               (vi) The  provisions  of  this  Section  3(C)  shall  govern  the
          election of Directors  by holders of shares of Preferred  Stock during
          any default period  notwithstanding  any provisions of the Certificate
          of Incorporation to the contrary,  including,  without limitation, the
          provisions of Article Sixth of the Certificate of Incorporation.

          (D)  Except as set forth  herein,  or as  otherwise  provided  by law,
     holders of Series A Preferred Stock shall have no special voting rights and
     their consent shall not be required (except to the extent they are entitled
     to vote with  holders of Common  Stock as set forth  herein) for taking any
     corporate action.

          Section 4.  Certain Restrictions.

          (A) Whenever  quarterly  dividends or other dividends or distributions
     payable on the Series A  Preferred  Stock as  provided  in Section 2 are in
     arrears,  thereafter  and  until  all  accrued  and  unpaid  dividends  and
     distributions,  whether or not  declared,  on shares of Series A  Preferred
     Stock outstanding shall have been paid in full, the Corporation shall not:

               (i) declare or pay dividends, or make any other distributions, on
          any shares of stock  ranking  junior  (either as to  dividends or upon
          liquidation,  dissolution  or winding  up) to the  Series A  Preferred
          Stock;

               (ii) declare or pay dividends,  or make any other  distributions,
          on any shares of stock ranking on a parity  (either as to dividends or
          upon  liquidation,  dissolution  or  winding  up)  with  the  Series A
          Preferred Stock, except dividends paid ratably on the shares of Series
          A Preferred  Stock and all such parity  stock on which  dividends  are
          payable or in arrears in  proportion to the total amounts to which the
          holders of all such shares are then entitled;

               (iii) redeem or purchase or otherwise  acquire for  consideration
          shares of any stock  ranking  junior  (either as to  dividends or upon
          liquidation,  dissolution  or winding  up) to the  Series A  Preferred
          Stock, provided that the Corporation may at any time redeem,  purchase
          or otherwise  acquire  shares of any such junior stock in exchange for
          shares of any stock of the  Corporation  ranking  junior (either as to
          dividends  or upon  dissolution,  liquidation  or  winding  up) to the
          Series A Preferred Stock; or

               (iv) redeem or purchase or  otherwise  acquire for  consideration
          any shares of Series A Preferred Stock, or any shares of stock ranking
          on a parity with the Series A Preferred  Stock,  except in  accordance
          with a purchase offer made in writing or by publication (as determined
          by the Board of  Directors)  to all  holders of such  shares upon such
          terms as the Board of Directors, after consideration of the respective
          annual dividend rates and other relative rights and preferences of the
          respective  series and  classes,  shall  determine  in good faith will
          result in fair and equitable  treatment among the respective series or
          classes.

          (B) The Corporation shall not permit any subsidiary of the Corporation
     to purchase or otherwise  acquire for  consideration any shares of stock of
     the Corporation  unless the Corporation  could, under paragraph (A) of this
     Section 4,  purchase or  otherwise  acquire such shares at such time and in
     such manner.

          Section 5.  Reacquired Shares.  Any shares of Series A Preferred Stock
purchased  or otherwise  acquired by the  Corporation  in any manner  whatsoever
shall be retired and cancelled promptly after the acquisition  thereof. All such
shares shall upon their  cancellation  become  authorized but unissued shares of
Preferred  Stock and may be reissued as part of a new series of Preferred  Stock
subject to the conditions and restrictions on issuance set forth herein,  in the
Certificate  of  Incorporation,  or in any  other  Certificate  of  Designations
creating  a series  of  Preferred  Stock or any  similar  stock or as  otherwise
required by law.

          Section 6.  Liquidation, Dissolution or Winding Up.

          (A) Upon  any   liquidation,   dissolution   or  winding   up  of  the
     Corporation,  no distribution shall be made (1) to the holders of shares of
     stock  ranking  junior  (either  as  to  dividends  or  upon   liquidation,
     dissolution  or winding up) to the Series A Preferred  Stock unless,  prior
     thereto,  the  holders  of shares of Series A  Preferred  Stock  shall have
     received One Thousand Dollars ($1,000),  per share, plus an amount equal to
     accrued and unpaid  dividends  and  distributions  thereon,  whether or not
     declared, to the date of such payment; provided,  however, that the holders
     of shares of Series A  Preferred  Stock  shall be  entitled  to  receive an
     aggregate  amount  per  share,  subject  to the  provision  for  adjustment
     hereinafter set forth,  equal to one thousand (1,000),  times the aggregate
     amount to be distributed per share to holders of shares of Common Stock, or
     (2) to the  holders of shares of stock  ranking  on a parity  (either as to
     dividends or upon liquidation, dissolution or winding up) with the Series A
     Preferred  Stock,  except  distributions  made  ratably  on  the  Series  A
     Preferred  Stock  and all such  parity  stock in  proportion  to the  total
     amounts to which the  holders of all such  shares  are  entitled  upon such
     liquidation,  dissolution or winding up. In the event the Corporation shall
     at any time  declare or pay any  dividend  on the Common  Stock  payable in
     shares  of  Common  Stock,  or  effect  a  subdivision  or  combination  or
     consolidation   of   the   outstanding   shares   of   Common   Stock   (by
     reclassification  or  otherwise  than by payment of a dividend in shares of
     Common  Stock) into a greater or lesser  number of shares of Common  Stock,
     then in each such case the  aggregate  amount to which holders of shares of
     Series A  Preferred  Stock were  entitled  immediately  prior to such event
     under the proviso in clause (1) of the preceding sentence shall be adjusted
     by  multiplying  such amount by a fraction  the  numerator  of which is the
     number of shares of Common Stock  outstanding  immediately after such event
     and the  denominator  of which is the number of shares of Common Stock that
     were outstanding immediately prior to such event.

          (B) In the  event,  however,  that  there  are not  sufficient  assets
     available to permit payment in full the Series A Liquidation Preference and
     the liquidation preferences of all other series of Preferred Stock, if any,
     which  rank on a  parity  with the  Series A  Preferred  Stock,  then  such
     remaining assets shall be distributed ratably to the holders of such parity
     shares in proportion to their respective liquidation preferences.

          Section 7.  Consolidation,  Merger, etc. In case the Corporation shall
enter into any consolidation,  merger, combination or other transaction in which
the shares of Common  Stock are  exchanged  for or changed  into other  stock or
securities,  cash and/or any other property, then in any such case each share of
Series A  Preferred  Stock  shall at the same  time be  similarly  exchanged  or
changed  into an amount  per  share,  subject to the  provision  for  adjustment
hereinafter set forth,  equal to One Thousand (1,000) times the aggregate amount
of stock,  securities,  cash and/or any other property (payable in kind), as the
case may be,  into which or for which  each share of Common  Stock is changed or
exchanged.  In the event the  Corporation  shall at any time  declare or pay any
dividend  on the Common  Stock  payable in shares of Common  Stock,  or effect a
subdivision or combination or consolidation of the outstanding  shares of Common
Stock (by  reclassification or otherwise than by payment of a dividend in shares
of Common Stock) into a greater or lesser number of shares of Common Stock, then
in each such case the amount set forth in the preceding sentence with respect to
the  exchange or change of shares of Series A Preferred  Stock shall be adjusted
by multiplying  such amount by a fraction,  the numerator of which is the number
of shares of Common  Stock  outstanding  immediately  after  such  event and the
denominator  of  which is the  number  of  shares  of  Common  Stock  that  were
outstanding immediately prior to such event.

          Section 8.  No Redemption. The  shares  of  Series A  Preferred  Stock
shall not be redeemable.

          Section 9.  Rank.  The  Series  A  Preferred  Stock  shall  rank, with
respect to the  payment of dividends  and the distribution  of assets, junior to
all series of any other class of the Corporation's Preferred Stock.

          Section 10. Amendment.   The  Certificate   of  Incorporation  of  the
Corporation  shall not be amended in any manner which would  materially alter or
change the powers, preferences or special rights of the Series A Preferred Stock
so as to affect them adversely without the affirmative vote of the holders of at
least a majority of the outstanding  shares of Series A Preferred Stock,  voting
together as a single class.

          IN WITNESS  WHEREOF,  this  Certificate  of Designation is executed on
behalf of the  Corporation  by its President and its corporate  seal attested by
its Secretary this __th day of June, 1997.

                         /s/ Peter Cartwright
                         --------------------
                         Name:   Peter Cartwright
                         Title:  Chairman, President and Chief Executive Officer



Attest:

/s/ Ann B. Curtis
-----------------
Name:   Ann B. Curtis
Title:  Executive Vice President
        and Corporate Secretary


<PAGE>
                                                                       Exhibit B

                         Form of Rights Certificate

Certificate No.  R-                                              ________ Rights


          NOT  EXERCISABLE  AFTER [TEN YEAR  ANNIVERSARY OF RECORD DATE] OR
          EARLIER IF REDEMPTION OR EXCHANGE OCCURS.  THE RIGHTS ARE SUBJECT
          TO  REDEMPTION AT THE OPTION OF THE COMPANY AT $.01 PER RIGHT AND
          TO EXCHANGE ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT. UNDER
          CERTAIN CIRCUMSTANCES,  RIGHTS BENEFICIALLY OWNED BY AN ACQUIRING
          PERSON OR AN AFFILIATE  OR  ASSOCIATE OF AN ACQUIRING  PERSON (AS
          SUCH  TERMS  ARE  DEFINED  IN  THE  RIGHTS   AGREEMENT)  AND  ANY
          SUBSEQUENT  HOLDER OF SUCH RIGHTS MAY BECOME NULL AND VOID.  [THE
          RIGHTS  REPRESENTED  BY  THIS  RIGHTS  CERTIFICATE  ARE  OR  WERE
          BENEFICIALLY  OWNED BY A PERSON  WHO WAS OR BECAME  AN  ACQUIRING
          PERSON OR AN AFFILIATE  OR  ASSOCIATE OF AN ACQUIRING  PERSON (AS
          SUCH TERMS ARE  DEFINED IN THE  RIGHTS  AGREEMENT).  ACCORDINGLY,
          THIS RIGHTS  CERTIFICATE  AND THE RIGHTS  REPRESENTED  HEREBY MAY
          BECOME  NULL  AND  VOID IN THE  CIRCUMSTANCES  SPECIFIED  IN SUCH
          AGREEMENT.]*

* The portion of the legend in bracket shall be inserted only if applicable  and
shall replace the preceding sentence.


                               Rights Certificate

                              CALPINE CORPORATION


          This  certifies  that  ____________,  or  registered  assigns,  is the
registered owner of the number of Rights set forth above, each of which entitles
the owner thereof, subject to the terms, provisions and conditions of the Rights
Agreement,  dated as of June 5, 1997,  as amended and restated on September  19,
2001  (the  "Rights  Agreement"),   between  Calpine  Corporation,   a  Delaware
corporation  (the  "Company"),  and EquiServe  Trust Company,  N.A. (the "Rights
Agent"),  to purchase from the Company at any time after the  Distribution  Date
(as such term is  defined  in the  Rights  Agreement)  and  prior to 5:00  P.M.,
California  time, on June 18, 2007 at the office of the Rights Agent  designated
for such  purpose,  or at the  office  of its  successor  as Rights  Agent,  one
one-thousandth  (a  "Unit")  of a fully  paid  non-assessable  share of Series A
Participating  Preferred  Stock,  par value  $0.001  per share  (the  "Preferred
Stock"),  of the Company,  at a purchase  price of $140.00 per Unit of Preferred
Stock (the "Purchase  Price"),  upon  presentation  and surrender of this Rights
Certificate  with the Form of Election to Purchase duly executed.  The number of
Rights  evidenced  by this  Rights  Certificate  (and  the  number  of  Units of
Preferred  Stock which may be purchased  upon exercise  hereof) set forth above,
and the Purchase Price set forth above,  are the number and Purchase Price as of
September 19, 2001, based on the Preferred Stock as constituted at such date. As
provided in the Rights Agreement,  the Purchase Price and the number of Units of
Preferred Stock which may be purchased upon the exercise of the Rights evidenced
by this Rights  Certificate are subject to modification  and adjustment upon the
happening of certain events.

          This Rights Certificate is subject to all of the terms, provisions and
conditions of the Rights Agreement,  which terms,  provisions and conditions are
hereby  incorporated  herein by  reference  and made a part  hereof and to which
Rights Agreement  reference is hereby made for a full description of the rights,
limitations  of rights,  obligations,  duties and  immunities  hereunder  of the
Rights Agent, the Company and the holders of the Rights Certificates.  Copies of
the  Rights  Agreement  are on file at the  principal  executive  offices of the
Company.

          This Rights  Certificate,  with or without other Rights  Certificates,
upon  surrender at the office of the Rights Agent  designated  for such purpose,
may be exchanged for another Rights  Certificate or Rights  Certificates of like
tenor  and date  evidencing  Rights  entitling  the  holder to  purchase  a like
aggregate  number of  Preferred  Stock as the  Rights  evidenced  by the  Rights
Certificate or Rights  Certificates  surrendered shall have entitled such holder
to purchase.  If this Rights  Certificate shall be exercised in part, the holder
shall be entitled to receive upon surrender hereof another Rights Certificate or
Rights Certificates for the number of whole Rights not exercised.

          Subject  to  the  provisions  of  the  Rights  Agreement,  the  Rights
evidenced  by this  Certificate  may be redeemed by the Company at a  redemption
price of $.01 per Right,  as adjusted in accordance with the terms of the Rights
Agreement.

          No  fractional  shares of  Preferred  Stock  will be  issued  upon the
exercise of any Right or Rights evidenced hereby (other than fractions which are
integral  multiples of one  one-thousandth of a share of Preferred Stock,  which
may, at the election of the Company, be evidenced by depositary  receipts),  but
in lieu  thereof  a cash  payment  will  be  made,  as  provided  in the  Rights
Agreement.

          No holder of this Rights  Certificate,  as such,  shall be entitled to
vote or receive  dividends  or be deemed for any  purpose the holder of Units of
Preferred Stock or of any other  securities of the Company which may at any time
be issuable on the exercise hereof,  nor shall anything  contained in the Rights
Agreement or herein be construed to confer upon the holder hereof,  as such, any
of the  rights  of a  stockholder  of the  Company  or any right to vote for the
election  of  directors  or upon any matter  submitted  to  stockholders  at any
meeting thereof,  or to give or withhold consent to any corporate  action, or to
receive notice of meetings or other actions  affecting  stockholders  (except as
provided  in the Rights  Agreement),  or to receive  dividends  or  subscription
rights,  or  otherwise,  until the  Rights or Rights  evidenced  by this  Rights
Certificate shall have been exercised as provided in the Rights Agreement.

          This  Rights  Certificate  shall  not be valid or  obligatory  for any
purpose until it shall have been countersigned by the Rights Agent.


<PAGE>


          WITNESS the  signature  of the proper  officers of the Company and its
corporate seal. Dated as of _________, 200__.


ATTEST:                                       CALPINE CORPORATION

By: /s/                                       By: /s/
    ------------------------------                ------------------------------
    Name:                                         Name:
    Title:                                        Title:


Countersigned:
EQUISERVE TRUST COMPANY, N.A.,
as Rights Agent

By: /s/
    ------------------------------
    Authorized Signatory



<PAGE>


                   Form of Reverse Side of Rights Certificate

                               FORM OF ASSIGNMENT

                (To be executed by the registered holder if such
               holder desires to transfer the Rights Certificate.)

          FOR VALUE RECEIVED ________________________ hereby sells,  assigns and
transfers unto _________________________________________________________________
                        (Please print name and address of transferee)

this Rights  Certificate,  together with all right,  title and interest therein,
and does hereby irrevocably constitute and appoint ___________________ Attorney,
to  transfer  the within  Rights  Certificate  on the books of the  within-named
Company, with full power of substitution.


Dated: ___________________, _____

                                                   _____________________________
                                                              Signature

Signature Guaranteed:

          Signatures  must  be  guaranteed  by a  participant  in  a  Securities
Transfer Association Inc. recognized signature guarantee medallion program.

________________________________________________________________________________

                                  CERTIFICATION

          The  undersigned  hereby  certifies that the Rights  evidenced by this
Rights  Certificate  are not  beneficially  owned by an  Acquiring  Person or an
Affiliate or Associate thereof (as defined in the Rights Agreement).




             Form of Reverse Side of Rights Certificate -- continued


<PAGE>

                          FORM OF ELECTION TO PURCHASE

(To be executed if holder desires to exercise the Rights Certificate.)

To CALPINE CORPORATION

          The  undersigned  hereby  irrevocably  elects to exercise  ___________
Rights represented by this Rights Certificate to purchase the units of Preferred
Stock  issuable upon the exercise of such Rights and requests that  certificates
for such Preferred Stock be issued in the name of:

Please insert social security
or other identifying number  ___________________________________________________
                                       (Please print name and address)

If such number of Rights  shall not be all the Rights  evidenced  by this Rights
Certificate,  a new Rights  Certificate for the balance remaining of such Rights
shall be registered in the name of and delivered to:

Please insert social security
or other identifying number  ___________________________________________________
                                       (Please print name and address)


Dated: ___________________, ____


                                                   _____________________________
                                                             Signature

Signature Guaranteed:

          Signatures  must  be  guaranteed  by a  participant  in  a  Securities
Transfer Association Inc. recognized signature guarantee medallion program.



<PAGE>


                         Form of Reverse Side of Rights

Certificate -- continued
________________________________________________________________________________
                                  CERTIFICATION

          The  undersigned  hereby  certifies that the Rights  evidenced by this
Rights  Certificate  are not  beneficially  owned by an  Acquiring  Person or an
Affiliate or Associate thereof (as defined in the Rights Agreement).

                                                   _____________________________
                                                             Signature

________________________________________________________________________________

                                     NOTICE

          The  signature in the foregoing  Forms of  Assignment  and Election to
Purchase  must  conform  to the name as  written  upon  the face of this  Rights
Certificate in every particular, without alteration or enlargement or any change
whatsoever.

          In the  event  the  certification  set  forth  above  in the  Form  of
Assignment  or the Form of  Election  to  Purchase,  as the case may be,  is not
completed,  the Company and the Rights Agent will deem the  beneficial  owner of
the Rights evidenced by this Rights  Certificate to be an Acquiring Person or an
Affiliate or  Associate  thereof (as defined in the Rights  Agreement)  and such
Assignment or Election to Purchase will not be honored.


<PAGE>


                                                                       Exhibit C

                               CALPINE CORPORATION

                          SUMMARY OF RIGHTS TO PURCHASE
                            SHARES OF PREFERRED STOCK

          On June 5, 1997,  the Board of Directors of Calpine  Corporation  (the
"Company") declared a dividend of one preferred share purchase right (a "Right")
for each  outstanding  share of Common  Stock (the  "Common  Stock"),  par value
$0.001 per share, of the Company.  The dividend is payable on June 18, 1997 (the
"Record  Date") to the  stockholders  of record on that date. In addition,  each
share of Common  Stock issued by the Company  subsequent  to the Record Date has
been  accompanied  by a Right.  Each Right  entitles  the  registered  holder to
purchase from the Company one  one-thousandth  of a share (a "Unit") of Series A
Junior Participating Preferred Stock, par value $0.001 per share (the "Preferred
Stock"),  of the Company at a price of $140.00 per Unit (the "Purchase  Price"),
subject to adjustment.  The description and terms of the Rights are set forth in
an Amended and Restated  Rights  Agreement  dated as of September  19, 2001 (the
"Rights  Agreement")  between the Company and EquiServe Trust Company,  N.A., as
Rights Agent (the "Rights Agent").

          Until the earlier to occur of (i) a public  announcement that a person
or group of  affiliated  or  associated  persons (an  "Acquiring  Person")  have
acquired beneficial  ownership of 15% or more of the outstanding Common Stock or
(ii) 10 business  days (or such later date as may be determined by action of the
Board of  Directors of the Company  prior to such time as any Person  becomes an
Acquiring Person) following the commencement of, or announcement of an intention
to make, a tender offer or exchange offer the consummation of which would result
in the  beneficial  ownership  by a  person  or  group  of 15% or  more  of such
outstanding   Common   Stock  (the  earlier  of  such  dates  being  called  the
"Distribution  Date"), the Rights will be evidenced,  with respect to any of the
Common Stock  certificates  outstanding  as of the Record  Date,  by such Common
Stock  certificate  with a copy of this Summary of Rights to Purchase  Preferred
Stock attached thereto.

          The Rights Agreement  provides that, until the Distribution  Date, the
Rights  will be  transferred  with and only  with the  Common  Stock.  Until the
Distribution  Date (or earlier  redemption  or  expiration  of the Rights),  new
Common Stock  certificates  issued after the Record Date,  upon  transfer or new
issuance  of Common  Stock  will  contain a  notation  incorporating  the Rights
Agreement by reference.  Until the Distribution  Date (or earlier  redemption or
expiration of the Rights),  the surrender for transfer of any  certificates  for
Common Stock, outstanding as of the Record Date, even without such notation or a
copy of this  Summary  of Rights to  Purchase  Preferred  Stock  being  attached
thereto,  will also  constitute the transfer of the Rights  associated  with the
Common Stock represented by such certificate.  As soon as practicable  following
the  Distribution  Date,  separate  certificates  evidencing the Rights ("Rights
Certificates") will be mailed to holders of record of the Common Stock as of the
Close of Business on the Distribution Date and such separate Rights Certificates
alone will evidence the Rights.

          The Rights are not exercisable until the Distribution Date. The Rights
will expire at the close of  business  on June 18,  2007 (the "Final  Expiration
Date"),  unless the Final  Expiration  Date is extended or unless the Rights are
earlier redeemed or exchanged by the Company, in each case as described below.

          The Purchase Price payable and the number of Units of Preferred  Stock
or other securities or property issuable upon exercise of the Rights are subject
to adjustment from time to time to prevent  dilution (i) in the event of a stock
dividend on, or a subdivision, combination or reclassification of, the Preferred
Stock, (ii) upon the grant to holders of the Units of Preferred Stock of certain
rights or warrants to subscribe  for or purchase  Units of Preferred  Stock at a
price, or securities convertible into Units of Preferred Stock with a conversion
price,  less than the then current market price of the Units of Preferred  Stock
or (iii) upon the  distribution  to holders of the Units of  Preferred  Stock of
evidences of indebtedness or assets  (excluding  regular periodic cash dividends
paid out of  earnings  or retained  earnings  or  dividends  payable in Units of
Preferred  Stock)  or of  subscription  rights or  warrants  (other  than  those
referred to above).

          The Purchase Price payable and the number of Units of Preferred  Stock
issuable upon exercise of each Right are also subject to adjustment in the event
of  a  stock  dividend  on  the  Common  Stock  payable  in  Common  Stock  or a
subdivision,  consolidation or combination of the Common Stock occurring, in any
such case, prior to the Distribution Date.

          Units of Preferred Stock  purchasable upon exercise of the Rights will
not be redeemable.  Each Unit of Preferred Stock will be entitled to a quarterly
dividend  equal to any dividends  declared per share of Common  Stock;  provided
that if no dividend is declared on the Common  Stock during such  quarter,  each
Unit of Preferred Stock will be entitled to a dividend of $.001. In the event of
liquidation, each Unit of Preferred Stock will be entitled to a payment equal to
the greater of $1.00 and any payment made per share of Common  Stock.  Each Unit
of Preferred  Stock will have one vote,  voting  together with the Common Stock.
Finally, in the event of any merger, consolidation or other transaction in which
shares of Common  Stock are  exchanged,  each Unit of  Preferred  Stock  will be
entitled to receive an amount  equal to the amount  received per share of Common
Stock. These rights are protected by customary antidilution provisions.

          Because of the nature of the dividend,  liquidation and voting rights,
the value of the number of Units of Preferred Stock purchasable upon exercise of
a Right should approximate the value of one share of Common Stock.

          In the event that, after the Rights become exercisable, the Company is
acquired in a merger or other business combination transaction with an Acquiring
Person or an affiliate  thereof,  or 50% or more of its  consolidated  assets or
earning power are sold to an Acquiring  Person or an affiliate  thereof,  proper
provision will be made so that each holder of a Right will  thereafter  have the
right to receive,  upon exercise  thereof at the then current  exercise price of
the Rights, that number of shares of common stock of the acquiring company which
at the time of such  transaction  will  have a market  value  of two  times  the
exercise price of the Rights.

          In the event  that any  person or group of  affiliated  or  associated
persons becomes the beneficial owner of 15% or more of the outstanding shares of
Common  Stock,  proper  provision  shall be made so that each holder of a Right,
other  than  Rights  beneficially  owned by the  Acquiring  Person  (which  will
thereafter  be void),  will  thereafter  have the right to receive upon exercise
that  number of Units of  Preferred  Stock (or cash,  shares of Common  Stock or
other  securities  or property)  having a market value of two times the exercise
price of the Rights.

          At any time after the  acquisition  by a person or group of affiliated
or associated persons of beneficial  ownership of 15% or more of the outstanding
shares of Common Stock and prior to the  acquisition  by such person or group of
50% or more of the outstanding Common Stock, the Company may exchange the Rights
(other than Rights  owned by such  person or group which have become  void),  in
whole or in part, at an exchange ratio of one Unit of Preferred  Stock per Right
(subject to adjustment).

          With certain  exceptions,  no adjustment in the Purchase Price will be
required until  cumulative  adjustments  require an adjustment of at least 1% in
such  Purchase  Price.  No fractional  shares of Preferred  Stock will be issued
(other than fractions which are integral  multiples of one  one-thousandth  of a
share of  Preferred  Stock,  which  may,  at the  election  of the  Company,  be
evidenced by depositary  receipts)  and, in lieu thereof,  an adjustment in cash
will be made based on the market  price of the Units of  Preferred  Stock on the
last trading day prior to the date of exercise.

          At any time  prior to the first  date of public  announcement  that an
Acquiring  Person has become  such,  the Board of  Directors  of the Company may
redeem  the  Rights in  whole,  but not in part,  at a price of $.01 per  Right,
subject to adjustment (the "Redemption Price"). The redemption of the rights may
be made  effective  at such time on such basis and with such  conditions  as the
Board of Directors in its sole  discretion may establish.  Immediately  upon any
redemption  of the Rights,  the right to exercise the Rights will  terminate and
the only right of the holders of Rights will be to receive the Redemption Price.
The Rights are also  redeemable  under other  circumstances  as specified in the
Rights Agreement.

          The terms of the Rights may be  amended by the Board of  Directors  of
the Company without the consent of the holders of the Rights,  except that, from
and after a  Distribution  Date,  no such  amendment  may  adversely  affect the
interests of the holders of the Rights.

          Until a Right is exercised,  the holder thereof, as such, will have no
rights as a stockholder of the Company, including, without limitation, the right
to vote or to receive dividends.

          The Rights have certain  anti-takeover  effects. The Rights will cause
substantial  dilution to a person or group that  attempts to acquire the Company
on terms not approved by the Company's Board of Directors, except pursuant to an
offer conditioned on a substantial  number of Rights being acquired.  The Rights
should not interfere with any merger or other business  combination  approved by
the Board of  Directors  since the Rights may be  redeemed by the Company at the
Redemption Price prior to the occurrence of a Distribution Date.

          A copy of the Rights  Agreement has been filed with the Securities and
Exchange  Commission  as an Exhibit to a  Registration  Statement on Form 8-A. A
copy of the Rights Agreement is available free of charge from the Company.  This
summary  description  of the  Rights  does not  purport  to be  complete  and is
qualified in its entirety by reference to the Rights Agreement,  which is hereby
incorporated herein by reference.

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